<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON SEPTEMBER 26, 1997
REGISTRATION NO. 333-
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------
FEDERAL DATA CORPORATION
<TABLE>
<S> <C> <C>
DELAWARE 5045 52-0940566
(State or other jurisdiction (Primary Standard Industrial (I.R.S. Employer
of Classification Code Number) Identification
incorporation or organization) No.)
</TABLE>
<TABLE>
<S> <C> <C>
FDCT Corp. Delaware 52-1950796
FDC Technologies, Inc. Delaware 52-1801937
DoxSys, Inc. Delaware 52-1799055
NYMA, Inc. Maryland 52-1127149
VAD International, Inc. Maryland 52-1982445
Sylvest Management Systems Corporation Maryland 52-1550631
</TABLE>
4800 HAMPDEN LANE
BETHESDA, MARYLAND 20814
(301) 986-0800
(ADDRESS, INCLUDING ZIP CODE AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
------------------------------
JAMES M. DEAN
FEDERAL DATA CORPORATION
4800 HAMPDEN LANE
BETHESDA, MARYLAND 20814
(301) 986-0800
(NAME, ADDRESS, INCLUDING ZIP CODE, AND
TELEPHONE NUMBER, INCLUDING AREA CODE, OF AGENT OF SERVICE)
COPIES TO:
MARK A. STEGEMOELLER
LATHAM & WATKINS
SEARS TOWER, SUITE 5800
CHICAGO, ILLINOIS 60606
(312) 876-7700
------------------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
As soon as practicable after this Registration Statement becomes effective.
If any of the securities being registered on this Form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box. / /
------------------------------
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
PROPOSED MAXIMUM PROPOSED MAXIMUM
TITLE OF EACH CLASS OF AMOUNT TO OFFERING PRICE AGGREGATE AMOUNT OF
SECURITIES TO BE REGISTERED BE REGISTERED PER NOTE OFFERING PRICE(1) REGISTRATION FEE
<S> <C> <C> <C> <C>
10 1/8% Senior Subordinated Notes
due 2005................................ $105,000,000 100% $105,000,000 $31,818
Subsidiary Guarantees of the 10 1/8%
Senior Subordinated Notes due 2005...... -- -- -- (2)
</TABLE>
(1) Estimated solely for the purposes of calculating the amount of the
registration fee pursuant to Rule 457.
(2) Pursuant to Rule 457(n), no separate registration fee is payable with
respect to the subsidiary guarantees.
------------------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933, AS AMENDED, OR UNTIL THE REGISTRATION STATEMENT
SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID
SECTION 8(A), MAY DETERMINE.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
CROSS REFERENCE SHEET
PURSUANT TO RULE 404(A) AND ITEM 501(B) OF REGULATION S-K
SHOWING LOCATION IN PROSPECTUS OF THE INFORMATION
REQUIRED BY PART I OF FORM S-4
<TABLE>
<CAPTION>
FORM S-4 ITEM NO. AND CAPTION CAPTION OR LOCATION IN PROSPECTUS
- ---------------------------------------------------------------- -----------------------------------------------------
<C> <S> <C>
A. INFORMATION ABOUT THE TRANSACTION
1. Forepart of Registration Statement and Outside Front
Cover Page Prospectus.............................. Outside Front Cover Page; Cross Reference Sheet;
Inside Front Cover Page
2. Inside Front and Outside Back Cover Pages of
Prospectus......................................... Inside Front Cover Page; Outside Back Cover Page
3. Risk Factors, Ratio of Earnings to Fixed Charges and
other Information.................................. Prospectus Summary; Risk Factors; Selected Unaudited
Pro Forma Consolidated Financial Information;
Selected Consolidated Historical Financial Data of
Federal Data Corporation
4. Terms of the Transaction............................. The Exchange Offer; Certain Federal Income Tax
Considerations; Plan of Distribution; Description
of Notes
5. Pro Forma Financial Information...................... Consolidated Financial Statements
6. Material Contacts with the Company Being Acquired.... Not Applicable
7. Additional Information Required for Reoffering by
Persons and Parties Deemed to be Underwriters...... Not Applicable
8. Interests of Named Experts and Counsel............... Not Applicable
9. Disclosure of Commission Position on Indemnification
for Securities Act
Liabilities........................................ Not Applicable
B. INFORMATION ABOUT THE REGISTRANT
10. Information with Respect to S-3 Registrants.......... Not Applicable
11. Incorporation of Certain Information by Reference.... Not Applicable
12. Information with Respect to S-2 or S-3 Registrants... Nor Applicable
13. Incorporation of Certain Information by Reference.... Not Applicable
14. Information with Respect to Registrants Other Than
S-3 or S-2 Registrants............................. Prospectus Summary; Risk Factors; The Exchange Offer;
The Recapitalization and the Transactions; Use of
Proceeds; Capitalization; Selected Unaudited Pro
Forma Consolidated Financial Data; Management's
Discussion and Analysis of Financial Condition and
Results of Operations; Business; Management;
Principal Stockholders; Certain Transactions;
Description of Certain Indebtedness; Description of
Notes; Financial Statements
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
FORM S-4 ITEM NO. AND CAPTION CAPTION OR LOCATION IN PROSPECTUS
- ---------------------------------------------------------------- -----------------------------------------------------
<C> <S> <C>
C. INFORMATION ABOUT THE COMPANY TO BE ACQUIRED
15. Information with Respect to S-3 Companies............ Not Applicable
16. Information with Respect to S-2 or S-3 Companies..... Not Applicable
17. Information with Respect to Companies Other Than S-2
or S-3 Companies................................... Not Applicable
D. VOTING AND MANAGEMENT
18. Information if Proxies, Consents or Authorizations
are to be Solicited................................ Not Applicable
19. Information if Proxies, Consents or Authorizations
are not to be Solicited or in an Exchange Offer.... Management; Certain Transactions; Principal
Stockholders
</TABLE>
<PAGE>
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
<PAGE>
PROSPECTUS
OFFER TO EXCHANGE
10 1/8% SENIOR SUBORDINATED NOTES DUE 2005 (THE "EXCHANGE NOTES")
FOR ALL OUTSTANDING 10 1/8% SENIOR SUBORDINATED NOTES DUE 2005 (THE "PRIVATE
NOTES")
OF
FEDERAL DATA CORPORATION
THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME ON
UNLESS EXTENDED.
------------------------
Federal Data Corporation ("FDC") is offering (the "Exchange Offer"), upon
the terms and subject to the conditions set forth in this Prospectus and the
accompanying Letter of Transmittal (the "Letter of Transmittal"), to exchange
$1,000 principal amount of its 10 1/8% Senior Subordinated Notes Due 2005 (the
"Exchange Notes"), which exchange has been registered under the Securities Act
of 1933, as amended (the "Securities Act"), pursuant to a registration statement
of which this Prospectus is a part (the "Registration Statement"), for each
$1,000 principal amount of its outstanding 10 1/8% Senior Subordinated Notes Due
2005 (the "Private Notes"), of which $105,000,000 in aggregate principal amount
was issued on July 25, 1997 and is outstanding as of the date hereof. The form
and terms of the Exchange Notes are the same as the form and terms of the
Private Notes except that (i) the exchange will have been registered under the
Securities Act, and, therefore, the Exchange Notes will not bear legends
restricting the transfer thereof and (ii) holders of the Exchange Notes will not
be entitled to certain rights of holders of the Private Notes under the
Registration Rights Agreement (as defined), which rights will terminate upon the
consummation of the Exchange Offer. The Exchange Notes will evidence the same
indebtedness as the Private Notes (which they replace) and will be entitled to
the benefits of the Indenture (as defined). The Private Notes and the Exchange
Notes are sometimes referred to herein collectively as the "Notes." See "The
Exchange Offer" and "Description of Notes."
The Exchange Notes will bear interest at the same rate and on the same terms
as the Private Notes. Consequently, the Exchange Notes will bear interest at the
rate of 10 1/8% per annum and the interest thereon will be payable semi-annually
on February 1 and August 1 of each year, commencing February 1, 1998. The
Exchange Notes will bear interest from and including the date of issuance of the
Private Notes (July 25, 1997). Holders whose Private Notes are accepted for
exchange will be deemed to have waived the right to receive any interest accrued
on the Private Notes.
SEE "RISK FACTORS" BEGINNING ON PAGE 16 FOR A DISCUSSION OF CERTAIN FACTORS
THAT SHOULD BE CONSIDERED IN CONNECTION WITH THE EXCHANGE OFFER AND AN
INVESTMENT IN THE EXCHANGE NOTES.
---------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF
THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
------------------------
FDC WILL ACCEPT FOR EXCHANGE ANY AND ALL VALIDLY TENDERED PRIVATE NOTES NOT
WITHDRAWN PRIOR TO 5:00 P.M., NEW YORK CITY TIME, ON , 1997, UNLESS
THE EXCHANGE OFFER IS EXTENDED BY FDC IN ITS SOLE DISCRETION (THE "EXPIRATION
DATE"). TENDERS OF PRIVATE NOTES MAY BE WITHDRAWN AT ANY TIME PRIOR TO 5:00
P.M., NEW YORK CITY TIME, ON THE EXPIRATION DATE. THE EXCHANGE OFFER IS NOT
CONDITIONED UPON ANY MINIMUM PRINCIPAL AMOUNT OF PRIVATE NOTES BEING TENDERED
FOR EXCHANGE. PRIVATE NOTES MAY BE TENDERED ONLY IN INTEGRAL MULTIPLES OF
$1,000. IN THE EVENT FDC TERMINATES THE EXCHANGE OFFER AND DOES NOT ACCEPT FOR
<PAGE>
EXCHANGE ANY PRIVATE NOTES, FDC WILL PROMPTLY RETURN ALL PREVIOUSLY TENDERED
PRIVATE NOTES TO THE HOLDERS THEREOF.
------------------------
The date of this Prospectus is , 1997
<PAGE>
The Exchange Notes will be general unsecured obligations of FDC and will be
subordinated in right of payment to all existing and future Senior Indebtedness
(as defined) of FDC including obligations under the New Senior Credit Facility
(as defined) and rank PARI PASSU with other senior subordinated indebtedness of
FDC. Pursuant to the terms of the Indenture, the Exchange Notes will be
guaranteed (the "Subsidiary Guarantees") by each of FDC's wholly owned
subsidiaries (the "Subsidiary Guarantors"). The Subsidiary Guarantees will be
general unsecured obligations of the Subsidiary Guarantors and will be
subordinated in right of payment to all existing and future Guarantor Senior
Indebtedness (as defined). At June 30, 1997, after giving effect to the offering
of the Private Notes and the application of the net proceeds therefrom, FDC
would have had $10.2 million of Senior Indebtedness (representing revolving line
of credit borrowings of $6.2 million and $4.0 million of undrawn letters of
credit) and $113.0 million of senior subordinated indebtedness outstanding and
the Subsidiary Guarantors would have had $6.4 million of Guarantor Senior
Indebtedness outstanding (excluding guarantees of indebtedness under the New
Senior Credit Facility). The Subsidiary Guarantors also would have had $14.2
million of secured nonrecourse notes and nonrecourse obligations under capital
leases.
The Exchange Notes are redeemable in whole or in part, at the option of FDC,
on or after August 1, 2001, at the redemption prices set forth herein plus
accrued and unpaid interest, if any, to the date of redemption. In addition, at
any time, or from time to time, on or prior to August 1, 2000, FDC, at its
option, may redeem up to 35% of the aggregate principal amount of the Exchange
Notes originally issued in the Offering, as described herein, with the net cash
proceeds received from one or more Public Equity Offerings (as defined) by FDC
at the redemption prices set forth herein plus accrued and unpaid interest, if
any, to the date of redemption; PROVIDED that at least 65% of the original
aggregate principal amount of the Exchange Notes remains outstanding after any
such redemption. The Exchange Notes will also be redeemable by FDC in the event
of a Change in Control (as defined) at any time prior to August 1, 2001, at a
redemption price equal to 100% of the principal amount thereof plus the
Applicable Premium (as defined) plus accrued and unpaid interest, if any, to the
date of redemption. In the event of a Change of Control, if FDC does not redeem
all of the outstanding Exchange Notes, (i) FDC will have the option, at any time
on or prior to August 1, 2000, to redeem the Exchange Notes in whole but not in
part, at a redemption price equal to 100% of the principal amount thereof, plus
the Applicable Premium (as defined) as of, and accrued and unpaid interest, if
any, to the date of redemption, and (ii) if FDC does not so redeem the Exchange
Notes, each holder of Exchange Notes will have the right to require FDC to
repurchase all or any part of such Holder's Exchange Notes at a price equal to
101% of the principal amount thereof, plus accrued interest to the date of
purchase. In addition, FDC will be obligated to offer to purchase Exchange Notes
at 100% of their principal amount, plus accrued and unpaid interest, if any,
thereon to the date of purchase in the event of certain asset sales.
Based on an interpretation by the staff of the Securities and Exchange
Commission (the "Commission") set forth in no-action letters issued to third
parties, FDC believes that the Exchange Notes issued pursuant to the Exchange
Offer in exchange for Private Notes may be offered for resale, resold and
otherwise transferred by a holder thereof (other than (i) a broker-dealer who
purchases such Exchange Notes directly from FDC to resell pursuant to Rule 144A
or any other available exemption under the Securities Act or (ii) a person that
is an affiliate of FDC within the meaning of Rule 405 under the Securities Act),
without compliance with the registration and prospectus delivery provisions of
the Securities Act; PROVIDED that the holder is acquiring the Exchange Notes in
the ordinary course of its business and is not participating, and had no
arrangement or understanding with any person to participate, in the distribution
of the Exchange Notes. Holders of Private Notes wishing to accept the Exchange
Offer must represent to FDC, as required by the Registration Rights Agreement,
that such conditions have been met. FDC believes that, to its knowledge, none of
the registered holders of the Private Notes is an affiliate (as such term is
defined in Rule 405 under the Securities Act) of FDC.
Prior to the Exchange Offer, there has been no public market for the Private
Notes. FDC does not intend to list the Exchange Notes on any securities exchange
or to seek approval for quotation through any automated quotation system. There
can be no assurance that an active market for the Exchange Notes will develop.
To the extent that a market for the Exchange Notes does develop, the market
value of the Exchange Notes will depend on market conditions (such as yields on
alternative investments), general economic conditions, FDC's financial condition
and certain other factors. Such conditions might cause the Exchange Notes, to
the extent that they are traded, to trade at a significant discount from face
value. See "Risk Factors--Absence of Public Market."
2
<PAGE>
Each broker-dealer that receives Exchange Notes for its own account pursuant
to the Exchange Offer must acknowledge that it will deliver a prospectus in
connection with any resale of such Exchange Notes. The Letter of Transmittal
states that by so acknowledging and by delivering a prospectus, a broker-dealer
will not be deemed to admit that it is an "underwriter" within the meaning of
the Securities Act. This Prospectus, as it may be amended or supplemented from
time to time, may be used by a broker-dealer in connection with resales of
Exchange Notes received in exchange for Private Notes where such Private Notes
were acquired by such broker-dealer as a result of market-making activities or
other trading activities. FDC has indicated its intention to make this
Prospectus (as it may be amended or supplemented) available to any broker-dealer
for use in connection with any such resale for the period required by the
Securities Act. See "Plan of Distribution."
FDC will not receive any proceeds from, and has agreed to bear the expenses
of, the Exchange Offer. No underwriter is being used in connection with this
Exchange Offer.
THE EXCHANGE OFFER IS NOT BEING MADE TO, NOR WILL FDC ACCEPT SURRENDERS FOR
EXCHANGE FROM, HOLDERS OF PRIVATE NOTES IN ANY JURISDICTION IN WHICH THE
EXCHANGE OFFER OR THE ACCEPTANCE THEREOF WOULD NOT BE IN COMPLIANCE WITH THE
SECURITIES OR BLUE SKY LAWS OF SUCH JURISDICTION.
NO PERSON IS AUTHORIZED IN CONNECTION WITH THE EXCHANGE OFFER TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATION NOT CONTAINED IN THIS PROSPECTUS OR
THE ACCOMPANYING LETTER OF TRANSMITTAL, AND, IF GIVEN OR MADE, SUCH INFORMATION
OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY FDC.
NEITHER THE DELIVERY OF THIS PROSPECTUS OR THE ACCOMPANYING LETTER OF
TRANSMITTAL, NOR ANY EXCHANGE MADE HEREUNDER SHALL UNDER ANY CIRCUMSTANCES
CREATE ANY IMPLICATION THAT THE INFORMATION CONTAINED HEREIN IS CORRECT AS OF
ANY DATE SUBSEQUENT TO THE DATE HEREOF.
UNTIL , 1997 (90 DAYS AFTER THE DATE OF THIS PROSPECTUS), ALL
DEALERS OFFERING TRANSACTIONS IN THE EXCHANGE NOTES, WHETHER OR NOT
PARTICIPATING IN THE EXCHANGE OFFER, MAY BE REQUIRED TO DELIVER A PROSPECTUS IN
CONNECTION THEREWITH. THIS IS IN ADDITION TO THE OBLIGATION OF DEALERS TO
DELIVER A PROSPECTUS WHEN ACTING AS UNDERWRITERS AND WITH RESPECT TO THEIR
UNSOLD ALLOTMENTS OR SUBSCRIPTIONS.
THE EXCHANGE NOTES WILL BE AVAILABLE INITIALLY ONLY IN BOOK-ENTRY FORM. FDC
EXPECTS THAT THE EXCHANGE NOTES ISSUED PURSUANT TO THE EXCHANGE OFFER WILL BE
ISSUED IN THE FORM OF ONE OR MORE FULLY REGISTERED GLOBAL NOTES THAT WILL BE
DEPOSITED WITH, OR ON BEHALF OF, THE DEPOSITORY TRUST COMPANY ("DTC" OR THE
"DEPOSITARY") AND REGISTERED IN ITS NAME OF CEDE & CO., AS ITS NOMINEE.
BENEFICIAL INTERESTS IN THE GLOBAL NOTE REPRESENTING THE EXCHANGE NOTES WILL BE
SHOWN ON, AND TRANSFERS THEREOF WILL BE EFFECTED ONLY THROUGH, RECORDS
MAINTAINED BY THE DEPOSITARY AND ITS PARTICIPANTS. AFTER THE INITIAL ISSUANCE OF
SUCH GLOBAL NOTE, EXCHANGE NOTES IN CERTIFICATED FORM WILL BE ISSUED IN EXCHANGE
FOR THE GLOBAL NOTE IN ACCORDANCE WITH THE TERMS AND CONDITIONS SET FORTH IN THE
INDENTURE. SEE "DESCRIPTION OF NOTES--BOOK ENTRY, DELIVERY AND FORM."
NOTICE REGARDING FORWARD-LOOKING INFORMATION
This Prospectus includes "forward looking statements" within the meaning of
Section 27a of the Securities Act and Section 21e of the Securities Exchange Act
of 1934, as amended (the "Exchange Act"). Such statements are identified by the
use of forward-looking words or phrases including, but not limited to,
"intended," "will," "should," "may," "strategically positioned," "expects,"
"expected," "anticipates," and "anticipated." These forward looking statements
are based on the Company's current expectations. All statements other than
statements of historical facts included in this Prospectus, including those
regarding market trends, the Company's financial position, business strategy,
projected costs, and plans and objectives of management for future operations,
are forward looking statements. Although the Company believes that the
expectations reflected in such forward-looking statements are reasonable, there
can be no assurance that such expectations will prove to have been correct.
Because forward-looking statements involve risks and uncertainties, the
Company's actual results could differ materially. Important factors that could
cause actual results to differ materially from the Company's expectations
("Cautionary Statements') are disclosed under "Risk Factors," and elsewhere in
this Prospectus including, without limitation, in conjunction with the
forward-looking statements included in this Prospectus. These forward-looking
statements represent the Company's judgment as of the date of this Prospectus.
All subsequent written and oral forward-looking statements attributable to the
Company or persons acting on behalf of the Company are expressly qualified in
their entirety by the Cautionary Statements. The Company disclaims, however, any
intent or obligation to update its forward-looking statements.
3
<PAGE>
PROSPECTUS SUMMARY
THE FOLLOWING SUMMARY IS QUALIFIED IN ITS ENTIRETY BY, AND SHOULD BE READ IN
CONJUNCTION WITH, THE MORE DETAILED INFORMATION AND FINANCIAL DATA, INCLUDING
THE FINANCIAL STATEMENTS AND NOTES THERETO, APPEARING ELSEWHERE IN THIS
PROSPECTUS. AS USED IN THIS PROSPECTUS, ALL REFERENCES TO THE COMPANY INCLUDE,
UNLESS THE CONTEXT INDICATES OTHERWISE, FEDERAL DATA CORPORATION ("FDC") AND ITS
SUBSIDIARIES AFTER GIVING EFFECT TO THE ACQUISITIONS OF NYMA, INC. ("NYMA") IN
MAY 1997 (THE "NYMA ACQUISITION") AND SYLVEST MANAGEMENT SYSTEMS CORPORATION
("SYLVEST") IN JUNE 1997 (THE "SYLVEST ACQUISITION") (COLLECTIVELY, THE
"ACQUISITIONS"). ALL REFERENCES IN THE PROSPECTUS TO "PRO FORMA" INFORMATION,
UNLESS OTHERWISE INDICATED, ARE PRO FORMA FOR THE ACQUISITIONS, THE APPLICATION
OF THE PROCEEDS OF THE OFFERING OF THE PRIVATE NOTES AND ENTRY INTO A NEW SENIOR
CREDIT FACILITY (THE "NEW SENIOR CREDIT FACILITY") (COLLECTIVELY, THE
"TRANSACTIONS").
THE COMPANY
The Company is a major supplier of information technology to a wide range of
customers within the U.S. Federal Government (the "Government"). The Company has
assembled, through internal growth and strategic acquisitions, comprehensive
information technology product and services capabilities to address the unique
needs of its Government clients. Management believes that the Company is
strategically positioned to benefit from the current trends in the Government
market for information technology and outsourcing of technical and professional
services. The Government is among the world's largest purchasers of information
technology with estimated total expenditures in fiscal 1997 in excess of $26
billion. For the year ended December 31, 1996 and the six months ended June 30,
1997, the Company's total pro forma revenues were $332.8 million and $183.8
million, respectively, and total pro forma EBITDA (as defined herein) was $23.3
million and $4.0 million, respectively.
Founded in 1969, the Company serves a diverse and expanding customer base
representing over 20 Government agencies including the National Aeronautics and
Space Administration ("NASA"), the Federal Aviation Administration (the "FAA"),
the National Institutes of Health (the "NIH"), the Department of Defense (the
"DoD"), the Veterans Benefit Administration (the "VBA") and the Department of
State. In addition, the Company has longstanding relationships with many of its
key clients, with agencies served by the Company for five or more years
accounting for more than half of the Company's pro forma revenues in 1996.
Management believes that the Company's established reputation and long-standing
relationships with Government customers, and the extensive knowledge gained from
those relationships, have been critical to the Company's strong record of growth
and provide a key competitive advantage in pursuing business opportunities with
new and existing customers.
Consistent with its strategy of providing a complete range of information
technology offerings to its Government customers, the Company has pursued
strategic acquisitions to broaden and strengthen key skill areas. In May 1997,
the Company purchased NYMA, a provider of sophisticated engineering and
information technology services. NYMA complemented and significantly expanded
the Company's core capabilities in the technology and engineering services
sector, providing the Company with the ability to bid effectively on new
contracts with a higher component of technical services requirements. In June
1997, the Company acquired Sylvest, a value-added reseller and integrator of
commercial off-the-shelf ("COTS") hardware, software and technical services
supporting open systems architectures within the Government marketplace. Through
the Sylvest Acquisition, the Company has become a leading reseller of COTS
hardware and software to the Government and has substantially expanded the
number of customers to which it can market its systems integration and services
offerings.
The Acquisitions have significantly enhanced the Company's presence in the
Government marketplace. Based on a recent survey, on a pro forma basis, the
Company would have been the 25th largest information technology contractor to
the Government in 1996. Management believes the information technology industry,
particularly the portion serving Government customers, has consolidated and will
4
<PAGE>
continue to consolidate, resulting in additional opportunities for the Company
to make attractive acquisitions that complement or expand its core capabilities.
A substantial portion of the Company's revenues are derived from integrated
technology solutions, which include both a technical services component and the
resale of COTS hardware and software. Management believes that its ability to
bundle products and services gives it a significant competitive advantage over
competitors who offer only products or services. The Company is organized into
four operating groups:
- THE SYSTEMS INTEGRATION GROUP provides large-scale, integrated information
technology systems customized to meet the unique needs of individual
customers. These systems are typically delivered through multi-year,
technically complex data processing projects that entail the application
and integration of leading-edge technology of multiple vendors. The
Company delivers systems integration services and provides required COTS
hardware and software as both a prime contractor and a subcontractor
across a broad range of Government opportunities.
- THE SERVICES GROUP provides information technology services, including
program management, software development and software maintenance
functions, to various Government agencies and prime contractors. The
Services Group also provides engineering support to NASA, the FAA and
other Government agencies in the areas of aeromechanics, aerospace
technology, space experimentation, structures, materials, instrumentation
and aeronautics. The Company has also recently been awarded contracts to
provide these services to private industry on a selected basis. The
Company substantially enhanced its services capabilities through the NYMA
Acquisition.
- THE SOLUTIONS GROUP provides information technology solutions designed to
address six discrete customer needs: document management, Microsoft
consulting, executive management consulting, point-of-sale systems
implementations, electronic commerce and training. These projects usually
are smaller scale and involve a higher content of pre-packaged systems or
specialized subject matter consulting than those of the Systems
Integration Group. In providing these solutions, the Company combines its
in-house technical expertise with its ability to provide COTS products
from multiple vendors.
- THE PRODUCT SALES GROUP is the Company's principal product resale unit and
focuses on the sale of workstations, servers and enterprise networking
hardware. Product sales are also made through the Systems Integration and
Solutions Groups, which resell hardware and software in connection with
their services engagements. Along with providing a broad range of top
quality products through its supplier and teaming relationships with
leading hardware and software manufacturers, the Company adds value for
its customers through its extensive knowledge of the Government
procurement process and through its integration, technical support and
implementation services. The Company substantially enhanced its product
reselling operations through the Sylvest Acquisition.
Management believes that the Company's expertise in both technical services
and product resales distinguishes it from most of its competitors and provides
it with significant cross-selling opportunities that support the Company's
growth strategy.
BUSINESS STRENGTHS
The Company attributes its growth and performance to several factors,
including the following:
- EXTENSIVE KNOWLEDGE OF CUSTOMERS. Through its experience on numerous
Government contracts since 1969, the Company has acquired an in-depth
knowledge of Government contracting and procurement rules and regulations
and of the unique information technology needs of its Government
customers. The Company's experience in the Government marketplace helps it
to anticipate a Government agency's needs, to fashion solutions
appropriate to the agency's infrastructure and
5
<PAGE>
personnel and to guide the agency's personnel through the Government
buying process, which has undergone significant change in recent years.
- STRONG POSITION IN AN ATTRACTIVE AND GROWING MARKET. The Government
market for information technology products and services is large and has
experienced significant growth. Industry sources estimate Government
spending in this area to be in excess of $26 billion in 1997 and it is
forecasted to grow at 6-8% annually over the next five years. In addition,
the General Services Administration (the "GSA") anticipates a continuation
of the trend toward increased Government use of outside information
technology providers and estimates that 65% of all Government agencies
operating in-house data systems may eventually outsource information
technology services to the private sector at an estimated cost savings of
25% to 30%.
- TECHNOLOGICAL EXPERTISE. Through its experience in offering a complete
package of technology products and services, the Company has developed a
high level of technological expertise. Core information technology
competencies include systems integration, engineering services, software
engineering, high end workstations and servers, networking products,
internet solutions, document management workflow systems and complex
project management. These core competencies allow the Company to bid
successfully on a wide range of contracts. Management believes the
Company's expertise and training programs contribute to employee and
customer loyalty.
- EXTENSIVE TEAMING RELATIONSHIPS WITH SUPPLIERS. The Company maintains
strong relationships with many of its key suppliers. These relationships
allow the Company to work with these suppliers to fashion joint solutions
for its customers. Management believes that the Company provides
significant value to its suppliers by allowing them to take advantage of
the Company's extensive knowledge of the Government and its procurement
regulations. In addition, the Company's sales and marketing capabilities
allow its suppliers to access new end-user markets without expanding their
marketing functions. The Company currently has relationships with most
leading hardware and software suppliers.
- STRONG MANAGEMENT TEAM AND INVESTOR BASE. The Company has a highly
experienced and committed management team that has successfully expanded
the Company's business and led the Company's diversification into
additional service and product markets. The Company's senior management
team averages over 11 years experience with the Company and over 23 years
experience in the industry. The Carlyle Group (including its affiliates,
"Carlyle"), the Company's principal stockholder, has supported the
Company's acquisition strategy and provided a critical source of equity
capital for the implementation of the Company's growth strategy.
BUSINESS AND GROWTH STRATEGY
The Company's goal is to be a leading one-stop information technology
solutions supplier, providing high-quality products and services that meet the
complete needs of its Government client base. The Company's strategies to meet
this objective are the following:
- CREATE COMPREHENSIVE SKILL AND PRODUCT BASE. The Company seeks to
continuously add new information technology capabilities and strategically
expand existing business areas to meet the changing information technology
needs and buying patterns of its clients. By expanding its extensive
technical skill base and ability to supply a broad and diverse set of COTS
hardware and software, the Company can provide its customers with the
widest possible range of cost effective solutions and engender a high
level of customer satisfaction. Management believes that such
capabilities, together with the Company's in-depth knowledge of changing
Government procurement practices, should continue to create new
opportunities for the Company.
- STRONG CUSTOMER KNOWLEDGE AND FOCUS. The Company strives to understand
the full range of each of its customers' information technology needs. The
Company's strategy is to continue to leverage its strong customer
knowledge, advanced technical skills and supplier relationships to tailor
optimal
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solutions to its customers' specific needs and to offer technology
infrastructures that anticipate its customers' rapidly evolving needs.
- PURSUE STRATEGIC ACQUISITIONS. The Company seeks to continue expanding
the breadth and quality of the information technology products and
services it offers. The recently completed acquisitions of NYMA and
Sylvest have added important complementary skills to the Company's
information technology capabilities. Management expects to continue to
pursue strategic acquisitions which it believes can contribute
significantly to the Company's future business growth.
- MAXIMIZE FLEXIBILITY OF GOVERNMENT CUSTOMERS. A key component of the
Company's success has been its ability to quickly adapt to the rapidly
evolving Government procurement process. The Company continually pursues
means of maximizing its customers' flexibility in acquiring a range of
products and services with competitive prices and minimal bureaucratic
delay by selecting the best acquisition methods available in the current,
more streamlined procurement climate.
- CAPITALIZE ON OUTSOURCING OPPORTUNITIES. The Company seeks to pursue new
opportunities created by changes in the Government information technology
industry. In particular, although the Government has frequently hired
service providers to fill specific roles in the past, the Government is
increasingly considering opportunities to outsource entire functions to
private industry. The Company intends to leverage its client
relationships, technical skills and access to COTS hardware and software
to pursue these opportunities.
THE INVESTOR
The Carlyle Group, a Washington D.C.-based private merchant bank founded in
1987, became the Company's controlling stockholder in a 1995 recapitalization of
the Company. Carlyle and its affiliates currently manage a $1.3 billion private
equity fund. Carlyle has made over 30 investments in select industries including
aerospace, defense, information technology and related services. Some of these
investments include BDM International, Inc. (NASDAQ: BDMI), a multinational
information technology company; Magnavox Electronic Systems Company, an
electronics systems supplier to the Government and prime contractors (later sold
to Hughes Electronics); Howmet Corporation, a leading supplier of investment
cast turbine engine components for the jet aircraft and industrial gas power
generation markets; and GDE Systems Inc., a leading supplier of mission planning
and information systems as well as test equipment to the Government and prime
contractors (later sold to Tracor, Inc.); Power Paragon Inc., a leading supplier
of power distribution systems to the U.S. government and prime contractors
(later sold to SPD Inc.); and Vought Aircraft Company, a leading supplier of
major aircraft structures and subassemblies for commercial and military aircraft
(later sold to Northrop Grumman Corporation).
THE RECAPITALIZATION AND THE TRANSACTIONS
Prior to December 1, 1995, a substantial majority of the Company's common
stock was owned by its employees. On December 1, 1995, the Company effected a
recapitalization, through which FDC Holdings, Inc. ("Holdings") merged with and
into the Company with the Company continuing as the surviving corporation (the
"Recapitalization"). Holdings was a company organized by Carlyle to facilitate
the Recapitalization and had no operating activity or history. Upon consummation
of the Recapitalization, Holdings received 85.4% of the Company's common stock
and 14.6% was retained by members of Company management who were shareholders
prior to the Recapitalization. The Recapitalization resulted in a charge to
stockholders' equity of $58.8 million to reflect redemption of certain common
stock.
The Company financed the Recapitalization through proceeds from term loans
of $35.0 million, borrowings of approximately $6.5 million under its prior
senior credit facility (the "Prior Senior Credit Facility"), issuance of $7.0
million in the Company's notes (the "FDC Notes") and an equity investment by
Holdings of $16.1 million. These proceeds were also utilized to pay fees and
expenses related to the Recapitalization and related financing, and to provide
working capital for the Company.
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In May 1997, the Company purchased all of the outstanding capital stock of
NYMA for $29.5 million, consisting of $24.5 million in cash and $5.0 million in
the Company's notes (the "NYMA Notes"). The purchase price may be increased by
up to $7.0 million if certain performance criteria are met. The Company funded
the cash portion of the purchase price with borrowings of approximately $9.5
million under the Prior Senior Credit Facility and approximately $15.0 million
in proceeds from an issuance of additional stock to the Company's stockholders.
In June 1997, the Company purchased all of the outstanding capital stock of
Sylvest for $40.4 million, consisting of $33.4 million in cash and $7.0 million
in the Company's notes (the "Sylvest Notes"). The purchase price may be
increased by up to $1.0 million if certain operating objectives are met and is
subject to adjustment based on an audit of the closing balance sheet. The
Company funded the cash portion of the purchase price with borrowings of $21.4
million under the Prior Senior Credit Facility and approximately $12.0 million
in proceeds from an issuance of additional stock to the Company's stockholders.
NYMA and Sylvest are referred to from time to time as the "Acquired Companies."
Upon consummation of the offering of the Private Notes, the Company (i)
prepaid $7.7 million of the notes originally issued in connection with the
recapitalization of the Company at the time of Carlyle's initial investment in
1995 (the "FDC Notes" and, together with the NYMA Notes and the Sylvest Notes,
the "Seller Notes") and $4.0 million of the Sylvest Notes, (ii) repaid (the
"Refinancing") approximately $80.4 million of its long-term debt ("Refinanced
Bank Debt") and terminated the Prior Senior Credit Facility and (iii) executed a
new senior secured revolving credit facility (the "New Senior Credit Facility"),
which provides revolving borrowing availability of up to $75.0 million, subject
to a borrowing base limitation.
THE EXCHANGE OFFER
<TABLE>
<S> <C>
The Exchange Offer................ FDC is hereby offering to exchange $1,000 principal
amount of Exchange Notes for each $1,000 principal
amount of Private Notes that are properly tendered and
accepted. FDC will issue Exchange Notes on or promptly
after the Expiration Date. As of the date hereof, there
is $105,000,000 aggregate principal amount of Private
Notes outstanding. See "The Exchange Offer."
Based on an interpretation by the staff of the
Commission set forth in no-action letters issued to
third parties, the Company believes that the Exchange
Notes issued pursuant to the Exchange Offer in exchange
for Private Notes may be offered for resale, resold and
otherwise transferred by a holder thereof (other than
(i) a broker-dealer who purchases such Exchange Notes
directly from the Company to resell pursuant to Rule
144A or any other available exemption under the
Securities Act or (ii) a person that is an affiliate of
the Company within the meaning of Rule 405 under the
Securities Act), without compliance with the
registration and prospectus delivery provisions of the
Securities Act; PROVIDED that the holder is acquiring
Exchange Notes in the ordinary course of its business
and is not participating, and had no arrangement or
understanding with any person to participate, in the
distribution of the Exchange Notes. Each broker-dealer
that receives Exchange Notes for its own account in
exchange for Private Notes, where such Private Notes
were acquired by such broker-dealer as a result of
market-making activities or other trading
</TABLE>
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<TABLE>
<S> <C>
activities, must acknowledge that it will deliver a
prospectus in connection with any resale of such
Exchange Notes. See "The Exchange Offer--Resale of the
Exchange Notes."
Registration Rights Agreement..... The Private Notes were sold by the Company on July 25,
1997 (the "Closing Date") to BT Securities Corporation
and Lehman Brothers Inc. (the "Initial Purchasers")
pursuant to a Purchase Agreement, dated July 18, 1997,
by and among the Company and the Initial Purchasers (the
"Purchase Agreement"). The Initial Purchasers
subsequently sold the Private Notes to third parties.
See The Exchange Offer--Purpose of the Exchange Offer."
Pursuant to the Purchase Agreement, the Company and the
Initial Purchasers entered into a Registration Rights
Agreement, dated as of July 25, 1997 (the "Registration
Rights Agreement"), which grants the holders of the
Private Notes certain exchange and registration rights.
The Exchange Offer is intended to satisfy such rights,
which will terminate upon the consummation of the
Exchange Offer. The holders of the Exchange Notes will
not be entitled to any exchange or registration rights
with respect to the Exchange Notes. See "The Exchange
Offer--Termination of Certain Rights."
Expiration Date................... The Exchange Offer will expire at 5:00 p.m., New York
City time, on , 1997, unless the
Exchange Offer is extended by the Company in its sole
discretion, in which case the term "Expiration Date"
shall mean the latest date and time to which the
Exchange Offer is extended. See "The Exchange
Offer--Expiration Date; Extensions; Amendments."
Accrued Interest on the Exchange
Notes and the Private Notes..... The Exchange Notes will bear interest from and including
the date of issuance of the Private Notes (July 25,
1997). Holders whose Private Notes are accepted for
exchange will be deemed to have waived the right to
receive any interest accrued on the Private Notes. See
"The Exchange Offer--Interest on the Exchange Notes."
Conditions to the Exchange
Offer........................... The Exchange Offer is subject to the condition that, in
the reasonable judgment of the Company, it does not
violate applicable law, rules or regulations or an
applicable interpretation of the staff of the
Commission. The Exchange Offer is not conditioned upon
any minimum aggregate principal amount of Private Notes
being tendered for exchange. See "The Exchange
Offer--Conditions."
Procedures for Tendering Private
Notes........................... Each holder of Private Notes wishing to accept the
Exchange Offer must complete, sign and date the Letter
of Transmittal, or a facsimile thereof, in accordance
with the instructions contained herein and therein, and
mail or otherwise deliver such Letter of Transmittal, or
such facsimile, together with such Private Notes and any
other required documentation to Norwest Bank Minnesota,
National Association, as exchange agent (the "Exchange
Agent"), at the address set forth herein. By executing
</TABLE>
9
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<TABLE>
<S> <C>
the Letter of Transmittal, the holder will represent to
and agree with the Company that, among other things, (i)
the Exchange Notes to be acquired by such holder of
Private Notes in connection with the Exchange Offer are
being acquired by such holder in the ordinary course of
its business, (ii) such holder has no arrangement or
understanding with any person to participate in a
distribution of the Exchange Notes, (iii) that if such
holder is a broker-dealer registered under the Exchange
Act or is participating in the Exchange Offer for the
purposes of distributing the Exchange Notes, such holder
will comply with the registration and prospectus
delivery requirements of the Securities Act in
connection with a secondary resale transaction of the
Exchange Notes acquired by such person and cannot rely
on the position of the staff of the Commission set forth
in no-action letters (see "The Exchange Offer--Resale of
the Exchange Notes"), (iv) such holder understands that
a secondary resale transaction described in clause (iii)
above and any resales of Exchange Notes obtained by such
holder in exchange for Private Notes acquired by such
holder directly from the Company should be covered by an
effective registration statement containing the selling
securityholder information required by Item 507 or Item
508, as applicable, of Regulation S-K of the Commission
and (v) such holder is not an "affiliate", as defined in
Rule 405 under the Securities Act, of the Company. If
the holder is a broker-dealer that will receive Exchange
Notes for its own account in exchange for Private Notes
that were acquired as a result of market-making
activities or other trading activities, such holder will
be required to acknowledge in the Letter of Transmittal
that such holder will deliver a prospectus in connection
with any resale of such Exchange Notes; however, by so
acknowledging and by delivering a prospectus, such
holder will not be deemed to admit that it is an
"underwriter" within the meaning of the Securities Act.
See "The Exchange Offer--Procedures for Tendering. "
Special Procedures for Beneficial
Owners.......................... Any beneficial owner whose Private Notes are registered
in the name of a broker, dealer, commercial bank, trust
company or other nominee and who wishes to tender such
Private Notes in the Exchange Offer should contact such
registered holder promptly and instruct such registered
holder to tender on such beneficial owner's behalf. If
such beneficial owner wishes to tender on such owner's
own behalf, such owner must, prior to completing and
executing the Letter of Transmittal and delivering such
owner's Private Notes, either make appropriate
arrangements to register ownership of the Private Notes
in such owner's name or obtain a properly completed bond
power from the registered holder. The transfer of
registered ownership may take considerable time and may
not be able to be completed prior to the Expiration
Date. See "The Exchange Offer-- Procedures for
Tendering."
</TABLE>
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<S> <C>
Guaranteed Delivery Procedures.... Holders of Private Notes who wish to tender their
Private Notes and whose Private Notes are not
immediately available or who cannot deliver their
Private Notes, the Letter of Transmittal or any other
documentation required by the Letter of Transmittal to
the Exchange Agent prior to the Expiration Date must
tender their Private Notes according to the guaranteed
delivery procedures set forth under "The Exchange
Offer--Guaranteed Delivery Procedures."
Acceptance of the Private Notes
and Delivery of the Exchange
Notes........................... Subject to the satisfaction or waiver of the conditions
to the Exchange Offer, the Company will accept for
exchange any and all Private Notes that are properly
tendered in the Exchange Offer prior to the Expiration
Date. The Exchange Notes issued pursuant to the Exchange
Offer will be delivered within five business days
following the Expiration Date. See "The Exchange
Offer--Terms of the Exchange Offer."
Withdrawal Rights................. Tenders of Private Notes may be withdrawn at any time
prior to the Expiration Date. See "The Exchange
Offer--Withdrawal of Tenders."
Certain Federal Income Tax
Considerations.................. The exchange of Private Notes for Exchange Notes will be
treated as a "non-event" for federal income tax
purposes. As a result, no material federal income tax
consequences will result to holders exchanging Private
Notes for Exchange Notes. See "Certain Federal Income
Tax Considerations."
Exchange Agent.................... Norwest Bank Minnesota, National Association is serving
as the Exchange Agent in connection with the Exchange
Offer.
</TABLE>
THE EXCHANGE NOTES
The Exchange Offer applies to the entire aggregate principal amount of the
Private Notes. The form and terms of the Exchange Notes are the same as the form
and terms of the Private Notes except that (i) the exchange will have been
registered under the Securities Act and, therefore, the Exchange Notes will not
bear legends restricting the transfer thereof and (ii) holders of the Exchange
Notes will not be entitled to certain rights of holders of the Private Notes
under the Registration Rights Agreement, which rights will terminate upon
consummation of the Exchange Offer. The Exchange Notes will evidence the same
indebtedness as the Private Notes (which they replace) and will be issued under,
and be entitled to the benefits of, the Indenture. For further information and
for definitions of certain capitalized terms used below, see "Description of
Notes."
<TABLE>
<S> <C>
Maturity Date..................... August 1, 2005
Interest Payment Dates............ Interest on the Exchange Notes will accrue from the date
of original issuance (the "Issue Date") and will be
payable semi-annually on February 1 and August 1 of each
year commencing on February 1, 1998.
Optional Redemption............... On or after August 1, 2001, the Exchange Notes will be
redeemable at the option of the Company, in whole or in
part, at the redemption prices set forth herein plus
accrued interest to the date of redemption. In addition,
prior to August 1, 2000, the Company may, at its option,
redeem up to 35% of the aggregate
</TABLE>
11
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<TABLE>
<S> <C>
principal amount of the Exchange Notes originally issued
with the net cash proceeds of one or more Public Equity
Offerings (as defined), at the redemption prices set
forth herein plus accrued interest to the date of
redemption; PROVIDED that at least 65% of the original
aggregate principal amount of Exchange Notes shall
remain outstanding after any such redemption.
Change of Control................. Upon a Change of Control (as defined), (i) the Company
will have the option, at any time on or prior to August
1, 2001, to redeem the Exchange Notes in whole but not
in part, at a redemption price equal to 100% of the
principal amount thereof, plus the Applicable Premium
(as defined) as of, and accrued and unpaid interest, if
any, to, the date of redemption, and (ii) if the Company
does not so redeem the Exchange Notes, each holder will
have the right, subject to certain conditions, to
require the Company to repurchase such holder's Exchange
Notes at a price equal to 101% of the principal amount
thereof plus accrued interest to the date of repurchase.
Ranking........................... The Exchange Notes will be general unsecured obligations
of the Company and will be subordinated in right of
payment to all existing and future Senior Indebtedness
(as defined) of the Company. The Exchange Notes will
rank PARI PASSU with any senior subordinated
indebtedness of the Company (including the Seller Notes)
and will rank senior to all other subordinated
indebtedness of the Company. As of June 30, 1997, after
giving effect to the offering of Private Notes, the
Company would have had approximately $10.2 million of
Senior Indebtedness (representing revolving line of
credit borrowings of $6.2 million and $4.0 million of
undrawn letters of credit) outstanding.
Guarantees........................ The Exchange Notes will be guaranteed on a senior
subordinated basis (the "Subsidiary Guarantees") by the
Subsidiary Guarantors. The Subsidiary Guarantees will be
general unsecured obligations of the Subsidiary
Guarantors and will be subordinated in right of payment
to all existing and future Guarantor Senior Indebtedness
(as defined). As of June 30, 1997, after giving effect
to the offering of Private Notes and the application of
the net proceeds therefrom, the Subsidiary Guarantors
collectively would have had approximately $6.4 million
of Guarantor Senior Indebtedness outstanding (excluding
guarantees of Indebtedness under the New Senior Credit
Facility). Pro forma Guarantor Senior Indebtedness
includes $2.9 million outstanding under the Floor Plan
Financing Facility (as defined), which amount is
reflected as accounts payable in the June 30, 1997
balance sheet. The Subsidiary Guarantors also would have
had $14.2 million of secured nonrecourse notes and
nonrecourse obligations under capital leases at June 30,
1997.
Certain Covenants................. The Indenture governing the Notes (the "Indenture") will
contain certain covenants that, among other things,
limit the ability of the Company and certain of its
subsidiaries to pay
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<S> <C>
dividends or make certain other Restricted Payments (as
defined), incur additional indebtedness, consummate
certain asset sales, incur indebtedness that is
subordinated in right of payment to any Senior
Indebtedness and senior in right of payment to the
Notes, incur liens, impose restrictions on the ability
of a subsidiary to pay dividends or make certain
payments to the Company and its subsidiaries, guarantee
certain indebtedness, issue certain preferred stock,
enter into certain transactions with affiliates, sell,
assign, transfer, lease, convey or otherwise dispose of
all or substantially all of the assets of the Company,
or enter into certain mergers and consolidations. In
addition, under certain circumstances, the Company will
be required to offer to purchase Notes at a price equal
to 100% of the principal amount thereof, plus accrued
interest, if any, to the date of purchase, with the
proceeds of certain Asset Sales (as defined). All of
such covenants are subject to significant qualifications
and exceptions.
</TABLE>
For additional information regarding the Exchange Notes, including
definitions of capitalized terms used above, see "Description of Notes."
RISK FACTORS
See "Risk Factors", which begins on page 16, for a discussion of certain
factors that should be considered in evaluating an investment in the Notes.
The Company is organized under the laws of Delaware with principal executive
offices located at 4800 Hampden Lane, Bethesda, Maryland 20814 (telephone
number: (301) 986-0800).
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SUMMARY UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL DATA
The following table sets forth summary unaudited pro forma consolidated
financial information of the Company. The pro forma consolidated financial
information for the year ended December 31, 1996 and the six months ended June
30, 1997, give effect to the Transactions as if they had occurred on January 1,
1996 and the pro forma balance sheet data gives effect to the offering of the
Private Notes and the application of the net proceeds therefrom as if it had
occurred on June 30, 1997. The following information should be read in
conjunction with the "Selected Unaudited Pro Forma Consolidated Financial Data,"
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and the financial statements of the Company and the Acquired
Companies and the notes thereto included elsewhere in this Prospectus.
<TABLE>
<CAPTION>
UNAUDITED PRO FORMA
---------------------------------
SIX MONTHS
YEAR ENDED ENDED
DECEMBER 31, 1996 JUNE 30, 1997
----------------- --------------
(IN THOUSANDS)
<S> <C> <C>
INCOME STATEMENT DATA:
Revenues..................................................................... $ 332,822 $ 183,826
-------- --------------
Cost of sales and services................................................... 259,679 150,400
Selling, general and administrative.......................................... 49,490 29,535
Amortization of goodwill..................................................... 3,953 1,977
Interest expense(a).......................................................... 15,771 7,048
-------- --------------
Total expenses............................................................. 328,893 188,960
-------- --------------
Income (loss) before income taxes............................................ 3,929 (5,134)
Provision (benefit) for income taxes......................................... 2,131 (1,798)
-------- --------------
Net income (loss).......................................................... $ 1,798 $ (3,336)
-------- --------------
-------- --------------
OTHER DATA:
EBITDA(b).................................................................... $ 23,295 $ 3,969
Net recourse interest expense(c)............................................. 13,557 6,280
Net cash recourse interest expense(d)........................................ 12,532 5,768
Depreciation and amortization(e)............................................. 5,809 2,823
Capital expenditures......................................................... 2,124 1,294
<CAPTION>
UNAUDITED
PRO FORMA AT
JUNE 30, 1997
--------------
(IN THOUSANDS)
<S> <C> <C>
BALANCE SHEET DATA:
Working capital.............................................................. $ 43,013
Total assets................................................................. 196,498
Total recourse debt(f)....................................................... 122,651
</TABLE>
- ------------------------
(a) Interest expense includes interest on both recourse and nonrecourse notes
payable and obligations under capital leases. The Company finances certain
equipment leases to Government customers with borrowings or capital leases
that are recourse only to the related payment stream and property leased. In
most circumstances, the Company's future obligations under these nonrecourse
agreements, in event of default by the end user lessee, would be limited to
ensuring the return of the associated assets to the lender. These
nonrecourse notes payable and obligations under capital leases are
considered
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debt under generally accepted accounting principles and, accordingly, are
reflected as liabilities in the Company's historical financial statements.
(b) EBITDA represents the sum of income (loss) before income taxes, net recourse
interest expense and depreciation and amortization. EBITDA is not a measure
of performance or financial condition under generally accepted accounting
principles but is presented to provide additional information related to
debt service capability. EBITDA should not be considered in isolation or as
a substitute for other measures of financial performance or liquidity under
generally accepted accounting principles. While EBITDA is frequently used as
a measure of operations and the ability to meet debt service requirements,
it is not necessarily comparable to other similarly titled captions of other
companies due to the potential inconsistencies in the method of calculation.
(c) Net recourse interest expense is interest expense minus interest expense on
nonrecourse notes payable and nonrecourse obligations under capital leases
of $2,015 and $703, and minus interest income on cash balances of $199 and
$65 for the year ended December 31, 1996 and the six months ended June 30,
1997, respectively.
(d) Net cash recourse interest expense is net recourse interest expense minus
amortization of deferred financing costs of $1,025 and $512 for the year
ended December 31, 1996 and the six months ended June 30, 1997,
respectively.
(e) Excludes amortization of deferred financing costs on the Private Notes that
are included in interest expense.
(f) Total recourse debt is total debt of $136.9 million minus $14.2 million of
nonrecourse notes payable and nonrecourse obligations under capital leases.
See note (a) above.
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RISK FACTORS
IN ADDITION TO THE OTHER INFORMATION SET FORTH IN THIS PROSPECTUS,
PROSPECTIVE INVESTORS SHOULD CAREFULLY REVIEW THE FOLLOWING RISK FACTORS BEFORE
DECIDING TO MAKE AN INVESTMENT IN THE NOTES.
SUBSTANTIAL LEVERAGE AND DEBT SERVICE
The Company is highly leveraged. At June 30, 1997, giving pro forma effect
to the offering of the Private Notes and application of the net proceeds
therefrom, the Company's consolidated total recourse debt and total
stockholders' equity would have been $122.7 million and $0.4 million,
respectively. See "Capitalization." The Company's pro forma ratio of earnings to
fixed charges for the year ended December 31, 1996 was 1.2 to 1.0 and the
Company would have had a fixed charge coverage deficiency of $5.1 million for
the six months ended June 30, 1997. The Company's ability to make scheduled
payments of the principal of, or interest on, or to refinance its indebtedness
(including the Notes) depends on its future performance, which to a certain
extent is subject to economic, financial, competitive and other factors beyond
its control. Based upon pro forma 1996 operations, management believes that
available cash flow, together with borrowings available under the New Senior
Credit Facility and other sources of liquidity, should be adequate to meet the
Company's anticipated requirements for working capital, capital expenditures,
interest payments and revolving balances under the New Senior Credit Facility.
There can be no assurance, however, that the Company's cash flow will be
sufficient to satisfy such requirements. If the Company is unable to generate
sufficient cash flow from operations in the future to service its debt and make
necessary capital expenditures, the Company may be required to refinance all or
a portion of its existing debt, including the Notes, to sell assets or to obtain
additional financing. There can be no assurance that any such refinancing would
be possible or that any such sales of assets or additional financing could be
achieved. If the Company is unable to repay its debt as it becomes due, the
purchasers of the Notes could lose some or all of their investment. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations--Liquidity and Capital Resources."
The Indenture and the New Senior Credit Facility permit the Company to incur
additional Indebtedness, subject to certain limitations, and the Indenture
permits the Company to borrow up to $75.0 million (or greater amounts subject to
a borrowing base limitation) under the New Senior Credit Facility and one or
more Floor Plan Financing Facilities (as defined).
The Company's high level of debt will have several important effects on its
future operations, including (a) requiring the Company to dedicate a significant
portion of its cash flow to service its debt, reducing funds available for
operations, capital expenditures, research and development, acquisitions and
future business opportunities, and increasing the Company's vulnerability to
adverse general economic and industry conditions; (b) limiting the Company's
flexibility in reacting to changes in its markets, in technology and in general
economic conditions; and (c) through the financial covenants and other
restrictions contained in the New Senior Credit Facility and in the Indenture,
requiring the Company to meet certain financial tests and restricting its
ability to borrow additional funds, to dispose of assets or to engage in certain
transactions.
SUBORDINATION OF THE NOTES; ASSET ENCUMBRANCE
The Notes will be subordinated to all Senior Indebtedness, including Senior
Indebtedness incurred after the date of the Indenture. On a pro forma basis, as
of June 30, 1997, the Company would have had $10.2 million of Senior
Indebtedness outstanding including debt under the New Senior Credit Facility.
The Indenture permits the Company to incur Senior Indebtedness under the New
Senior Credit Facility as well as additional Senior Indebtedness (provided
certain financial or other conditions are met). The Company's Restricted
Subsidiaries have guaranteed the obligations of the Company under the Indenture
and the Notes, but such guarantees will be subordinated to all Senior
Indebtedness of such Guarantors, which will include the guarantees of the
Company's indebtedness under the New Senior Credit Facility and the Floor
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Plan Financing Facility. The Notes and the Subsidiary Guarantees will be
subordinated in right of payment to all existing and future Senior Indebtedness
of the Company and the Subsidiary Guarantors, respectively, including the
principal, premium (if any) and interest with respect to the Senior Indebtedness
under the New Senior Credit Facility and guarantees thereof and the Floor Plan
Financing Facility.
The Company may not pay principal of, premium (if any) on, or interest on,
the Notes, make any deposit pursuant to defeasance provisions or repurchase or
redeem or otherwise retire any Notes (i) if any Significant Senior Indebtedness
(as defined) is not paid when due or (ii) if any other default on Designated
Senior Indebtedness (as defined) occurs that permits the holders of such
Designated Senior Indebtedness to accelerate maturity of such Designated Senior
Indebtedness, in accordance with its terms, and the Trustee receives a notice of
such default unless, in either case, the default has been cured or waived, any
such acceleration has been rescinded or such Senior Indebtedness has been paid
in full or, in the case of any default other than a payment default, 179 days
have passed since the default notice is given. See "Description of Notes." Upon
any payment or distribution of the assets of the Company or any Subsidiary
Guarantor in connection with a total or partial liquidation or dissolution or
reorganization of or similar proceeding relating to the Company or such
Subsidiary Guarantor, the holders of Senior Indebtedness will be entitled to
receive payment in full before the holders of the Notes are entitled to receive
any payment. See "Description of the Securities--Subordination." The Notes are
also unsecured and thus, in effect, will rank junior to any secured indebtedness
of the Company or the Guarantors. The indebtedness and guarantees outstanding
under the New Senior Credit Facility will be secured by liens upon all assets,
including all receivables, inventory and general intangibles and equipment, as
well as the stock of the Restricted Subsidiaries, and indebtedness under Floor
Plan Financing Facilities and nonrecourse lease financing transactions will also
be secured.
Because the Company conducts substantially all of its operations through its
Subsidiaries, it is required to rely almost entirely upon payment from its
Subsidiaries for the funds necessary to meet its obligations, including the
payment of interest on and principal of the Notes. The ability of the
Subsidiaries to make such payments will be subject to, among other things,
applicable state laws. Claims of creditors of the Company's Subsidiaries will
generally have priority as to the assets of such Subsidiaries over the claims of
the Company.
Although the Subsidiary Guarantees provide the holders of the Notes with a
direct claim against the assets of the Subsidiary Guarantors, enforcement of the
Subsidiary Guarantees against any Subsidiary Guarantor would be subject to
certain "suretyship" defenses available to guarantors generally, and such
enforcement would also be subject to certain defenses available to the
Subsidiary Guarantors in certain circumstances. See "--Fraudulent Conveyance;
Preferential Transfer." Although the Indenture contains waivers of most
"suretyship" defenses, there can be no assurance that those waivers would be
enforced by a court in a particular case. To the extent that the Subsidiary
Guarantees are not enforceable, the Notes and Subsidiary Guarantees would be
effectively subordinated to all liabilities of the Subsidiary Guarantors,
including trade payables of such Subsidiary Guarantors, whether or not such
liabilities otherwise constitute Guarantor Senior Indebtedness under the
Indenture. In addition, although the New Senior Credit Facility will generally
permit Subsidiaries to pay dividends in amounts sufficient to pay interest on
the Notes, the payment of dividends to the Company by its Subsidiaries is
contingent upon the earnings of those Subsidiaries and approval of those
Subsidiaries.
FRAUDULENT CONVEYANCE; PREFERENTIAL TRANSFER
If the court in a lawsuit brought by an unpaid creditor or representative of
creditors, such as a trustee in bankruptcy or the Company or any Subsidiary
Guarantor as a debtor-in-possession, were to find under relevant federal and
state fraudulent conveyance statutes that the Company or any Subsidiary
Guarantor did not receive fair consideration or reasonably equivalent value for
incurring the indebtedness represented by the Notes or its Subsidiary
Guarantees, and that, at the time of such incurrence, the Company or such
Subsidiary Guarantor (i) was insolvent, (ii) was rendered insolvent by reason of
such incurrence or
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grant, (iii) was engaged in a business or transaction for which the assets
remaining with the Company or such Subsidiary Guarantor constituted unreasonably
small capital or (iv) intended to incur, or believed that it would incur, debts
beyond its ability to pay such debts as they matured, such court, subject to
applicable statutes of limitation, could avoid the Company's obligations under
the Notes or the Subsidiary Guarantor's obligations under the Subsidiary
Guarantees, subordinate the Notes or the Subsidiary Guarantees to other
indebtedness of the Company or the Subsidiary Guarantors or take other action
detrimental to the holders of the Notes.
The measure of insolvency for these purposes will vary depending upon the
law of the jurisdiction being applied. Generally, however, a company will be
considered insolvent for these purposes if the sum of that company's debts
(including contingent obligations) is greater than all of that company's
property at a fair valuation, or if the present fair saleable value of that
company's assets is less than the amount that will be required to pay its
probable liability on its existing debts (including contingent obligations) as
they become absolute and matured. Moreover, regardless of solvency, a court
could avoid an incurrence of indebtedness, including the Notes or the Subsidiary
Guarantees, to the claims of all existing and future creditors on similar
grounds. Based upon financial and other information currently available to it,
management believes the Company and each Subsidiary Guarantor is solvent and
will continue to be solvent after the consummation of the Transactions. However,
there can be no assurance as to what standard a court would apply in order to
determine whether the Company or the Subsidiary Guarantors were "insolvent" upon
consummation of the sale of the Notes and the Subsidiary Guarantees.
Additionally, under federal bankruptcy or applicable state insolvency law,
if certain bankruptcy or insolvency proceedings are initiated by or against the
Company or any Subsidiary Guarantor within 90 days after any payment by the
Company or any Subsidiary Guarantor with respect to the Notes or the Subsidiary
Guarantees or if the Company or any Subsidiary Guarantor anticipated becoming
insolvent at the time of such payment, all or a portion of such payment could be
avoided as a preferential transfer and the recipient of such payment could be
required to return such payment.
GOVERNMENT CONTRACTING RISKS
The Company derives substantially all of its revenues from contracts or
subcontracts with the Government and believes that the success and development
of its business will continue to depend on its successful participation in
Government contract programs. Accordingly, changes in Government contracting
policies could directly affect the Company's financial performance. Among the
factors that could materially adversely affect the Company's Government
contracting business are budgetary constraints affecting Government spending
generally or specific departments (such as DoD, NASA or the Veterans
Administration, for example), in particular, changes in fiscal policies or
available funding, changes in Government programs or requirements, curtailment
of the Government's use of technology services firms such as the Company, the
adoption of new laws or regulations, technological developments, Governmental
shutdowns (such as that which occurred during the Government's fiscal 1996, as
discussed under "Management's Discussion and Analysis of Financial Condition and
Results of Operations") and general economic conditions. These or other factors
could cause Governmental agencies to reduce their purchases under contracts, to
exercise their right to terminate contracts or not to exercise options to renew,
which could have a material adverse effect on the Company's financial condition,
results of operations and debt service capability.
Several Government customers served by the Company represented significant
portions of 1996 pro forma revenues. The U.S. Navy, NASA and the Veterans
Administration represented approximately 15%, 13% and 11% of 1996 pro forma
revenues, respectively, and the loss of any of these customers could have a
material adverse effect on the Company's financial condition, results of
operations and debt service capability. See "Business--Products and Services"
for a discussion of the Company's material contracts.
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Consistent with the overall trend toward reduced growth in Government
spending, many of the Company's Government customers are subject to increasingly
stringent budgetary constraints. For example, the budgets of DoD and NASA have
been substantially reduced in recent years. The Company has substantial
contracts in place with a number of these agencies, and the Company's continued
performance under these contracts, or award of additional contracts from these
agencies, could be materially adversely affected by continued or future spending
reductions or budget cutbacks at these agencies. See "Business-- Products and
Services." Although these reductions have not materially impacted the Company to
date, there can be no assurance that further budget reductions will not occur,
and such reductions could have a material adverse effect on the Company's
financial condition, results of operations and debt service capability.
All Government contracts require compliance with various contract provisions
and procurement regulations. The Government frequently reviews and considers
revisions to its procurement practices and has substantially modified numerous
procurement procedures in recent years. Such new or modified procurement
regulations could materially adversely affect the Company, increase competition
or increase the Company's costs of competing for or performing under Government
contracts. Moreover, any violation of procurement regulations could result in
the termination of the contracts, imposition of fines, and/or debarment from
award of additional Government contracts.
Most Government contracts are subject to modification or termination in the
event of changes in funding, and the Company's contractual costs and revenue are
subject to adjustment as a result of Government audits. In addition, Government
contracts, by their terms, generally can be terminated at any time by the
Government, without cause, for its convenience. Further, all Government contract
awards are subject to protest by competitors. The termination or nonrenewal of
any of the Company's significant contracts or the imposition of fines, damages
or suspension from bidding on additional contracts could have a material adverse
effect on the Company's financial condition, results of operations and debt
service capability.
Through the operations of NYMA and Sylvest, the Company derived
approximately 24% of its pro forma 1996 revenue and approximately 12% of its pro
forma 1996 income before income taxes (excluding interest expense and
amortization of goodwill) from contracts that were awarded under section 8(a) of
the Small Business Act ("Section 8(a)"), which is intended to foster growth of
small businesses owned and controlled by socially and economically disadvantaged
individuals. After consummation of the Acquisitions, Sylvest's and NYMA's
continued participation under these Section 8(a) contracts will require waivers
from the Administrator of the Small Business Administration. There can be no
assurance that waivers will be obtained with respect to these Section 8(a)
contracts, and the failure to obtain such waivers could have a material adverse
effect on the Company's financial condition, results of operations or debt
service capability. For a description of the material contract that could be
affected, see "Business--Products and Services." NASA has recently notified NYMA
that it does not plan to request a waiver or to exercise the final option year
of a contract when the current option expires on December 31, 1997. The
Government has advised the Company that it plans to procure the goods and
services currently provided by NYMA under a new Section 8(a) set-aside contract
on which NYMA would be ineligible to participate as a prime contractor. NYMA
intends to pursue continued participation in the program in a reduced role as a
subcontractor on the new contract in 1998, although such participation would
generate lower revenues and EBITDA than NYMA has historically earned, and there
can be no assurance that such a subcontract will be obtained. 1996 revenues from
this contract were approximately $33 million.
RISKS UNDER TRADITIONAL CONTRACT VEHICLES. The Company derives a
substantial portion of its revenues from fixed-term Government contracts that
typically span a base year and one or more option years and are awarded through
formal competitive bids. There can be no assurance that the Government will
extend a fixed-term contract through its option years and, even if the
Government were to so extend each of the Company's fixed-term contracts, several
of such contracts expire in the next few years, and substantially all of the
Company's existing fixed-term contracts expire prior to the maturity of the
Exchange Notes. For a
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description of the Company's material contracts, see "Business--Products and
Services." Upon expiration, to the extent a requirement continues to exist for
the services provided thereunder, such contracts are frequently subject to a
competitive rebidding process, and there can be no assurance that the Company
will win any particular bid, or that the Company will be able to replace
business lost upon expiration or completion of any such contract. The Company's
failure to win or replace a significant dollar volume of such contracts could
materially adversely affect the Company's financial condition, results of
operations and debt service capability.
RISKS UNDER NEW CONTRACT VEHICLES. In contrast to traditional, longer-term
agreements by individual agencies to purchase specific services or products from
a single contractor or team of contractors, budget pressures and reforms in the
procurement process have caused many Government customers to spend an increasing
portion of their procurement budgets over the past few years through GSA
Schedules and other smaller-scale, shorter-term, multiple award, and/or multiple
agency contract ("MAC") vehicles. These vehicles are generally for an
"indefinite delivery, indefinite quantity" ("IDIQ") of goods and services, and
therefore effectively constitute procurement "schedules" or catalogs. These new
contract vehicles are generally awarded to multiple contractors, may be
available to multiple agencies, and require that the contractor make an
effective post-award sales effort to realize meaningful revenue under the
contract.
Competition for post-award sales under many IDIQ contracts is intense and
there can be no assurance that the Company will continue to increase revenues or
otherwise sell successfully pursuant to GSA Schedules or other IDIQ vehicles,
and failure to do so could materially and adversely affect the Company's
financial condition, results of operation and debt service capability. Moreover,
sales are frequently made pursuant to such contracts at prices lower than those
stated in the contracts or related schedules. The Government's growing use of
GSA Schedules and other IDIQ vehicles and increasing emphasis on commercial
procurement practices, along with pressure for continuous competition through
the lifetime of these contracts, could have a material adverse effect on the
Company's financial condition, results of operations and debt service
capability.
The Company derives significant revenues from sales made pursuant to its GSA
Schedules and other IDIQ vehicles. One such contract, the NIH's Electric
Computer Store ("ECS"), presently has 17 awardees and is up for renewal later in
1997. The Company's inability to renew or replace its GSA Schedules or other
IDIQ contracts (including ECS) could have a material adverse effect on the
Company's financial condition, results of operations and debt service
capability.
COMPETITION
The Company serves highly competitive and fragmented markets, in which no
single competitor holds a significant market position. The Company derives
substantially all of its revenues from contracts with the Government and its
prime contractors, and many such contracts are awarded on the basis of
negotiations or competitive bids where price may be a significant factor. The
Company experiences vigorous competition from a large number of private-sector
firms. In addition, under new procurement regulations, Government agencies can
compete with private firms such as the Company in certain cases by offering
services to other agencies. Some of the Company's competitors are large,
diversified firms with substantially greater financial resources and larger
technical staffs than the Company. In addition, under GSA Schedules and many
IDIQ vehicles, the Company faces a large number of competitors for post-award
sales of COTS products. It is increasingly likely that the Company's customers,
many of which have had multi-year contracts with individual suppliers (including
the Company) in the past, will meet an increasing proportion of their
information technology requirements through multi-vendor, multi-agency
procurement vehicles. There can be no assurance that the Company will be able to
continue to compete successfully in this changing procurement environment.
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DEPENDENCE ON KEY TECHNICAL PERSONNEL
The Company's continued success depends in large part on its ability to
recruit and retain the technical personnel necessary to serve its clients
effectively. Competition for skilled personnel in the information technology
services industry is intense and increasing, and technology service companies
often experience high attrition among their skilled employees. Excessive
attrition among its technical personnel could increase the Company's costs of
performing its contractual obligations, reduce the Company's ability to
efficiently satisfy its clients' needs and seriously constrain the Company's
future growth potential. In addition, the Company must often comply with
provisions in Government contracts that require employment of persons with
specified levels of education, work experience and security clearances. The loss
of any significant number of the Company's existing key technical personnel or
the inability to attract and retain key employees in the future could have a
material adverse effect on the Company's financial condition, results of
operations and debt service capability. See "Business--Employees" and
"Management."
ACQUISITION STRATEGY
Through the Acquisitions, the Company has increased its work force by
approximately 350% in June 1997 compared to year-end 1996. The Company's
continued success will depend upon its ability to integrate NYMA, Sylvest and
other acquired businesses into its operations. The integration of such
businesses into the Company's operations may require a disproportionate amount
of management's attention and the Company's resources. There can be no assurance
that the acquired entities will operate profitably, that the Company will
realize anticipated synergies, or that the Acquisitions will cause the Company's
operating performance to improve.
Although management intends to continue to identify and complete synergistic
acquisitions and the Company regularly engages in discussions with acquisition
targets, there can be no assurances that suitable acquisition targets will be
available in the future on reasonable terms, that additional acquisitions will
be completed, that acquisition financing will be available on reasonable terms
or at all, that any new businesses will generate revenues or net income
comparable to the Company's existing businesses or that such businesses will be
integrated successfully or operated profitably. In addition, the New Senior
Credit Facility contains certain covenants restricting, among other things,
acquisitions and capital expenditures, and the New Senior Credit Facility and
the Indenture limit the incurrence of additional indebtedness. Such covenants
may limit the ability of the Company to complete certain additional
acquisitions. See "Management's Discussion and Analysis of Financial Condition
and Results of Operations."
SEASONALITY AND QUARTERLY FLUCTUATIONS
The Company's business is seasonal, with revenues and profitability
generally higher in the third and fourth quarters and lower in the first quarter
(which has frequently shown an operating loss) of each fiscal year, in line with
Government procurement patterns. Any quarter may include significant variations
in revenue and profitability, depending on the timing of particular contract
awards, installation schedules, and contract expiration schedules. Product sales
are generally more seasonal than services sales, and the Sylvest Acquisition
could exacerbate the seasonality of the Company's business. As a result of this
seasonality, operating results and cash flow may vary significantly from quarter
to quarter.
CONCENTRATION OF OWNERSHIP
Entities controlled by Carlyle have, in the aggregate, more than 80% of the
Company's voting power. Consequently, Carlyle can control the election of the
directors of the Company and the outcome of all matters submitted to a vote of
the Company's stockholders, as well as the Company's management, operations and
policies.
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ABSENCE OF PUBLIC MARKET
There is currently no established trading market for the Notes and the
Company does not intend to apply for listing of the Notes on any securities
exchange or on any automated dealer quotation system. The Company has been
advised by the Initial Purchasers that they presently intend to make a market in
the Notes, but the Initial Purchasers are under no obligation to do so, and any
such market-making may be discontinued at any time without notice, at the sole
discretion of the Initial Purchasers. Accordingly, no assurance can be given as
to the prices or liquidity of, or trading markets for, the Notes. The liquidity
of any market for the Notes will depend upon the number of holders of the Notes,
the interest of securities dealers in making a market in the Notes, prevailing
interest rates, the market for similar securities and other factors, including
general economic conditions and the financial condition and performance of, and
prospectus for, the Company. The absence of an active market for the Notes could
adversely affect the market price and liquidity of the Notes. Although the
Company does not intend to list the Notes on any securities exchange or to seek
approval for quotation of the Notes through any automated quotation system, the
Notes are eligible for trading in the Private Offerings, Resales and Trading
through Automatic Linkages ("PORTAL") market of the National Association of
Securities Dealers, Inc.
FAILURE TO EXCHANGE PRIVATE NOTES
Exchange Notes will be issued in exchange for Private Notes only after
timely receipt by the Exchange Agent of such Private Notes, a properly completed
and duly executed Letter of Transmittal and all other required documentation.
Therefore, holders of Private Notes desiring to tender such Private Notes in
exchange for Exchange Notes should allow sufficient time to ensure timely
delivery. Neither the Exchange Agent nor the Company is under any duty to give
notification of defects or irregularities with respect to tenders of Private
Notes for exchange. Private Notes that are not tendered or are tendered but not
accepted will, following consummation of the Exchange Offer, continue to be
subject to the existing restrictions upon transfer thereof. In addition, any
holder of Private Notes who tenders in the Exchange Offer for the purpose of
participating in a distribution of the Exchange Notes will be required to comply
with the registration and prospectus delivery requirements of the Securities Act
in connection with any resale transaction. Each broker-dealer that receives
Exchange Notes for its own account in exchange for Private Notes, where such
Private Notes were acquired by such broker-dealer as a result of market-making
activities or any other trading activities, must acknowledge that it will
deliver a prospectus in connection with any resale of such Exchange Notes. To
the extent that Private Notes are tendered and accepted in the Exchange Offer,
the trading market for untendered and tendered but unaccepted Private Notes
could be adversely affected due to the limited amount, or "float," of the
Private Notes that are expected to remain outstanding following the Exchange
Offer. Generally, a lower "float" of a security could result in less demand to
purchase such security and could, therefore, result in lower prices for such
security. For the same reason, to the extent that a large amount of Private
Notes are not tendered or are tendered and not accepted in the Exchange Offer,
the trading market for the Exchange Notes could be adversely affected. See "Plan
of Distribution" and "The Exchange Offer."
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THE EXCHANGE OFFER
PURPOSE OF THE EXCHANGE OFFER
The Private Notes were sold by the Company on the Closing Date to the
Initial Purchasers pursuant to the Purchase Agreement. The Initial Purchasers
subsequently sold the Private Notes, and the Company and the Initial Purchasers
entered into the Registration Rights Agreement on July 25, 1997. Pursuant to the
Registration Rights Agreement, the Company agreed that, unless the Exchange
Offer is not permitted by applicable law or Commission policy, it would file
with the Commission a registration statement under the Securities Act (a
"Registration Statement") with respect to the Exchange Notes within 60 days
after the Closing Date and use its best efforts to cause such Registration
Statement to become effective under the Securities Act within 150 days after the
Closing Date. A copy of the Registration Rights Agreement has been filed as an
exhibit to the Registration Statement. The Registration Statement is intended to
satisfy certain of the Company's obligations under the Registration Rights
Agreement and the Purchase Agreement.
RESALE OF THE EXCHANGE NOTES
With respect to the Exchange Notes, based upon an interpretation by the
staff of the Commission set forth in certain no-action letters issued to third
parties, the Company believes that a holder (other than (i) a broker-dealer who
purchases such Exchange Notes directly from the Company to resell pursuant to
Rule 144A or any other available exemption under the Securities Act or (ii) any
such holder that is an "affiliate" of the Company within the meaning of Rule 405
under the Securities Act) who exchanges Private Notes for Exchange Notes in the
ordinary course of business and who is not participating, does not intend to
participate, and has no arrangement with any person to participate, in a
distribution of the Exchange Notes, will be allowed to resell Exchange Notes to
the public without further registration under the Securities Act and without
delivering to the purchasers of the Exchange Notes a prospectus that satisfies
the requirements of Section 10 of the Securities Act. However, if any holder
acquires Exchange Notes in the Exchange Offer for the purpose of distributing or
participating in the distribution of the Exchange Notes or is a broker-dealer,
such holder cannot rely on the position of the staff of the Commission
enumerated in certain no-action letters issued to third parties and must comply
with the registration and prospectus delivery requirements of the Securities Act
in connection with any resale transaction, unless an exemption from registration
is otherwise available. Each broker-dealer that receives Exchange Notes for its
own account in exchange for Private Notes, where such Private Notes were
acquired by such broker-dealer as a result of market-making activities or other
trading activities, must acknowledge that it will deliver a prospectus in
connection with any resale of such Exchange Notes. The Letter of Transmittal
states that by so acknowledging and by delivering a prospectus, a broker-dealer
will not be deemed to admit that it is an "underwriter" within the meaning of
the Securities Act. This Prospectus, as it may be amended or supplemented from
time to time, may be used by a broker-dealer in connection of resales of
Exchange Notes received in exchange for Private Notes where such Private Notes
were acquired by such broker-dealer as a result of market-making or other
trading activities. Pursuant to the Registration Rights Agreement the Company
has agreed to make this Prospectus, as it may be amended or supplemented from
time to time, available to broker-dealer for use in connection with any resale
for the period required by the Securities Act. See "Plan of Distribution."
TERMS OF THE EXCHANGE OFFER
Upon the terms and subject to the conditions set forth in this Prospectus
and the Letter of Transmittal, the Company will accept any and all Private Notes
validly tendered and not withdrawn prior to the Expiration Date. The Company
will issue $1,000 principal amount of Exchange Notes in exchange for each $1,000
principal amount of outstanding Private Notes surrendered pursuant to the
Exchange Offer. Private Notes may be tendered only in integral multiples of
$1,000.
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The form and terms of the Exchange Notes are the same as the form and terms
of the Private Notes except that (i) the exchange will be registered under the
Securities Act and, therefore, the Exchange Notes will not bear legends
restricting the transfer thereof and (ii) holders of the Exchange Notes will not
be entitled to any of the rights of holders of Private Notes under the
Registration Rights Agreement, which rights will terminate upon the consummation
of the Exchange Offer. The Exchange Notes will evidence the same indebtedness as
the Private Notes (which they replace) and will be issued under, and be entitled
to the benefits of, the Indenture, which also authorized the issuance of the
Private Notes, such that both series of Notes will be treated as a single class
of debt securities under the Indenture.
As of the date of this Prospectus, $105,000,000 in aggregate principal
amount of the Private Notes are outstanding and registered in the name of Cede &
Co., as nominee for DTC. Only a registered holder of the Private Notes (or such
holder's legal representative or attorney-in-fact) as reflected on the records
of the Trustee under the Indenture may participate in the Exchange Offer. There
will be no fixed record date for determining registered holders of the Private
Notes entitled to participate in the Exchange Offer.
Holders of the Private Notes do not have any appraisal or dissenters' rights
under the Indenture in connection with the Exchange Offer. The Company intends
to conduct the Exchange Offer in accordance with the provisions of the
Registration Rights Agreement and the applicable requirements of the Securities
Act, the Securities Exchange Act of 1934 as amended (the "Exchange Act"), and
the rules and regulations of the Commission thereunder.
The Company shall be deemed to have accepted validly tendered Private Notes
when, as and if the Company has given oral or written notice thereof to the
Exchange Agent. The Exchange Agent will act as agent for the tendering holders
of Private Notes for the purposes of receiving the Exchange Notes from the
Company.
Holders who tender Private Notes in the Exchange Offer will not be required
to pay brokerage commissions or fees or, subject to the instructions in the
Letter of Transmittal, transfer taxes with respect to the exchange of Private
Notes pursuant to the Exchange Offer. The Company will pay all charges and
expenses, other than certain applicable taxes described below, in connection
with the Exchange Offer. See "--Fees and Expenses."
EXPIRATION DATE; EXTENSIONS; AMENDMENTS
The term "Expiration Date" shall mean 5:00 p.m., New York City time on
, 1997, unless the Company, in its sole discretion, extends the
Exchange Offer, in which case the term "Expiration Date" shall mean the latest
date and time to which the Exchange Offer is extended.
In order to extend the Exchange Offer, the Company will (i) notify the
Exchange Agent of any extension by oral or written notice, (ii) mail to the
registered holders an announcement thereof and (iii) issue a press release or
other public announcement which shall include disclosure of the approximate
number of Private Notes deposited to date, each prior to 9:00 a.m., New York
City time, on the next business day after the previously scheduled Expiration
Date. Without limiting the manner in which the Company may choose to make a
public announcement of any delay, extension, amendment or termination of the
Exchange Offer, the Company shall have no obligation to publish, advertise, or
otherwise communicate any such public announcement, other than by making a
timely release to an appropriate news agency.
The Company reserves the right, in its sole discretion, (i) to delay
accepting any Private Notes, (ii) to extend the Exchange Offer or (iii) if any
conditions set forth below under "--Conditions" shall not have been satisfied,
to terminate the Exchange Offer by giving oral or written notice of such delay,
extension or termination to the Exchange Agent. Any such delay in acceptance,
extension, termination or amendment will be followed as promptly as practicable
by oral or written notice thereof to the registered holders. If the Exchange
Offer is amended in a manner determined by the Company to constitute a material
change, the Company will promptly disclose such amendment by means of a
prospectus supplement that will be
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distributed to the registered holders, and the Company will extend the Exchange
Offer for a period of five to ten business days, depending upon the significance
of the amendment and the manner of disclosure to the registered holders, if the
Exchange Offer would otherwise expire during such five to ten business day
period.
INTEREST ON THE EXCHANGE NOTES
The Exchange Notes will bear interest at a rate equal to 10 1/8% per annum.
Interest on the Exchange Notes will be payable semi-annually on February 1 and
August 1 of each year, commencing February 1, 1998. Holders of Exchange Notes
will receive interest from the date of initial issuance of the Private Notes.
Holders of Private Notes that are accepted for exchange will be deemed to have
waived the right to receive any interest accrued on the Private Notes.
PROCEDURES FOR TENDERING
Only a registered holder of Private Notes may tender such Private Notes in
the Exchange Offer. To tender in the Exchange Offer, a holder of Private Notes
must complete, sign and date the Letter of Transmittal, or a facsimile thereof,
have the signatures thereon guaranteed if required by the Letter of Transmittal,
and mail or otherwise deliver such Letter of Transmittal or such facsimile to
the Exchange Agent at the address set forth below under "--Exchange Agent" for
receipt prior to the Expiration Date. In addition, either (i) certificates for
such Private Notes must be received by the Exchange Agent along with the Letter
of Transmittal, (ii) a timely confirmation of a book-entry transfer (a
"Book-Entry Confirmation") of such Private Notes, if such procedure is
available, into the Exchange Agent's account at the Depositary pursuant to the
procedure for book-entry transfer described below, must be received by the
Exchange Agent prior to the Expiration Date or (iii) the holder must comply with
the guaranteed delivery procedures described below.
The tender by a holder that is not withdrawn prior to the Expiration Date
will constitute an agreement between such holder and the Company in accordance
with the terms and subject to the conditions set forth herein and in the Letter
of Transmittal.
THE METHOD OF DELIVERY OF PRIVATE NOTES AND THE LETTER OF TRANSMITTAL AND
ALL OTHER REQUIRED DOCUMENTS TO THE EXCHANGE AGENT IS AT THE ELECTION AND RISK
OF THE HOLDER. INSTEAD OF DELIVERY BY MAIL, IT IS RECOMMENDED THAT HOLDERS USE
AN OVERNIGHT OR HAND DELIVERY SERVICE, PROPERLY INSURED. IN ALL CASES,
SUFFICIENT TIME SHOULD BE ALLOWED TO ASSURE DELIVERY TO THE EXCHANGE AGENT
BEFORE THE EXPIRATION DATE. NO LETTER OF TRANSMITTAL OR PRIVATE NOTES SHOULD BE
SENT TO THE COMPANY. HOLDERS MAY REQUEST THEIR RESPECTIVE BROKERS, DEALERS,
COMMERCIAL BANKS, TRUST COMPANIES OR NOMINEES TO EFFECT THE ABOVE TRANSACTIONS
FOR SUCH HOLDERS.
Any beneficial owner(s) of the Private Notes whose Private Notes are
registered in the name of a broker, dealer, commercial bank, trust company or
other nominee and who wishes to tender should contact the registered holder
promptly and instruct such registered holder to tender on such beneficial
owner's behalf. If such beneficial owner wishes to tender on such owner's own
behalf, such owner must, prior to completing and executing the Letter of
Transmittal and delivering such owner's Private Notes, either make appropriate
arrangements to register ownership of the Private Notes in such owner's name or
obtain a properly completed bond power from the registered holder. The transfer
of registered ownership may take considerable time.
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Signatures on a Letter of Transmittal or a notice of withdrawal described
below (see "--Withdrawal of Tenders"), as the case may be, must be guaranteed by
an Eligible Institution (as defined below) unless the Private Notes tendered
pursuant thereto are tendered (i) by a registered holder who has not completed
the box entitled "Special Issuance Instructions" or the box entitled "Special
Delivery Instructions" on the Letter of Transmittal or (ii) for the account of
an Eligible Institution. In the event that signatures on a Letter of Transmittal
or a notice of withdrawal, as the case may be, are required to be guaranteed,
such guarantee must be made by a member firm of a registered national securities
exchange or of the National Association of Securities Dealers, Inc., a
commercial bank or trust company having an office or correspondent in the United
States or an "eligible guarantor institution" within the meaning of Rule 17Ad-15
under the Exchange Act which is a member of one of the recognized signature
guarantee programs identified in the Letter of Transmittal (an "Eligible
Institution").
If the Letter of Transmittal is signed by a person other than the registered
holder of any Private Notes listed therein, such Private Notes must be endorsed
or accompanied by a properly completed bond power, signed by such registered
holder as such registered holder's name appears on such Private Notes.
If the Letter of Transmittal or any Private Notes or bond powers are signed
by trustees, executors, administrators, guardians, attorneys-in-fact, officers
of corporations or others acting in a fiduciary or representative capacity, such
persons should so indicate when signing, and unless waived by the Company,
evidence satisfactory to the Company of their authority to so act must be
submitted with the Letter of Transmittal.
The Exchange Agent and the Depositary have confirmed that any financial
institution that is a participant in the Depositary's system may utilize the
Depositary's Automated Tender Offer Program to tender Private Notes. All
questions as to the validity, form, eligibility (including time of receipt),
compliance with conditions, acceptance and withdrawal of tendered Private Notes
will be determined by the Company in its sole discretion, which determination
will be final and binding. The Company reserves the absolute right to reject any
and all Private Notes not properly tendered or any Private Notes the Company's
acceptance of which would, in the opinion of counsel for the Company, be
unlawful. The Company also reserves the right to waive any defects,
irregularities or conditions of tender as to particular Private Notes. The
Company's interpretation of the terms and conditions of the Exchange Offer
(including the instructions in the Letter of Transmittal) will be final and
binding on all parties. Unless waived, any defects or irregularities in
connection with tenders of Private Notes must be cured within such time as the
Company shall determine. Although the Company intends to notify holders of
defects or irregularities with respect to tenders of Private Notes, neither the
Company, the Exchange Agent nor any other person shall incur any liability for
failure to give such notification. Tenders of Private Notes will not be deemed
to have been made until such defects or irregularities have been cured or
waived.
While the Company has no present plan to acquire any Private Notes that are
not tendered in the Exchange Offer or to file a registration statement to permit
resales of any Private Notes that are not tendered pursuant to the Exchange
Offer, the Company reserves the right in its sole discretion to purchase or make
offers for any Private Notes that remain outstanding subsequent to the
Expiration Date or, as set forth below under "--Conditions," to terminate the
Exchange Offer and to the extent permitted by applicable law, purchase Private
Notes in the open market, in privately negotiated transactions or otherwise. The
terms of any such purchases or offers could differ from the terms of the
Exchange Offer.
By tendering, each holder of Private Notes will represent to the Company
that, among other things, (i) Exchange Notes to be acquired by such holder of
Private Notes in connection with the Exchange Offer are being acquired by such
holder in the ordinary course of business of such holder, (ii) such holder has
no arrangement or understanding with any person to participate in the
distribution of the Exchange Notes, (iii) such holder acknowledges and agrees
that any person who is a broker-dealer registered under the Exchange Act or is
participating in the Exchange Offer for the purposes of distributing the
Exchange Notes must comply with the registration and prospectus delivery
requirements of the Securities Act in
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connection with a secondary resale transaction of the Exchange Notes acquired by
such person and cannot rely on the position of the staff of the Commission set
forth in certain no-action letters, (iv) such holder understands that a
secondary resale transaction described in clause (iii) above and any resales of
Exchange Notes obtained by such holder in exchange for Private Notes acquired by
such holder directly from the Company should be covered by an effective
registration statement containing the selling securityholder information
required by Item 507 or Item 508, as applicable, of Regulation S-K of the
Commission and (v) such holder is not an "affiliate," as defined in Rule 405
under the Securities Act, of the Company. If the holder is a broker-dealer that
will receive Exchange Notes for such holder's own account in exchange for
Private Notes that were acquired as a result of market-making activities or
other trading activities, such holder will be required to acknowledge in the
Letter of Transmittal that such holder will deliver a prospectus in connection
with any resale of such Exchange Notes; however, by so acknowledging and by
delivering a prospectus, such holder will not be deemed to admit that it is an
"underwriter" within the meaning of the Securities Act.
RETURN OF PRIVATE NOTES
If any tendered Private Notes are not accepted for any reason set forth in
the terms and conditions of the Exchange Offer or if Private Notes are withdrawn
or are submitted for a greater principal amount than the holders desire to
exchange, such unaccepted, withdrawn or non-exchanged Private Notes will be
returned without expense to the tendering holder thereof (or, in the case of
Private Notes tendered by book-entry transfer into the Exchange Agent's account
at the Depositary pursuant to the book-entry transfer procedures described
below, such Private Notes will be credited to an account maintained with the
Depositary) as promptly as practicable.
BOOK-ENTRY TRANSFER
The Exchange Agent will make a request to establish an account with respect
to the Private Notes at the Depositary for purposes of the Exchange Offer within
two business days after the date of this Prospectus, and any financial
institution that is a participant in the Depositary's systems may make book-
entry delivery of Private Notes by causing the Depositary to transfer such
Private Notes into the Exchange Agent's account at the Depositary in accordance
with the Depositary's procedures for transfer. However, although delivery of
Private Notes may be effected through book-entry transfer at the Depositary, the
Letter of Transmittal or facsimile thereof, with any required signature
guarantees and any other required documents, must, in any case, be transmitted
to and received by the Exchange Agent at the address set forth below under
"--Exchange Agent" on or prior to the Expiration Date or pursuant to the
guaranteed delivery procedures described below.
GUARANTEED DELIVERY PROCEDURES
Holders who wish to tender their Private Notes and (i) whose Private Notes
are not immediately available or (ii) who cannot deliver their Private Notes,
the Letter of Transmittal or any other required documents to the Exchange Agent
prior to the Expiration Date, may effect a tender if:
(a) The tender is made through an Eligible Institution;
(b) Prior to the Expiration Date, the Exchange Agent receives from such
Eligible Institution a properly completed and duly executed Notice of
Guaranteed Delivery substantially in the form provided by the Company
setting forth the name and address of the holder, the certificate
number(s) of such Private Notes and the principal amount of Private Notes
tendered, stating that the tender is being made thereby and guaranteeing
that, within five New York Stock Exchange trading days after the
Expiration Date, the Letter of Transmittal (or a facsimile thereof),
together with the certificate(s) representing the Private Notes in proper
form for transfer or a Book-Entry
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<PAGE>
Confirmation, as the case may be, and any other documents required by the
Letter of Transmittal, will be deposited by the Eligible Institution with
the Exchange Agent; and
(c) Such properly executed Letter of Transmittal (or facsimile thereof), as
well as the certificate(s) representing all tendered Private Notes in
proper form for transfer and all other documents required by the Letter
of Transmittal are received by the Exchange Agent within five New York
Stock Exchange trading days after the Expiration Date.
Upon request to the Exchange Agent, a Notice of Guaranteed Delivery will be
sent to holders who wish to tender their Private Notes according to the
guaranteed delivery procedures set forth above.
WITHDRAWAL OF TENDERS
Except as otherwise provided herein, tenders of Private Notes may be
withdrawn at any time prior to the Expiration Date.
To withdraw a tender of Private Notes in the Exchange Offer, a written or
facsimile transmission notice of withdrawal must be received by the Exchange
Agent at its address set forth herein prior to the Expiration Date. Any such
notice of withdrawal must (i) specify the name of the person having deposited
the Private Notes to be withdrawn (the "Depositor"), (ii) identify the Private
Notes to be withdrawn (including the certificate number or numbers and principal
amount of such Private Notes) and (iii) be signed by the holder in the same
manner as the original signature on the Letter of Transmittal by which such
Private Notes were tendered (including any required signature guarantees). All
questions as to the validity, form and eligibility (including time of receipt)
of such notices will be determined by the Company in its sole discretion, whose
determination shall be final and binding on all parties. Any Private Notes so
withdrawn will be deemed not to have been validly tendered for purposes of the
Exchange Offer and no Exchange Notes will be issued with respect thereto unless
the Private Notes so withdrawn are validly retendered. Properly withdrawn
Private Notes may be retendered by following one of the procedures described
above under "The Exchange Offer--Procedures for Tendering" at any time prior to
the Expiration Date.
CONDITIONS
Notwithstanding any other term of the Exchange Offer, the Company shall not
be required to accept for exchange, or exchange the Exchange Notes for, any
Private Notes, and may terminate the Exchange Offer as provided herein before
the acceptance of such Private Notes, if the Exchange Offer violates applicable
law, rules or regulations or an applicable interpretation of the Staff of the
Commission.
If the Company reasonably determines that such condition (that the Exchange
Offer not violate applicable law, rules, regulations or interpretation of the
Staff) is not satisfied, the Company may (i) refuse to accept any Private Notes
and return all tendered Private Notes to the tendering holders or (ii) extend
the Exchange Offer and retain all Private Notes tendered prior to the expiration
of the Exchange Offer, subject, however, to the rights of holders to withdraw
such Private Notes (see "--Withdrawal of Tenders").
LIQUIDATED DAMAGES
The Company, the Subsidiary Guarantors and the Initial Purchaser entered
into a registration rights agreement (the "Registration Rights Agreement") dated
as of July 25, 1997, pursuant to which each of the Company and the Subsidiary
Guarantors agreed that they will, at their cost, for the benefit of the Holders,
(i) to the extent not prohibited by any applicable law or applicable
interpretation of the staff of the Commission (A) prepare and, on or prior to 60
days (the "Filing Date") after the date of original issuance of the Private
Notes (the "Issue Date"), file with the Commission a Registration Statement
under the Securities Act with respect to an offer by the Company to the holders
of the Private Notes (the "Exchange Offer") to issue and deliver to such
holders, in exchange for the Private Notes, a like principal amount of
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notes (the "Exchange Notes") guaranteed on a senior subordinated basis by each
of the Subsidiary Guarantors, and identical to the Private Notes in all material
respects, except that the such notes will not have provisions regarding
restrictions on transfer, (B) use their best efforts to cause the Registration
Statement relating to the Exchange Offer to be declared effective by the
Commission under the Securities Act on or prior to 150 days after the Issue
Date, and (C) commence the Exchange Offer and use their best efforts to issue,
on or prior to the date (the "Consummation Date") that is 30 days immediately
following the date that the Exchange Registration Statement shall have been
declared effective, the Exchange Notes. The offer and sale of the Exchange Notes
pursuant to the Exchange Offer shall be registered pursuant to the Securities
Act on an appropriate form (the "Exchange Registration Statement") and duly
registered or qualified under all applicable state securities or Blue Sky laws
and will comply with all applicable tender offer rules and regulations under the
Exchange Act and state securities or Blue Sky laws. The Exchange Offer shall not
be subject to any condition, other than that the Exchange Offer does not violate
any applicable law or interpretation of the staff of the Commission.
If, prior to consummation of the Exchange Offer, any of the Initial
Purchasers hold any Private Notes acquired by it and having, or which are
reasonably likely to be determined to have, the status of an unsold allotment in
the initial distribution, or any other holder of Private Notes is not entitled
to participate in the Exchange Offer, the Company and the Subsidiary Guarantors,
upon the request of such Initial Purchaser or any such holder, shall,
simultaneously with the delivery of the Exchange Notes in the Exchange Offer,
issue and deliver to such Initial Purchaser and any such holder, in exchange
(the "Private Exchange") for such Private Notes held by such Initial Purchaser
and any such holder, a like principal amount of debt securities of the Company,
guaranteed by each of the Subsidiary Guarantors on a senior subordinated basis,
that are identical in all material respects to the Exchange Notes (the "Private
Exchange Notes").
If (i) the Company and the Subsidiary Guarantors are not permitted to file
the Exchange Offer Registration Statement or to consummate the Exchange Offer
because the Exchange Offer is not permitted by any applicable law or applicable
interpretation of the Staff of the Commission or (ii) any holder of a Private
Note notifies the Company on or prior to the 30th day following the Issue Date
that (A) due to a change in law or policy it is not entitled to participate in
the Exchange Offer, (B) due to a change in law or policy it may not resell
Exchange Notes acquired by it in the Exchange Offer to the public without
delivering a prospectus and the Prospectus contained in the Exchange
Registration Statement is not appropriate or available for such resales by such
holder or (C) it owns Private Notes (including any Initial Purchaser that holds
Private Notes as part of an unsold allotment from the original offering of the
Private Notes) acquired directly from the Company or a Subsidiary Guarantor or
an Affiliate of the Company or a Subsidiary Guarantor or (iii) any holder of
Private Exchange Notes so requests after the consummation of the Private
Exchange or (iv) the Company and the Subsidiary Guarantors have not consummated
the Exchange Offer within 180 days after the Issue Date (each such event
referred to in clauses (i) through (iv), a "Shelf Filing Event"), the Company
and the Subsidiary Guarantors shall (a) promptly deliver to the holders and the
Trustee notice thereof and (b) at their own expense cause to be filed with the
Commission pursuant to Rule 415 a shelf registration statement (the "Shelf
Registration Statement") as promptly as practicable and in any event prior to 60
days after such filing obligation arises relating to all Transfer Restricted
Notes (as defined) (the "Shelf Registration") the holders of which have provided
certain information requested by the Company (provided that if the Shelf Filing
Event arises pursuant to clause (iv) above, the Company and the Subsidiary
Guarantors shall file the Shelf Registration Statement on or prior to the 181st
day after the Issue Date), and shall use their best efforts to have the Shelf
Registration Statement declared effective by the Commission on or prior to 90
days after the filing thereof. In such circumstances, the Company and the
Subsidiary Guarantors shall use their best efforts to keep the Shelf
Registration Statement continuously effective under the Securities Act, until
(A) two years (or such shorter period as may be established by any amendment to
the two year period set forth in Rule 144(k) under the Securities Act) following
the Issue Date or (B) if sooner, the date immediately following the date that
all Transfer Restricted Notes covered by the Shelf Registration Statement have
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been sold pursuant thereto or otherwise cease to be Transfer Restricted Notes
(the "Effectiveness Period").
During any consecutive 365-day period, the Company will have the ability to
suspend the availability of the Shelf Registration Statement for up to two
periods of up to 45 consecutive days, but no more than an aggregate of 60 days
during any 365-day period.
For purposes of the foregoing, a "Transfer Restricted Note" means each
Private Note, each Exchange Note as to which clause (ii) of the second preceding
paragraph is applicable, and each Private Exchange Note, in each case upon
original issuance thereof and at all time subsequent thereto until the earliest
to occur of (A) the date on which any such Private Note has been exchanged by a
person other than a Participating Broker-Dealer for an Exchange Note (other than
with respect to an Exchange Note as to which clause (ii) of the preceding
paragraph applies) pursuant to the Exchange Offer, (B) with respect to Exchange
Notes received by Participating Broker-Dealers in the Exchange Offer, the
earlier of (x) the date on which such Exchange Note has been sold by such
Participating Broker-Dealer by means of the Prospectus contained in the Exchange
Registration Statement and (y) the date on which the Exchange Registration
Statement has been effective under the Securities Act for a period of six months
after the Consummation Date, (C) a Shelf Registration Statement covering such
Note, Exchange Note or Private Exchange Note has been declared effective by the
Commission and such Note, Exchange Note or Private Exchange Note, as the case
may be, has been disposed of in accordance with such effective Shelf
Registration Statement, (D) the date on which such Note, Exchange Note or
Private Exchange Note, as the case may be, is eligible for distribution to the
public without volume or manner of sale restrictions pursuant to Rule 144(k) or
(E) the date on which such Private Note, Exchange Note or Private Exchange Note,
as the case may be, ceases to be outstanding for purposes of the Indenture or
any other indenture under which such Exchange Note or Private Exchange Note was
issued.
If the Company and the Subsidiary Guarantors fail to comply with the above
provisions or if the Exchange Offer Registration Statement or the Shelf
Registration statement fails to become effective, then, as liquidated damages
(the "Liquidated Damages") shall become payable in respect of the Private Notes
as follows:
(i) if (A) neither the Exchange Offer Registration Statement nor Shelf
Registration Statement is filed with the Commission on or prior to the
Filing Date or (B) notwithstanding that the Company and the Subsidiary
Guarantors have consummated or will consummate an Exchange Offer, the
Company and the Subsidiary Guarantors are required to file a Shelf
Registration Statement and such Shelf Registration Statement is not filed on
or prior to the date required by the Registration Rights Agreement, then
commencing on the day after either such required filing date, Liquidated
Damages shall accrue on the principal amount of the Private Notes at a rate
of 0.5% per annum for the first 90 days immediately following each such
filing date, such Liquidated Damages rate increasing by an additional 0.5%
per annum at the beginning of each subsequent 90-day period; or
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(ii) if (A) neither the Exchange Offer Registration Statement nor a
Shelf Registration Statement is declared effective by the Commission on or
prior to 90 days after the applicable filing date or (B) notwithstanding
that the Company and the Subsidiary Guarantors have consummated or will
consummate an Exchange Offer, the Company and the Subsidiary Guarantors are
required to file a Shelf Registration Statement and such Shelf Registration
Statement is not declared effective by the Commission on or prior to the
90th day following the date such Shelf Registration Statement was filed,
then commencing on the day after the 90th day following the applicable
filing date, Liquidated Damages shall accrue on the principal amount of the
Private Notes at a rate of 0.5% per annum for the first 90 days immediately
following such date, such Liquidated Damages rate increasing by an
additional 0.5% per annum at the beginning of each subsequent 90-day period;
or
(iii) if (A) the Company and the Subsidiary Guarantors have not
exchanged Exchange Notes for all Private Notes validly tendered in
accordance with the terms of the Exchange Offer on or prior to the 30th day
after the date on which the Exchange Offer Registration Statement was
declared effective or (B) if applicable, the Shelf Registration Statement
has been declared effective and such Shelf Registration Statement ceases to
be effective at any time prior to the second anniversary of its effective
date (other than after such time as all Private Notes have been disposed of
thereunder), then Liquidated Damages shall accrue on the principal amount of
the Private Notes at a rate of 0.5% per annum for the first 90 days
commencing on (x) the 31st day after such effective date, in the case of (A)
above, or (y) the day such Shelf Registration Statement ceases to be
effective in the case of (B) above, such Liquidated Damages rate increasing
by an additional 0.5% per annum at the beginning of each subsequent 90-day
period;
PROVIDED, HOWEVER, that the Liquidated Damages rate on the Private Notes may not
exceed in the aggregate 1.50% per annum; PROVIDED, FURTHER, HOWEVER, that (1)
upon the filing of the Exchange Offer Registration Statement or a Shelf
Registration Statement (in the case of clause (i) above), (2) upon the
effectiveness of the Exchange Offer Registration Statement or a Shelf
Registration Statement (in the case of clause (ii) above), or (3) upon the
exchange of Exchange Notes for all Private Notes tendered (in the case of clause
(iii) (A) above), or upon the effectiveness of the Shelf Registration Statement
which had ceased to remain effective (in the case of clause (iii) (B) above),
Liquidated Damages on the Private Notes as a result of such clause (or the
relevant subclause thereof), as the case may be, shall cease to accrue.
Any Liquidated Damages will be payable in cash to record holders in the same
manner as interest will be payable on the Private Notes.
No holder of Transfer Restricted Notes shall be entitled to Liquidated
Damages payable in connection with any Shelf Registration Statement unless and
until such holder shall have provided certain information reasonably requested
by the Company for use in connection with such Shelf Registration Statement.
The summary herein of certain provisions of the Registration Rights
Agreement does not purport to be complete and is subject to, and is qualified in
its entirety by, all the provisions of the Registration Rights Agreement, a copy
of which will be available upon request to the Company.
TERMINATION OF CERTAIN RIGHTS
All rights under the Registration Rights Agreement (including registration
rights) of holders of the Private Notes eligible to participate in the Exchange
Offer will terminate upon consummation of the Exchange Offer except with respect
to the Company's continuing obligations (i) to indemnify such holders (including
any broker-dealers) and certain parties related to such holders against certain
liabilities (including liabilities under the Securities Act), (ii) to provide,
upon the request of any holder of a transfer-restricted Private Note, the
information required by Rule 144A(d)(4) under the Securities Act in order to
permit resales of such Private Notes pursuant to Rule 144A and (iii) to provide
copies of the latest version of the Prospectus to broker-dealers upon their
request for the period required by the Securities Act.
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EXCHANGE AGENT
Norwest Bank Minnesota, National Association has been appointed as Exchange
Agent of the Exchange Offer. Questions and requests for assistance, requests for
additional copies of this Prospectus or of the Letter of Transmittal and
requests for Notice of Guaranteed Delivery should be directed to the Exchange
Agent addressed as follows:
<TABLE>
<S> <C>
BY REGISTERED OR CERTIFIED MAIL: IN PERSON:
Norwest Bank Minnesota, Northstar East Bldg.
National Association 608 2nd Ave. S.
Corporate Trust Operations 12th Floor
P.O. Box 1517 Corporate Trust Ser.
Minneapolis, MN 55480-1517 Minneapolis, MN
BY HAND OR OVERNIGHT COURIER: BY FACSIMILE FOR ELIGIBLE INSTITUTIONS
ONLY):
Norwest Bank Minnesota, (612) 667-4927
National Association CONFIRM RECEIPT OF NOTICE OF
Corporate Trust Operations GUARANTEED DELIVERY BY TELEPHONE:
Norwest Center (612) 667-9764
Sixth and Marquette
Minneapolis, MN 55479-0113
</TABLE>
DELIVERY TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE OR TRANSMISSION VIA A
FACSIMILE NUMBER OTHER THAN AS SET FORTH ABOVE WILL NOT CONSTITUTE A VALID
DELIVERY.
FEES AND EXPENSES
The expenses of soliciting tenders will be borne by the Company. The
principal solicitation is being made by mail; however, additional solicitation
may be made by telegraph, telephone or in person by officers and regular
employees of the Company and its affiliates.
The Company has not retained any dealer-manager in connection with the
Exchange Offer and will not make any payments to brokers, dealers or others
soliciting acceptances of the Exchange Offer. The Company, however, will pay the
Exchange Agent reasonable and customary fees for its services and will reimburse
it for its reasonable out-of-pocket expenses in connection therewith.
The cash expenses to be incurred in connection with the Exchange Offer will
be paid by the Company and are estimated in the aggregate to be approximately
$250,000. Such expenses include registration fees, fees and expenses of the
Exchange Agent and the Trustee, accounting and legal fees and printing costs,
among others.
The Company will pay all transfer taxes, if any, applicable to the exchange
of Private Notes pursuant to the Exchange Offer. If, however, a transfer tax is
imposed for any reason other than the exchange of the Private Notes pursuant to
the Exchange Offer, then the amount of any such transfer taxes (whether imposed
on the registered holder or any other persons) will be payable by the tendering
holder. If satisfactory evidence of payment of such taxes or exemption therefrom
is not submitted with the Letter of Transmittal, the amount of such transfer
taxes will be billed directly to such tendering holder.
CONSEQUENCE OF FAILURES TO EXCHANGE
Participation in the Exchange Offer is voluntary. Holders of the Private
Notes are urged to consult their financial and tax advisors in making their own
decisions on what action to take, and the Company takes no position with respect
to the advisability of the Exchange Offer.
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The Private Notes that are not exchanged for the Exchange Notes pursuant to
the Exchange Offer will remain restricted securities. Accordingly, such Private
Notes may be resold only (i) to a person whom the seller reasonably believes is
a QIB in a transaction meeting the requirements of Rule 144A, (ii) in a
transaction meeting the requirements of Rule 144 under the Securities Act, (iii)
outside the United States to a foreign person in a transaction meeting the
requirements of Rule 904 under the Securities Act, (iv) in accordance with
another exemption from the registration requirements of the Securities Act (and
based upon an opinion of counsel if the Company so requests), (v) to the Company
or (vi) pursuant to an effective registration statement and, in each case, in
accordance with any applicable securities laws of any state of the United States
or any other applicable jurisdiction.
ACCOUNTING TREATMENT
For accounting purposes, the Company will recognize no gain or loss as a
result of the Exchange Offer. The expenses of the Exchange Offer will be
amortized over the term of the Exchange Notes.
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THE RECAPITALIZATION AND THE TRANSACTIONS
Prior to December 1, 1995, a substantial majority of the Company's common
stock was owned by its employees. On December 1, 1995, the Company effected the
Recapitalization, wherein Holdings merged with and into the Company with the
Company continuing as the surviving corporation. Holdings was a company
organized by Carlyle to facilitate the Recapitalization and had no operating
activity or history. Upon consummation of the Recapitalization, Holdings
received 85.4% of the Company's common stock and 14.6% was retained by members
of Company management who were shareholders prior to the Recapitalization. The
Recapitalization resulted in a charge to stockholders' equity of $58.8 million
to reflect redemption of certain common stock.
The Company financed the Recapitalization through proceeds from term loans
of $35.0 million, borrowings of approximately $6.5 million under the Prior
Senior Credit Facility, issuance of $7.0 million in FDC Notes and an equity
investment by Holdings of $16.1 million. These proceeds were also utilized to
pay fees and expenses related to the Recapitalization and related financing, and
to provide working capital for the Company.
In May 1997, the Company purchased all of the outstanding capital stock of
NYMA for $29.5 million, consisting of $24.5 million in cash and $5.0 million in
NYMA Notes. The purchase price may be increased by up to $7.0 million if certain
performance criteria are met. Such payments, if any, will be accounted for as
adjustments to the purchase price. The Company funded the cash portion of the
purchase price with additional borrowings of approximately $9.5 million and the
sale of 555,556 shares of the Company's common stock for approximately $15.0
million. In connection with the NYMA Acquisition, the Company also borrowed
approximately $18.5 million under the Prior Senior Credit Facility to retire
existing Company and NYMA working capital debt and to pay related fees and
expenses.
In June 1997, the Company purchased all of the outstanding capital stock of
Sylvest for $40.4 million, consisting of $33.4 million in cash and $7.0 million
in Sylvest Notes. The purchase price may be increased by up to $1.0 million if
certain operating objectives are met and is subject to adjustment based on an
audit of the closing balance sheet. Such payments, if any, will be accounted for
as adjustments to the purchase price. The Company funded the cash portion of the
purchase price with additional borrowings of $21.4 million and the sale of
444,444 shares of the Company's common stock for approximately $12.0 million. In
connection with the Sylvest Acquisition, the Company also borrowed approximately
$6.0 million under the Prior Senior Credit Facility to retire existing Sylvest
working capital debt and to pay related fees and expenses.
Shortly after the consummation of the offering of the Private Notes, the
Company replaced its Prior Senior Credit Facility with the New Senior Credit
Facility. See "Description of Certain Indebtedness."
USE OF PROCEEDS
The Company will not receive any proceeds from the Exchange Offer. In
consideration for issuing the Exchange Notes as contemplated in this Prospectus,
the Company will receive in exchange Private Notes in like principal amount, the
terms of which are identical to the Exchange Notes except that (i) the exchange
will have been registered under the Securities Act, and, therefore, the Exchange
Notes will not bear legends restricting the transfer thereof and (ii) holders of
the Exchange Notes will not be entitled to certain rights of holders of the
Private Notes under the Registration Rights Agreement, which rights will
terminate upon the consummation of the Exchange Offer. The Private Notes
surrendered in exchange for Exchange Notes will be retained by the Company and
the Exchange Offer will not result in any increase in the indebtedness of the
Company.
34
<PAGE>
CAPITALIZATION
The following table sets forth the capitalization of the Company on a
historical and on a pro forma basis at June 30, 1997. The debt balances and
total capitalization presented below represent the recourse obligations of the
Company and exclude $14.2 million of nonrecourse notes payable and nonrecourse
obligations under capital leases. The information presented below is unaudited
and should be read in conjunction with the "Selected Unaudited Pro Forma
Consolidated Financial Data" and the notes thereto, the "Summary Unaudited Pro
Forma Consolidated Financial Data" and the financial statements of the Company
and the Acquired Companies and the notes thereto included elsewhere in this
Prospectus.
<TABLE>
<CAPTION>
JUNE 30, 1997
--------------------------
HISTORICAL PRO FORMA(A)
----------- -------------
(DOLLARS IN MILLIONS)
<S> <C> <C>
Cash and cash equivalents.............................................................. $ 7.3 $ 5.5
----------- -------------
----------- -------------
Recourse debt:(b)
Senior credit facility:
Term notes......................................................................... $ 80.4 $ --
Revolving line of credit(c)........................................................ 13.9 6.2
Recourse obligations under capital leases............................................ 3.5 3.5
Senior subordinated notes due 2005................................................... -- 105.0
Seller notes......................................................................... 19.7 8.0
----------- -------------
Total recourse debt................................................................ 117.5 122.7
Stockholders' equity(d)................................................................ 3.5 0.4
----------- -------------
Total capitalization(b).......................................................... $ 121.0 $ 123.1
----------- -------------
----------- -------------
</TABLE>
- ------------------------
(a) Pro forma to give effect to the offering of the Private Notes and the
application of the net proceeds therefrom.
(b) The Company has excluded $14.2 million of nonrecourse notes payable and
nonrecourse obligations under capital leases from the debt balances and
total capitalization presented above. The Company's future obligation under
these nonrecourse agreements, in the event of default by the end user
lessee, would be limited in most circumstances, outside a bankruptcy
proceeding, to ensuring the return of the associated assets to the lender.
These nonrecourse notes payable and nonrecourse obligations under capital
leases are considered debt under generally accepted accounting principles
and accordingly, are reflected as liabilities in the Company's historical
financial statements. Total recourse debt is total debt of $136.9 million
minus the $14.2 million of nonrecourse notes payable and nonrecourse
obligations under capital leases noted above.
(c) At June 30, 1997, the Company's Prior Senior Credit Facility had a revolving
credit borrowing availability of $60.0 million. Availability was reduced by
borrowings of $13.9 million and $4.0 million through the issuance of a
letter of credit in connection with the contingent consideration available
to the former shareholders of NYMA. The Prior Senior Credit Facility was
replaced with the New Senior Credit Facility in July 1997. The New Senior
Credit Facility has total availability of $75.0 million, subject to a
borrowing base limitation. At June 30, 1997, on a pro forma basis after
giving effect to the Transactions, availability under the New Senior Credit
Facility was reduced by the $4.0 million letter of credit and $6.2 million
of revolving line of credit borrowings.
(d) Stockholders' equity includes the effect of the Recapitalization which
included a charge to stockholders' equity of $58.8 million. In connection
with the Recapitalization and the Acquisitions, Carlyle and management have
contributed approximately $43.1 million of cash to the Company. See Notes 2
and 14 to FDC's consolidated financial statements.
35
<PAGE>
SELECTED UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL DATA
The following selected unaudited pro forma consolidated financial data give
effect to the Transactions. The unaudited pro forma consolidated balance sheet
presents the consolidated financial position of the Company, as of June 30,
1997, assuming that the offering of the Private Notes and the application of the
net proceeds therefrom occurred as of June 30, 1997. The unaudited pro forma
consolidated statements of operations have been prepared assuming the sale of
the Private Notes and the application of the net proceeds therefrom occurred as
of January 1, 1996. The unaudited pro forma consolidated statements of
operations reflect the historical results of the Company, NYMA and Sylvest for
the year ended December 31, 1996 and for the six months ended June 30, 1997. The
acquisition of NYMA was completed on May 2, 1997. The acquisition of Sylvest was
completed on June 30, 1997. Pursuant to the stock purchase agreement with
Sylvest, the Solutions Division of Sylvest, which was retained by the previous
owners, was excluded from the transaction. Where significant, pro forma
adjustments have been made to reflect the impact of excluding the related
revenue and expense amounts. The unaudited pro forma consolidated financial data
give effect to certain pro forma adjustments that are described in the notes to
these statements.
The unaudited pro forma consolidated financial data are presented for
informational purposes only and are not necessarily indicative of the financial
position or results of operations that would have been achieved had the
Transactions been completed as of the respective date or period presented, nor
are they necessarily indicative of the Company's future financial position or
results of operations. The unaudited pro forma consolidated financial data
should be read in conjunction with the historical financial statements of the
Company, NYMA and Sylvest, including the notes thereto, included elsewhere in
this Prospectus.
The Company believes that the assumptions used in preparing the unaudited
pro forma consolidated financial data provide a reasonable basis for presenting
all of the significant effects of the Transactions and that the pro forma
adjustments give effect to those assumptions in the unaudited pro forma
consolidated financial data. The Company, NYMA and Sylvest each have fiscal
years ending December 31.
36
<PAGE>
FEDERAL DATA CORPORATION
UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET
JUNE 30, 1997
(IN THOUSANDS)
<TABLE>
<CAPTION>
PRO FORMA
ADJUSTMENTS
RELATED TO THE
OFFERING OF THE PRO FORMA
THE COMPANY PRIVATE NOTES CONSOLIDATED
-------------- --------------- ------------
<S> <C> <C> <C>
ASSETS
Cash and cash equivalents............................................... $ 7,276 $ 98,000(a) $ 5,471
(99,805)(b)
Accounts receivable..................................................... 91,893 -- 91,893
Net investment in sales-type leases..................................... 8,538 -- 8,538
Other assets............................................................ 11,261 -- 11,261
-------------- --------------- ------------
Total current assets.................................................. 118,968 (1,805) 117,163
Net investment in sales-type leases..................................... 6,844 -- 6,844
Property, plant and equipment........................................... 3,990 -- 3,990
Goodwill................................................................ 57,512 -- 57,512
Other assets............................................................ 7,075 7,000(a) 10,989
(3,086)(c)
-------------- --------------- ------------
Total assets.......................................................... $ 194,389 $ 2,109 $ 196,498
-------------- --------------- ------------
-------------- --------------- ------------
LIABILITIES AND STOCKHOLDERS' EQUITY
Short-term recourse debt................................................ $ 9,651 $ 9,651
Short-term nonrecourse debt............................................. 8,119 8,119
Accounts payable and other liabilities.................................. 56,380 56,380
-------------- ------------
Total current liabilities............................................. 74,150 74,150
Long-term recourse debt................................................. 107,805 $ 105,000(a) 113,000
(88,105)(b)
(11,700)(b)
Long-term nonrecourse debt.............................................. 6,071 -- 6,071
Other liabilities....................................................... 2,890 -- 2,890
-------------- --------------- ------------
Total liabilities..................................................... 190,916 5,195 196,111
-------------- --------------- ------------
Stockholders' equity(d).................................................
Common stock............................................................ 29 -- 29
Capital in excess of par value.......................................... 40,227 -- 40,227
Accumulated deficit..................................................... (36,783) (3,086)(c) (39,869)
-------------- --------------- ------------
Total stockholders' equity............................................ 3,473 (3,086) 387
-------------- --------------- ------------
Total liabilities and stockholders' equity............................ $ 194,389 $ 2,109 $ 196,498
-------------- --------------- ------------
-------------- --------------- ------------
</TABLE>
37
<PAGE>
FEDERAL DATA CORPORATION
NOTE TO UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET
AS OF JUNE 30, 1997
(IN THOUSANDS)
1. PRO FORMA ADJUSTMENTS TO THE UNAUDITED CONSOLIDATED BALANCE SHEET
Pro forma adjustments to the unaudited consolidated balance sheet are made
to reflect the following:
(a) To reflect the issuance of and proceeds from the sale of the Private
Notes, after deduction of expenses (including Initial Purchasers' discount),
which were approximately $5,000. In addition, the Company has incurred
approximately $2,000 of expenses related to the establishment of the New Senior
Credit Facility. Such amounts are capitalized as deferred financing costs and
reflected as Other Assets.
(b) To reflect the repayment of $88,105 of the Company's Existing Bank Debt
under the Prior Senior Credit Facility and the repayment of $11,700 of Seller
Notes.
(c) To reflect the elimination of deferred financing costs, net of deferred
taxes, related to the Existing Bank Debt.
(d) Stockholders' equity includes the effect of the Recapitalization which
included a charge to stockholders' equity of $58.8 million. In connection with
the Recapitalization and the Acquisitions, Carlyle and management have
contributed approximately $43.1 million of cash to the Company. See Notes 2 and
14 to FDC's consolidated financial statements.
38
<PAGE>
FEDERAL DATA CORPORATION
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1996
(IN THOUSANDS)
<TABLE>
<CAPTION>
PRO FORMA
ADJUSTMENTS
PRO FORMA RELATED TO THE
ADJUSTMENTS OFFERING OF
THE RELATED TO THE THE PRIVATE PRO FORMA
COMPANY NYMA SYLVEST ACQUISITIONS SUBTOTAL NOTES CONSOLIDATED
---------- --------- ---------- -------------- ---------- -------------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Revenues............................ $ 151,108 $ 82,046 $ 106,542 $ (6,874)(a) $ 332,822 $ 332,822
---------- --------- ---------- ------- ---------- ------------
Cost of sales and services.......... 114,248 57,824 92,736 (5,129)(a) 259,679 259,679
Selling, general and administrative
expenses.......................... 21,366 22,481 11,376 (3,380)(a) 49,490 49,490
(2,353)(b)
Amortization of goodwill............ 3,953(c) 3,953 3,953
Interest expense.................... 7,564 394 340 (734)(d) 13,997 $ (338)(g) 15,771
6,433(e) 2,112(h)
---------- --------- ---------- ------- ---------- ------- ------------
Total expenses.................. 143,178 80,699 104,452 (1,210) 327,119 1,774 328,893
---------- --------- ---------- ------- ---------- ------- ------------
Income before income taxes.......... 7,930 1,347 2,090 (5,664) 5,703 (1,774) 3,929
Provision for income taxes.......... 3,202 547 47 (955)(f) 2,841 (710)(f) 2,131
---------- --------- ---------- ------- ---------- ------- ------------
Net income.......................... $ 4,728 $ 800 $ 2,043 $ (4,709) $ 2,862 $ (1,064) $ 1,798
---------- --------- ---------- ------- ---------- ------- ------------
---------- --------- ---------- ------- ---------- ------- ------------
</TABLE>
<TABLE>
<S> <C>
OTHER PRO FORMA DATA
EBITDA(1)................................................................................. $ 23,295
Net recourse interest expense(2).......................................................... 13,557
Net cash recourse interest expense(3)..................................................... 12,532
Depreciation and amortization(4).......................................................... 5,809
Capital expenditures...................................................................... 2,124
</TABLE>
- ------------------------
(1) EBITDA represents the sum of income (loss) before income taxes, net recourse
interest expense and depreciation and amortization. EBITDA is not a measure
of performance or financial condition under generally accepted accounting
principles, but is presented to provide additional information related to
debt service capability. EBITDA should not be considered in isolation or as
a substitute for other measures of financial performance or liquidity under
generally accepted accounting principles. While EBITDA is frequently used as
a measure of operations and the ability to meet debt service requirements,
it is not necessarily comparable to other similarly titled captions of other
companies due to the potential inconsistencies in the method of calculation.
(2) Net recourse interest expense is interest expense minus interest expense on
nonrecourse notes payable and nonrecourse obligations under capital leases
of $2,015 and minus interest income on cash balances of $199.
(3) Net cash recourse interest expense is net recourse interest expense minus
amortization of deferred financing costs of $1,025.
(4) Excludes amortization of deferred financing costs on the Notes that are
included in interest expense.
39
<PAGE>
FEDERAL DATA CORPORATION
NOTE TO UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1996
(IN THOUSANDS)
1. PRO FORMA ADJUSTMENTS TO THE UNAUDITED CONSOLIDATED STATEMENT OF OPERATIONS
Pro forma adjustments to the unaudited consolidated statement of
operations for the year ended December 31, 1996 are made to reflect the
following:
(a) To remove revenues and direct costs of the Solutions division of
Sylvest pursuant to the stock purchase agreement.
(b) To record the reduction in compensation expense in connection with
new employment agreements entered into with NYMA and Sylvest senior
management concurrent with the effective date of their respective stock
purchase agreements.
(c) To record amortization of goodwill related to the Acquisitions over
an estimated useful life of 15 years.
(d) To remove historical interest expense incurred by NYMA and Sylvest
due to the repayment of the related debt balances.
(e) To reflect interest expense, including amortization of additional
deferred financing costs on additional borrowings under the Prior Senior
Credit Facility and the Seller Notes.
(f) To record the estimated aggregate income tax provision. This amount
includes the tax effect of all pro forma adjustments and the tax effect of
accounting for Sylvest as if it were a C corporation. Sylvest was a S
corporation prior to the Sylvest Acquisition.
(g) To reflect the net change in amortization of deferred financing
costs resulting from the issuance of the Notes:
<TABLE>
<S> <C>
Amortization of deferred financing costs related to
the Existing Bank Debt........................... $ (1,363)
Pro forma deferred financing costs related to the
Notes and the New Senior Credit Facility......... 1,025
---------
Net decrease....................................... $ (338)
---------
---------
</TABLE>
At December 31, 1996, there were deferred financing costs related to the
Existing Bank Debt. No adjustments for the write-off of these amounts has been
included in the unaudited pro forma consolidated statement of operations for the
year ended December 31, 1996.
(h) To record the net change in interest expense resulting from the
issuance of the Notes and the establishment of the New Senior Credit
Facility:
<TABLE>
<S> <C>
Notes at 10.125%................................... $ 10,631
Actual interest expense on Existing Bank Debt...... (2,361)
Pro forma interest expense on additional borrowings
under the Prior Senior Credit Facility and Seller
Notes............................................ (6,408)
Pro forma increased fees related to the New Senior
Credit Facility.................................. 250
---------
Net increase....................................... $ 2,112
---------
---------
</TABLE>
40
<PAGE>
FEDERAL DATA CORPORATION
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 1997
(IN THOUSANDS)
<TABLE>
<CAPTION>
PRO FORMA PRO FORMA
ADJUSTMENTS ADJUSTMENTS
RELATED TO RELATED TO THE
THE THE OFFERING OF THE PRO FORMA
COMPANY NYMA(1) SYLVEST(1) ACQUISITIONS SUBTOTAL PRIVATE NOTES CONSOLIDATED
----------- ----------- ----------- ------------- ---------- ---------------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Revenues........................ $ 87,172 $ 23,624 $ 78,863 $ (5,833)(a) $ 183,826 $ 183,826
----------- ----------- ----------- ------------- ---------- ------------
Cost of sales and services...... 70,277 13,838 70,312 (4,027)(a) 150,400 150,400
Selling, general and
administrative expenses........ 12,753 11,670 10,213 (1,963)(a) 29,535 29,535
(3,138)(b)
Amortization of goodwill........ 233 -- -- 1,744(c) 1,977 1,977
Interest expense................ 3,734 144 297 (441)(d) 6,462 $ (111)(g) 7,048
2,728(e) -- 697(h) --
----------- ----------- ----------- ------------- ---------- ----- ------------
Total expenses.............. 86,997 25,652 80,822 (5,097) 188,374 586 188,960
----------- ----------- ----------- ------------- ---------- ----- ------------
Income (loss) before income
taxes.......................... 175 (2,028) (1,959) (736) (4,548) (586) (5,134)
Provision (benefit) for income
taxes.......................... 163 (785) -- (942)(f) (1,564) (234)(f) (1,798)
----------- ----------- ----------- ------------- ---------- ----- ------------
Net income (loss)............... $ 12 $ (1,243) $ (1,959) $ 206 $ (2,984) $ (352) $ (3,336)
----------- ----------- ----------- ------------- ---------- ----- ------------
----------- ----------- ----------- ------------- ---------- ----- ------------
OTHER PRO FORMA DATA
EBITDA(2)........................................................................................................... $ 3,969
Net recourse interest expense(3).................................................................................... 6,280
Net cash recourse interest expense(4)............................................................................... 5,768
Depreciation and amortization(5).................................................................................... 2,823
Capital expenditures................................................................................................ 1,294
</TABLE>
- ------------------------
(1) Includes activity of NYMA and Sylvest prior to their acquisition by the
Company.
(2) EBITDA represents the sum of income (loss) before income taxes, net recourse
interest expense and depreciation and amortization. EBITDA is not a measure
of performance or financial condition under generally accepted accounting
principles, but is presented to provide additional information related to
debt service capability. EBITDA should not be considered in isolation or as
a substitute for other measures of financial performance or liquidity under
generally accepted accounting principles. While EBITDA is frequently used as
a measure of operations and the ability to meet debt service requirements,
it is not necessarily comparable to other similarly titled captions of other
companies due to the potential inconsistencies in the method of calculation.
(3) Net recourse interest expense is interest expense minus interest expense on
nonrecourse notes payable and nonrecourse obligations under capital leases
of $703 and minus interest income on cash balances of $65.
(4) Net cash recourse interest expense is net recourse interest expense minus
amortization of deferred financing costs of $512.
(5) Excludes amortization of deferred financing costs on the Notes that are
included in interest expense.
41
<PAGE>
FEDERAL DATA CORPORATION
NOTE TO UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 1997
(IN THOUSANDS)
1. PRO FORMA ADJUSTMENTS TO THE UNAUDITED CONSOLIDATED STATEMENT OF OPERATIONS
Pro forma adjustments to the unaudited consolidated statement of operations
for the six months ended June 30, 1997 are made to reflect the following:
(a) To remove revenues and direct costs of the Solutions division of
Sylvest pursuant to the stock purchase agreement.
(b) To record the reduction in compensation expense in connection with
new employment agreements entered into with NYMA and Sylvest senior
management concurrent with the effective date of their respective stock
purchase agreements.
(c) To record amortization of goodwill related to the Acquisitions over
an estimated useful life of 15 years.
(d) To remove historical interest expense incurred by NYMA and Sylvest
due to the repayment of the related debt balances.
(e) To reflect interest expense, including amortization of additional
deferred financing costs on additional borrowings under the Prior Senior
Credit Facility and the Seller Notes.
(f) To record the estimated aggregate income tax provision. This amount
includes the tax effect of all pro forma adjustments and the tax effect of
accounting for Sylvest as if it were a C corporation. Sylvest was a S
corporation prior to the Sylvest Acquisition.
(g) To reflect the net change in amortization of deferred financing
costs resulting from the issuance of the Notes:
<TABLE>
<S> <C>
Amortization of deferred financing costs related
to the Existing Bank Debt....................... $ (623)
Pro forma deferred financing costs related to the
Notes and the New Senior Credit Facility........ 512
---------
Net decrease...................................... $ (111)
---------
---------
</TABLE>
At June 30, 1997, there were deferred financing costs related to the
Existing Bank Debt. No adjustments for the write-off of these amounts has
been included in the unaudited pro forma consolidated statement of
operations for the six months ended June 30, 1997.
(h) To record the net change in interest expense resulting from the
issuance of the Notes and the establishment of the New Senior Credit
Facility:
<TABLE>
<S> <C>
Notes at 10.125%.................................. $ 5,316
Actual interest expense on Existing Bank Debt..... (1,540)
Pro forma interest expense on additional
borrowings under the Prior Senior Credit
Facility and Seller
Notes........................................... (3,204)
Pro forma increased fees related to the New Senior
Credit Facility................................. 125
---------
Net increase...................................... $ 697
---------
---------
</TABLE>
42
<PAGE>
SELECTED CONSOLIDATED HISTORICAL FINANCIAL DATA OF
FEDERAL DATA CORPORATION
The following table sets forth selected consolidated historical financial
data of FDC as of and for the years ended December 31, 1992, 1993, 1994, 1995
and 1996. The selected consolidated historical financial data has been derived
from FDC's consolidated financial statements, which have been audited by Price
Waterhouse LLP, independent accountants. Consolidated balance sheets at December
31, 1995 and 1996 and the related consolidated statements of operations, of
stockholders' (deficit) equity and of cash flows for the three years ended
December 31, 1996 and notes thereto appear elsewhere in this Prospectus. The
selected consolidated historical financial data as of June 30, 1997 and for the
six months ended June 30, 1996 and 1997 have been derived from FDC's unaudited
consolidated financial statements which, in the opinion of management, reflect
all material adjustments, consisting only of normal recurring adjustments,
necessary for a fair statement of the data for the unaudited periods. The
operating results for the six months ended June 30, 1997 are not necessarily
indicative of the results that may be expected for the full year ending December
31, 1997. The selected consolidated historical financial data should be read in
conjunction with "Management's Discussion and Analysis of Financial Condition
and Results of Operations" and the audited consolidated financial statements of
FDC, together with the related notes thereto, included elsewhere in this
Prospectus.
<TABLE>
<CAPTION>
SIX MONTHS ENDED
YEAR ENDED DECEMBER 31, JUNE 30,
------------------------------------------------ ------------------
1992 1993 1994 1995 1996 1996 1997
-------- -------- -------- -------- -------- -------- --------
(IN THOUSANDS EXCEPT RATIO DATA) (UNAUDITED)
<S> <C> <C> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Revenues.............................. $ 96,933 $112,441 $143,527 $129,819 $151,108 $ 54,099 $ 87,172
-------- -------- -------- -------- -------- -------- --------
Expenses:
Cost of sales and services.......... 73,710 86,623 114,038 107,366 114,248 41,314 70,277
Selling, general and
administrative.................... 13,297 14,395 20,546 20,943 21,366 9,001 12,986
Interest(a)......................... 4,377 5,389 3,580 3,663 7,564 3,942 3,734
-------- -------- -------- -------- -------- -------- --------
Total expenses.................... 91,384 106,407 138,164 131,972 143,178 54,257 86,997
-------- -------- -------- -------- -------- -------- --------
Income (loss) from continuing
operations before income taxes...... 5,549 6,034 5,363 (2,153) 7,930 (158) 175
Income tax provision (benefit)........ 2,220 369 1,171 (3,950) 3,202 (63) 163
-------- -------- -------- -------- -------- -------- --------
Income (loss) from continuing
operations.......................... 3,329 5,665 4,192 1,797 4,728 (95) 12
Loss from discontinued operations, net
of income tax benefit(b)............ (6,330) -- -- -- -- -- --
-------- -------- -------- -------- -------- -------- --------
Net (loss) income..................... $ (3,001) $ 5,665 $ 4,192 $ 1,797 $ 4,728 $ (95) $ 12
-------- -------- -------- -------- -------- -------- --------
-------- -------- -------- -------- -------- -------- --------
OPERATING AND OTHER DATA(C):
EBITDA(d)............................. $ 8,149 $ 7,509 $ 6,734 $ (847) $ 14,082 $ 3,004 $ 3,803
Net recourse interest expense(e)...... 431 109 44 40 5,370 2,684 2,986
Net cash recourse interest
expense(f).......................... 431 109 44 40 3,926 1,940 2,645
Depreciation and amortization......... 2,169 1,366 1,327 1,266 782 478 642
Capital expenditures.................. 362 593 2,590 686 903 365 1,088
Ratio of earnings to fixed
charges(g).......................... 2.0x 2.0x 2.2x (h) 2.0x -- 1.0x
Pro forma ratio of earnings to fixed
charges(g).......................... -- -- -- -- 1.2x -- (h)
BALANCE SHEET DATA AT END OF PERIOD:
Working capital....................... $ 4,073 $ 14,422 $ 17,195 $ 11,025 $ 16,249 $ 44,818
Total assets.......................... 103,046 115,094 120,947 150,102 83,286 194,369
Long-term debt(i)..................... 46,984 35,753 20,077 43,412 50,170 113,876
Stockholders' equity (deficit)(j)..... 9,823 15,310 19,399 (25,962) (22,826) 3,473
</TABLE>
43
<PAGE>
- --------------------------
(a) Interest expense includes interest on both recourse and nonrecourse notes
payable and obligations under capital leases.
(b) During 1990, the Company sold the business and substantially all the assets
of a subsidiary and accounted for the disposition as a discontinued
operation. The loss recorded during 1992 related to estimated costs arising
from a subcontractor's breach of contract to perform services under a
Government prime contract related to the discontinued operation.
(c) Net cash flows from (for) operating activities was $5,443, $12,258, $19,242,
$(2,767), $1,452, $(4,463) and $6,140 for the years ended December 31, 1992,
1993, 1994, 1995 and 1996, and for the six months ended June 30, 1996 and
1997, respectively. Net cash flows (for) from investing activities was
$(24,977), $(8,093), $(7,558), $(52,841), $49,703, $50,242 and $(59,213) for
the years ended December 31, 1992, 1993, 1994, 1995 and 1996, and for the
six months ended June 30, 1996 and 1997, respectively. Net cash flows from
(for) financing activities was $26,358, $(4,155), $(3,529), $50,327,
$(60,275), $(56,009) and $59,158 for the years ended December 31, 1992,
1993, 1994, 1995 and 1996, and for the six months ended June 30, 1996 and
1997, respectively.
(d) EBITDA represents the sum of income (loss) from continuing operations before
income taxes, net recourse interest expense and depreciation and
amortization. EBITDA is not a measure of performance or financial condition
under generally accepted accounting principles, but is presented to provide
additional information related to debt service capability. EBITDA should not
be considered in isolation or as a substitute for other measures of
financial performance or liquidity under generally accepted accounting
principles. While EBITDA is frequently used as a measure of operations and
the ability to meet debt service requirements, it is not necessarily
comparable to other similarly titled captions of other companies due to the
potential inconsistencies in the method of calculation.
(e) Net recourse interest expense is interest expense minus interest expense on
nonrecourse notes payable and nonrecourse obligations under capital leases
of $3,734, $4,910, $3,188, $2,669, $2,015, $1,182 and $703 and minus
interest income on cash balances of $212, $370, $348, $954, $179, $76 and
$45 for the years ended December 31, 1992, 1993, 1994, 1995 and 1996 and for
the six months ended June 30, 1996 and 1997, respectively.
(f) Net cash recourse interest expense is net recourse interest expense minus
amortization of deferred financing costs of $817, $408 and $341 for the year
ended December 31, 1996 and for the six months ended June 30, 1996 and 1997,
respectively, and minus interest expense of $627 and $336 for the year ended
December 31, 1996 and the six months ended June 30, 1996, respectively, on
Seller Notes that was paid through the issuance of payment in kind notes.
(g) For the purpose of calculating the ratios of earnings to fixed charges,
"earnings" represents income from continuing operations before income taxes
plus fixed charges. "Fixed charges" consist of interest expense, excluding
interest income and including amortization of debt issuance costs, and the
portion of operating lease rental expense (33%) which management believes is
representative of the interest component of lease expense.
(h) As a result of the loss from continuing operations before income taxes
incurred for the year ended December 31, 1995, the Company was unable to
fully cover the indicated fixed charges by $2,153. On a pro forma basis,
after giving effect to the Transactions, earnings did not cover fixed
charges for the six months ended June 30, 1997 by $5,134.
(i) Long-term debt includes both recourse and nonrecourse notes payable and
obligations under capital leases.
(j) Stockholders' equity (deficit) includes the effect of the Recapitalization
which included a charge to stockholders' equity of $58.8 million. In
connection with the Recapitalization and the Acquisitions, Carlyle and
management have contributed approximately $43.1 million of cash to the
Company. See Notes 2 and 14 to FDC's consolidated financial statements.
44
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
THE FOLLOWING DISCUSSION AND ANALYSIS OF FDC'S CONSOLIDATED FINANCIAL
CONDITION AND CONSOLIDATED RESULTS OF OPERATIONS SHOULD BE READ IN CONJUNCTION
WITH FDC'S CONSOLIDATED FINANCIAL STATEMENTS AND NOTES THERETO APPEARING
ELSEWHERE IN THIS PROSPECTUS. EXCEPT AS EXPRESSLY INDICATED, THE FOLLOWING
DISCUSSION DOES NOT GIVE EFFECT TO THE OFFERING OF THE PRIVATE NOTES OR THE
ACQUISITIONS OR INCLUDE PRO FORMA FINANCIAL INFORMATION.
GENERAL
FDC is a major supplier of information technology to a wide range of
customers within the Government. FDC has assembled, through internal growth and
strategic acquisitions, comprehensive information technology product and
services capabilities to address the unique needs of its Government clients.
Management believes the continuing consolidation within the information
technology industry, particularly among companies serving Government customers,
should result in additional opportunities for the Company to make attractive
acquisitions. As a result, the Company is continually involved in the
investigation and evaluation of potential acquisition candidates. Any such
transactions are typically subject to numerous conditions, including due
diligence investigations, contract reviews and negotiation of a definitive
purchase agreement in addition to arranging acceptable financing. In evaluating
acquisition targets, the Company considers, among other things, their
competitive market position, management teams, growth position, technical skills
and contract base. At any time the Company may have one or more offers
outstanding and may have executed one or more letters of intent or binding
acquisition agreements. There can be no assurance, however, that any such
understandings, letters of intent or discussions will result in any particular
transaction being consummated, or that acceptable financing will be available.
Prior to December 1, 1995, the majority of FDC's common stock was owned by
its employees. On December 1, 1995, FDC effected the Recapitalization wherein
Holdings merged with and into FDC with FDC continuing as the surviving
corporation. Holdings was a company organized by Carlyle to facilitate the
Recapitalization and had no operating activity or history. Upon consummation of
the Recapitalization, Holdings received 85.4% of FDC's outstanding common stock
and 14.6% was retained by members of FDC's management who were shareholders
prior to the Recapitalization. The merger was accounted for as a
recapitalization which resulted in a charge to stockholders' equity of $58.8
million to reflect the redemption of common stock.
The Government accounted for approximately 95%, 95% and 97% of total
revenues during 1994, 1995 and 1996, respectively. Revenue from sales and
sales-type leases (capital leases on which the lessor derives profit on the
underlying product as well as on the financing feature of the lease) is
generally recognized upon installation at the customer's site. FDC pioneered the
lease-to-ownership-plan ("LTOP"), a capital lease transaction, which allows
customers the flexibility to use operating lease funds to acquire equipment and
software and convert the transaction to an installment purchase if the contract
equipment meets its longer-term technological requirements. Under an LTOP, the
title of the equipment or software passes to the Government after the Government
makes the final lease payment. FDC typically discounts payments to be received
from the Government on a nonrecourse basis with independent financial
institutions. Accordingly, FDC's net investment in sales-type leases are pledged
as collateral for these nonrecourse obligations, which are reflected as
nonrecourse indebtedness on FDC's consolidated balance sheet. FDC considers
LTOPs to be sales-type leases in those instances where FDC believes that the
risk of cancellation of the Government lease is remote.
The Company's business is highly seasonal due to the Government's funding
and buying patterns which generally produce greater revenue, earnings and cash
flow to the Company in the third and fourth quarters with weaker performance
(frequently including operating losses) in the first quarter. Results for the
six months ended June 30, 1997 are not necessarily indicative of results to be
expected for the year ending December 31, 1997.
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The Company's operating performance is affected by the number of Government
contracts held, the types of contracts, the timing of installation or delivery
and the relative margins of the services performed or products sold, as the case
may be. For a discussion of the Company's material contracts, including the
receipt of a recent termination notice stating that NASA will not exercise its
option at year-end 1997 on a NYMA "Section 8(a)" contract and related
considerations, see "Business--Products and Services-- Services
Group--Engineering Services--Scientific, Engineering, Technical and
Administrative Related Services." In general, the Company earns its highest
margins on its most specialized systems integration work and lower margins on
cost-plus services contracts and on sales of COTS products by its Product Sales
Group, which tend to have a lower services component associated with such sales
and a more competitive after-award sales environment. However, profitability
regularly varies from contract to contract and product to product over the
contract term.
The following discussion includes the results of operations of NYMA from May
2, 1997 (the date of acquisition) through June 30, 1997. Since Sylvest was
acquired on June 30, 1997, Sylvest's results of operations have not been
included. The Acquisitions substantially expanded the size of the Company. Pro
forma revenues for 1996 were more than double FDC's revenues (see "Selected
Unaudited Pro Forma Consolidated Financial Data"), and the Company's work force
expanded from 250 at the end of 1996 to over 1,000 after the Acquisitions. As a
result of these Acquisitions, the Company's results of operations and financial
condition will differ materially from those reported in prior periods, as the
Company's revenues, expenses and level of indebtedness and capitalization will
all increase materially. Cash flows may also be affected materially depending on
the operating performance of the Acquired Companies. Because of the indebtedness
incurred to finance the Recapitalization, operating results for periods after
the Recapitalization are not comparable with the results for periods prior to
the Recapitalization. For financial information regarding the Acquired
Companies, see "Selected Unaudited Pro Forma Consolidated Financial Data" and
the financial statements and the notes thereto of the Acquired Companies
included elsewhere in this Prospectus.
RESULTS OF OPERATIONS
SIX MONTHS ENDED JUNE 30, 1997 COMPARED WITH SIX MONTHS ENDED JUNE 30, 1996
REVENUES
Revenues for the six months ended June 30, 1997 were $87.2 million, up $33.1
million or 61% over the comparable period of 1996. The NYMA Acquisition
accounted for $17.3 million of the increase in revenue over the comparable
period of 1996. Revenue from equipment and software sales was $42.0 million, up
$16.3 million or 64% from the comparable period of 1996. The NYMA Acquisition
accounted for $6.2 million of the increase in equipment and software sales
revenue over the comparable period of 1996. The remaining increase in revenue
from equipment and software sales is principally due to increased emphasis on
FDC's COTS products business and the negative impact of the Government budget
delay and shutdown on FDC's 1996 first half revenue. Revenue from maintenance
and support services was $44.0 million, up $17.9 million or 69% from the
comparable period of 1996. The NYMA Acquisition accounted for $11.0 million of
the increase in revenue over the comparable period of 1996. The remaining
increase in revenue from maintenance and support services is principally due to
increased professional services performed under existing contracts and
additional contracts under maintenance plans.
COST OF SALES AND SERVICES
Cost of sales and services for the six months ended June 30, 1997 was $70.3
million, up $29.0 million or 70% over the comparable period of 1996. The NYMA
Acquisition accounted for $15.3 million of the increase in cost of sales and
services over the comparable period of 1996. Cost of sales and services for the
six months ended June 30, 1997 was 82% of sales and services revenues compared
with 80% of sales and services revenues for the comparable period in 1996. The
slight decrease in the gross margin percentage primarily relates to increased
influence of the COTS products sold through the Product Sales Group which
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generally have lower gross margin percentages than product sales by FDC's
Systems Integration Group and Solutions Group and the lower margins on NYMA's
cost plus award fee business, offset by the improved margins from the
professional services business, a greater percentage of which is now being
performed by FDC employees instead of being subcontracted to others.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSE
Selling, general and administrative expense for the six months ended June
30, 1997 was $13.0 million, up $4.0 million or 44% over the comparable period of
1996. The NYMA Acquisition accounted for $0.9 million of the increase in
selling, general and administrative expenses over the comparable period of 1996.
The amortization of goodwill related to the NYMA Acquisition accounted for $0.3
million of the increase in selling, general and administrative expense over the
comparable period of 1996. The remaining increase in selling, general and
administrative expense was due primarily to an increase in the number of
personnel. Excluding the effect of the NYMA Acquisition and the amortization of
goodwill, selling, general and administrative expense for the six months ended
June 30, 1997 was down to 15% of revenues compared with 17% of revenues for the
comparable period of 1996. This decrease in selling, general and administrative
expense as a percentage of revenue was due primarily to economies of scale
resulting from the increase in revenues.
INTEREST EXPENSE
Interest expense for the six months ended June 30, 1997 was $3.7 million,
down $0.2 million or 5% from the comparable period of 1996. Recourse interest
expense increased $0.3 million for the six months ended June 30, 1997 over the
comparable period of 1996 primarily due to increased recourse debt balances
including term debt used to partially finance the NYMA Acquisition. Interest
expense on nonrecourse debt declined $0.5 million for the six months ended June
30, 1997 from the comparable period of 1996 due to a reduced level of capital
leases.
INCOME TAXES
The provision for income taxes for the first half of 1997 is based on an
estimated annual effective rate, excluding expenses not deductible for income
tax purposes. Before giving effect to the Acquisitions, the effective tax
provision rate for the year ending December 31, 1997 is estimated to be 40%,
approximately the same rate as that experienced for 1996. The Company believes
that the nondeductibility of goodwill associated with the NYMA Acquisition will
cause future tax rates to be higher.
NET INCOME/LOSS
Net income for the six months ended June 30, 1997 was $12 thousand, a $107
thousand improvement from the net loss of $95 thousand recorded in the
comparable period of 1996 for the reasons discussed above.
YEAR ENDED DECEMBER 31, 1996 COMPARED WITH YEAR ENDED DECEMBER 31, 1995
REVENUES
Revenues for the year ended December 31, 1996 were $151.1 million, up $21.3
million or 16% over 1995. Revenue from equipment and software sales was $87.5
million, up $6.5 million or 8% from 1995. The increase in revenue from equipment
and software sales was principally due to increased emphasis on FDC's COTS
products business. Revenue from maintenance and support services was $59.9
million, up $16.1 million or 37% from 1995. The increase in revenue from
maintenance and support services was principally due to increased professional
services performed under existing contracts and additional contracts under
maintenance plans.
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COST OF SALES AND SERVICES
Cost of sales and services for the year ended December 31, 1996 was $114.2
million, up $6.9 million or 6% compared with 1995. Cost of sales and services
for 1996 was 78% of sales and services revenues compared with 86% of sales and
services revenues in 1995. The increase in gross margin percentage primarily
relates to efficiencies recognized on the higher revenue base in the maintenance
and support services businesses and to a $6.3 million loss recorded in 1995 on a
single fixed-price government contract. The loss resulted when expected cost
reductions associated with the introduction of new technology were not realized.
Excluding the effect of the $6.3 million loss, cost of sales and services for
1995 was 81% of sales and services revenues.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSE
Selling, general and administrative expense for the year ended December 31,
1996 was $21.4 million, up $0.4 million or 2% over 1995. Selling, general and
administrative expense for the year ended December 31, 1996 was down to 14% of
revenues compared with 16% of revenues for 1995. This decrease as a percent of
revenues was due primarily to $5.4 million of expenses incurred during 1995 in
connection with the Recapitalization. These expenses included the forgiveness of
$3.1 million of indebtedness from certain of FDC's officers, special
discretionary bonuses of $1.4 million and $0.9 million of other one-time
charges. Excluding the effect of expenses incurred in connection with the
Recapitalization, selling, general and administrative expenses as a percent of
revenues would have been 11% in 1995. The increase in recurring selling, general
and administrative expenses during 1996 primarily relates to increased personnel
as FDC expanded its sales force in the products and professional services areas.
INTEREST EXPENSE
Interest expense for the year ended December 31, 1996 was $7.6 million, up
$3.9 million or 106% over 1995. The increase in interest expense primarily
relates to the interest on the indebtedness which was issued in connection with
the Recapitalization. The increase in interest expense on such indebtedness more
than offset the decrease in interest expense resulting from reduced capital
leases.
INCOME TAXES
The effective tax provision rate for the year ended December 31, 1996 was
40% as compared with the effective tax benefit rate of 184% for 1995. The 1995
tax benefit resulted from the Company's elimination of its deferred tax asset
valuation allowance of $3.3 million based on management's belief that there was
sufficient assurance that the Company's deferred tax assets would be realized,
offset by $0.6 million of nondeductible expenses. Excluding the effect of the
elimination of the deferred tax asset valuation allowance and the nondeductible
expenses, the Company would have had an effective tax benefit rate for the year
ended December 31, 1995 of 36%.
NET INCOME
Net income for the year ended December 31, 1996 was $4.7 million, up $2.9
million or 163% over 1995 based on the reasons discussed above.
YEAR ENDED DECEMBER 31, 1995 COMPARED WITH YEAR ENDED DECEMBER 31, 1994
REVENUES
Revenues for the year ended December 31, 1995 were $129.8 million, down
$13.7 million or 10% from 1994. Revenues from equipment and software sales were
$81.0 million, down $26.9 million or 25% from 1994. The decrease in revenues
from equipment and software sales is principally due to a greater volume of
business from initial installations on contracts awarded during 1994. In
addition, the first of two
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Government budget delays and shutdowns had a negative impact on the Company's
business in the fourth quarter of 1995. Revenues from maintenance and support
services were $43.8 million, up $12.3 million or 39% from 1994. The increase in
revenues from maintenance and support services is principally due to increased
professional services performed under existing contracts and additional
contracts under maintenance plans.
COST OF SALES AND SERVICES
Cost of sales and services for the year ended December 31, 1995 was $107.4
million, down $6.7 million or 6% from 1994 primarily due to the decrease in
product and software sales. Cost of sales and services for the year ended
December 31, 1995 was 86% of sales and services revenues compared with 82% of
sales and services revenues for 1994. During 1995, the Company recorded a $6.3
million loss on a contract as discussed above. Excluding the effect of the $6.3
million loss, cost of sales and services for 1995 was 81% of sales and services
revenues.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSE
Selling, general and administrative expense for the year ended December 31,
1995 was $20.9 million, up $0.4 million or 2% over 1994. Selling, general and
administrative expense for the year ended December 31, 1995 was 16% of revenues
compared with 14% of revenues for 1994. This increase in selling, general and
administrative expense as a percent of revenues was due primarily to $5.4
million of expenses incurred during 1995 in connection with the
Recapitalization. These expenses included the forgiveness of $3.1 million of
indebtedness from certain of FDC's officers, special discretionary bonuses of
$1.4 million and $0.9 million of other one-time charges. Excluding the effect of
the expenses incurred in connection with the Recapitalization, selling, general
and administrative expenses as a percent of revenues would have been 11% in
1995. Selling, general and administrative expenses during 1994 included $2.1
million of one-time compensation expenses incurred in contemplation of a
potential change in ownership of FDC and a $0.5 million reserve established for
a possible loss on a limited partnership, which owned FDC's office space.
Excluding the effect of these expenses, selling, general and administrative
expenses as a percent of revenues would have been 12% in 1994.
INTEREST EXPENSE
Interest expense for the year ended December 31, 1995 was $3.7 million, up
$0.1 million or 2% over the comparable period of 1994.
INCOME TAXES
The Company recorded an effective tax benefit rate of 184% for the year
ended December 31, 1995, compared with an effective tax provision rate of 22%
for 1994. This tax benefit was primarily the result of the Company's elimination
of its deferred tax asset valuation allowance of $3.3 million based on
management's belief that there was sufficient assurance that the Company's
deferred tax assets would be realized, offset in part by $0.6 million of
nondeductible expenses. Excluding the effect of the elimination of the deferred
tax asset valuation allowance and the nondeductible expenses, the Company would
have had an effective tax benefit rate for the year ended December 31, 1995 of
36%. During 1994, the Company recorded the benefit of investment tax credits of
$1.1 million and released $0.9 million of the deferred tax asset valuation
allowance. Excluding the effects of the investment tax credits and the release
of the deferred tax asset valuation allowance, the effective tax provision rate
for the year ended December 31, 1994 would have been 36%.
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NET INCOME
Net income for the year ended December 31, 1995 was $1.8 million, down $2.4
million or 57% from 1994 based on the reasons discussed above.
LIQUIDITY AND CAPITAL RESOURCES
The Company's primary source of liquidity is cash provided by operations.
The Company's liquidity requirements generally vary seasonally with revenues,
which are generally higher in the third and fourth quarters of each fiscal year.
Historically, cash flow from the collection of accounts receivable from the
Government has generally been predictable and dependable. Cash and cash
equivalents were $1.2 million at December 31, 1996, down $9.1 million from
December 31, 1995 primarily as a result of net cash flow from operating
activities of $1.5 million and net cash flows from investing activities of $49.7
million being offset by net cash flow used in financing activities of $60.3
million. Net cash flow from operating activities was primarily a result of net
income plus depreciation and amortization, which totaled $5.5 million, offset in
part by other changes in assets and liabilities of $4.0 million. Net cash flow
from investing activities was $49.7 million for 1996 primarily as a result of
selling the short-term investments resulting from the equity payments received
in the Recapitalization of $51.8 million, offset in part by purchases of
equipment for sales-type leases and property and equipment totaling $2.1
million. Net cash flows used in financing activities amounted to $60.3 million
for 1996, primarily as a result of the redemption payments made to selling
shareholders in the Recapitalization of $51.8 million, repayments of borrowings
of $15.8 million and repayments of capital lease obligations of $5.4 million,
offset in part by additional net borrowings under the Company's line of credit
of $10.8 million.
As of June 30, 1997, FDC had outstanding recourse debt of $117.5 million
and, pro forma for the offering of the Private Notes, the Company would have had
recourse debt of $122.7 million. See "Capitalization." These amounts exclude
$14.2 million of nonrecourse notes payable and obligations under capital leases,
which the Company records in connection with the financing of certain equipment
sales and leases. See "--General." At June 30, 1997, the Company was a party to
the $60.0 million Prior Senior Credit Facility (under which borrowings of $13.9
million and $4.0 million of undrawn letters of credit were outstanding), which
was replaced by the New Senior Credit Facility upon consummation of the offering
of the Private Notes. See "Description of Certain Indebtedness."
The Company's Prior Senior Credit Facility included certain restrictions as
to the Company's ability, among other things, to acquire or dispose of assets,
to pay dividends and to incur additional indebtedness. In addition, the Company
was required to maintain a minimum net worth and certain operating ratios,
including, among others, interest coverage and fixed charges. All of the
Company's assets not otherwise pledged were utilized as collateral under the
Company's credit agreements. The New Senior Credit Facility has similar
covenants and provisions and provides for a maximum availability based upon a
borrowing base comprised of 85% of Eligible Receivables and 60% of Eligible
Inventory (as defined in the New Senior Credit Facility), up to a maximum
availability of $75.0 million. At June 30, 1997 on a pro forma basis there were
$4.0 million of undrawn letters of credit and $6.2 million of revolving line of
credit borrowings. The New Senior Credit Facility bears interest at the
Company's option at the base rate in effect from time to time plus 1.25% or the
eurodollar rate plus 2.25% plus an additional 2.0% on overdue amounts. See
"Description of Certain Indebtedness."
The Company, through Sylvest, also maintains an inventory and receivables
financing facility with an international asset-based lender to facilitate the
purchase of inventory by Sylvest from approved vendors for prompt resale to
customers. The Company pays no interest on accounts drawn under such Floor Plan
Financing Facility (as defined) for negotiated periods and such drawn amounts
are reflected in accounts payable during such periods. See "Description of
Certain Indebtedness."
Stockholders' equity amounted to $3.5 million at June 30, 1997, an increase
in stockholders' equity of $26.3 million from December 31, 1996. This increase
is principally due to proceeds from the sale of
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common stock of $27.0 million, net of issuance costs of $0.8 million. The
stockholders' deficit amounted to $22.8 million at December 31, 1996, a
reduction of $3.1 million from December 31, 1995. This reduction is principally
due to the net income of $4.7 million for 1996, net of a charge to retained
earnings of $1.6 million, to fund future additional distributions for the
benefit of the selling shareholders in the Recapitalization. The stockholders'
deficit amounted to $26.0 million at December 31, 1995, a change of $45.4
million from stockholders' equity at December 31, 1994. The reduction is
principally due to the redemption of common stock in the Recapitalization of
$58.8 million and other redemptions of common stock of $1.8 million, offset in
part by net income of $1.8 million and net proceeds from the sale of common
stock of $13.9 million.
Based on the Company's current level of operations, management believes that
available cash, together with the net proceeds of the offering of the Private
Notes and available borrowings under the New Senior Credit Facility and the
Floor Plan Financing Facility, should be adequate to meet the Company's
anticipated future requirements for working capital, capital expenditures and
scheduled payments of interest on its debts (including the Notes).
INFLATION AND GENERAL ECONOMIC CONDITIONS
Although the Company cannot accurately anticipate the effect of inflation on
its operations, it does not believe that inflation has had, or is likely in the
foreseeable future to have, a material impact on its results of operations.
Unlike other service providers, the Company does not have a significant number
of fixed price service contracts where the Company bears the risk of cost
increases. The Company's operating results would be adversely affected by
increases in interest rates which would result in higher interest payments by
the Company under its variable rate credit facilities. The Company has not
historically entered into hedging transactions with respect to its variable rate
debt, but may do so in the future.
RECENT ACCOUNTING PRONOUNCEMENTS
Statement of Financial Accounting Standards No. 128, "Earnings per Share"
(SFAS 128) is effective for the Company for the year ending December 31, 1997.
Under SFAS 128, the Company will not be required to present earnings per share
for as long as its common stock is not publicly held.
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BUSINESS
GENERAL
The Company is a major supplier of information technology to a wide range of
customers within the Government. The Company has assembled, through internal
growth and strategic acquisitions, comprehensive information technology product
and services capabilities to address the unique needs of its Government clients.
Management believes that the Company is strategically positioned to benefit from
the current trends in the Government market for information technology and
outsourcing of technical and professional services. The Government is among the
world's largest purchasers of information technology with estimated total
expenditures in fiscal 1997 in excess of $26 billion. For the year ended
December 31, 1996 and the six months ended June 30, 1997, the Company's total
pro forma revenues were $332.8 million, $183.8 million, respectively, and total
pro forma EBITDA (as defined herein) were $23.3 million and $4.0 million,
respectively.
Founded in 1969, the Company serves a diverse and expanding customer base
representing over 20 Government agencies including NASA, the FAA, the NIH, the
DoD, the VBA and the Department of State. In addition, the Company has
longstanding relationships with many of its key clients, with agencies served by
the Company for five or more years accounting for more than half of the
Company's pro forma revenues in 1996. Management believes that the
Company'sestablished reputation and long-standing relationships with Government
customers, and the extensive knowledge gained from those relationships, have
been critical to the Company's strong record of growth and provide a key
competitive advantage in pursuing business opportunities with new and existing
customers.
Consistent with its strategy of providing a complete range of information
technology offerings to its Government customers, the Company has pursued
strategic acquisitions to broaden and strengthen key skill areas. In May 1997,
the Company purchased NYMA, a provider of sophisticated engineering and
information technology services. NYMA complemented and significantly expanded
the Company's core capabilities in the technology and engineering services
sector, providing the Company with the ability to bid effectively on new
contracts with a higher component of technical services requirements. In June
1997, the Company acquired Sylvest, a value-added reseller and integrator of
COTS hardware, software and technical services supporting open systems
architectures within the Government marketplace. Through the Sylvest
Acquisition, the Company has become a leading reseller of COTS hardware and
software to the Government and has substantially expanded the number of
customers to which it can market its systems integration offerings.
The Acquisitions have significantly enhanced the Company's presence in the
Government marketplace. Based on a recent survey, on a pro forma basis, the
Company would have been the 25th largest information technology contractor to
the Government in 1996. Management believes the information technology industry,
particularly the portion serving Government customers, has and will continue to
consolidate, resulting in additional opportunities for the Company to make
attractive acquisitions that complement or expand its core capabilities.
INDUSTRY OVERVIEW
According to Federal Sources, Inc., an independent market research firm
specializing in the Government market, the Government is the world's largest
single buyer of information technology services and products. Federal Sources,
Inc. estimates that Government spending specifically designated for information
technology will be $26.5 billion during the Government's fiscal 1997. The
Government also spends significant additional funds on information technology
through other general budget appropriations. According to the Electronic
Industries Association, Government agencies that are not required to report
their information technology expenditures, including agencies in the
intelligence community, will spend an additional $20 billion on such technology
in the Government's fiscal 1997.
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Despite growing budget pressures, Government outlays for third-party
technology services and outsourcing have increased steadily as the Government
has sought to control its spending and gain the efficiencies and flexibility
experienced by commercial purchasers of these services. The GSA anticipates a
continuation of the trend toward increased Government use of outside information
technology providers and estimates that 65% of all Government agencies operating
in-house data systems may eventually outsource information technology services
to the private sector at an estimated cost savings of 25% to 30%. The current
legislative and regulatory environment generally supports initiatives in the
Government information technology sector to change procurement practices and
become more like the private sector. Several statutory and regulatory changes
have brought about a significant transition in Government procurement practices,
dramatically increasing the number of procurement "vehicles" available to
Government customers and generally reducing the lead time required to buy
information technology products and services. See "--Government Contracts."
In addition to its growing use of third-party providers, the Government,
like many corporate organizations, has sought to address an increasing portion
of its information technology needs through relatively inexpensive, open
architecture systems based on COTS hardware and software, which are rapidly
displacing the single purpose, custom systems historically favored by the
Government.
These concurrent changes in the types of information technology solutions
purchased by Government agencies and the rules governing the procurement of such
solutions have dramatically changed the marketplace in the last few years and
are likely to continue doing so. Where Government agencies traditionally
procured customized information technology solutions through agency-specific
contracts awarded to a single contractor or contractor team, Government agencies
are now more likely to purchase flexible, COTS-based information technology
systems through IDIQ contracts awarded to multiple contractors or teams of
contractors or through established GSA Schedules or multi-agency contracts
("MACs"). See "--Government Contracts."
BUSINESS AND GROWTH STRATEGY
The Company's goal is to be a leading one-stop information technology
solutions supplier, providing high-quality products and services that meet the
complete needs of its Government client base. The Company's strategies to meet
this objective are the following:
- CREATE COMPREHENSIVE SKILL AND PRODUCT BASE. The Company seeks to
continuously add new information technology capabilities and strategically
expand existing business areas to meet the changing information technology
needs and buying patterns of its clients. By expanding its extensive
technical skill base and ability to supply a broad and diverse set of COTS
hardware and software, the Company can provide its customers with the
widest possible range of cost effective solutions and engender a high
level of customer satisfaction. Management believes that such
capabilities, together with the Company's in-depth knowledge of changing
Government procurement practices, should continue to create new
opportunities for the Company.
- STRONG CUSTOMER KNOWLEDGE AND FOCUS. The Company strives to understand
the full range of each of its customers' information technology needs. The
Company's strategy is to continue to leverage its strong customer
knowledge, advanced technical skills and supplier relationships to tailor
optimal solutions to its customers' specific needs and to offer technology
infrastructures that anticipate its customers' rapidly evolving needs.
- PURSUE STRATEGIC ACQUISITIONS. The Company seeks to continue expanding
the breadth and quality of the information technology products and
services it offers. The recently completed acquisitions of NYMA and
Sylvest have added important complementary skills to the Company's
information technology capabilities. Management expects to continue to
pursue strategic acquisitions which it believes can contribute
significantly to the Company's future business growth.
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- MAXIMIZE FLEXIBILITY OF GOVERNMENT CUSTOMERS. A key component of the
Company's success has been its ability to quickly adapt to the rapidly
evolving Government procurement process. The Company continually pursues
means of maximizing its customers' flexibility in acquiring a range of
products and services with competitive prices and minimal bureaucratic
delay by selecting the best methods available in the current, more
streamlined procurement climate.
- CAPITALIZE ON OUTSOURCING OPPORTUNITIES. The Company seeks to pursue new
opportunities created by changes in the Government information technology
industry. In particular, although the Government has frequently hired
service providers to fill specific roles in the past, the Government is
increasingly considering opportunities to outsource entire functions to
private industry. As part of this strategy, the Company intends to
leverage its client relationships, technical skills and access to COTS
hardware and software in pursuing emerging opportunities in the
outsourcing of certain Government information technology functions.
PRODUCTS AND SERVICES
The Company focuses on providing a comprehensive array of high technology
professional services in combination with hardware and software products from a
variety of selected manufacturers. The Services Group focuses primarily on
providing sophisticated technical and engineering personnel to enhance
information technology performance and productivity and to provide project
engineering and outsourcing services. The Systems Integration Group integrates
diverse hardware and software components into a single turnkey system, usually
selling COTS hardware and software products as an element of the integrated
solution. The Product Sales Group provides a one-stop shop for government
customers to procure COTS hardware and software. The Solutions Group provides
high-end, solutions-oriented consulting services.
SYSTEMS INTEGRATION GROUP
Systems integration refers to the integration of diverse information
technology products, frequently including the combination of existing custom
systems with COTS hardware and software into a single turnkey system. The
Company's Systems Integration Group provides large-scale, tailored integrated
solutions to its customers, generally including design, construction, and
implementation, as well as the sale of any COTS hardware and software required
for completion. The Company is a prominent computer systems integrator, having
been a pioneer in systems integration for the Government in 1969. The Company
has over 25 years of experience supplying custom turnkey systems to various
departments and agencies of the Government. The contracts completed during this
period have ranged from national defense programs to administrative, payroll and
inventory control functions of various Government departments and agencies.
The Company's systems integration projects are characterized by complex
features such as multi-year systems life, multiple vendors, technical
complexity, the application and integration of leading-edge technology and the
selection and management of subcontractors and teaming partners with expertise
specific to the system solution required by the customer. The Company acts as
both a prime contractor and as a subcontractor on a broad range of systems
integration projects for the Government. In performing these duties, the Company
generally procures equipment, software, networking components and services from
several manufacturers or suppliers to produce a single, program-specific turnkey
system. When no "off-the-shelf" solution or product exists, the Company on
occasion develops software to provide a total compliant solution. The Company
also generally provides installation, maintenance, training and technical
support services throughout the life of the contract. Most systems integration
contracts specify initial system requirements to be covered by the contract
amount; as technology and customer needs change over the life of the contracts,
they function as IDIQ contracts that permit the Company to supply equipment
upgrades and customer support in response to changing customer requirements and
improvements in technology. Management believes that such long-term contracts
have permitted the Company to develop
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strong partnerships with its customers and have contributed to the Company's
success with long-term programs in an environment of rapidly changing
procurement requirements and technological growth.
The Systems Integration Group consists of over 100 dedicated technical and
management personnel trained to provide COTS integration, mainframe, midrange
and microcomputer integration, communications and networking, software
development, and help desk and support organizations.
Listed below are summary descriptions of major contracts and programs for
the Systems Integration Group. The term of each contract specified is the
maximum term under the contract including all options. The Government has
typically exercised all options under the Systems Integration Group's contracts.
Although the future status of any contract is uncertain after contract
expiration, management believes that certain support and service functions being
provided under many of these contracts may be subject to recompetition and rebid
upon expiration, either alone or in combination with other products and/or
services. For a description of Government contracts, see "--Government
Contracts."
U.S. NAVY SUPPLY SYSTEMS COMMAND. This fifteen-year contract was
awarded in 1983 and provides for the installation of computer systems at 62
NAVSUP sites worldwide. The systems are used for integrated wide-area and
local area communications control, terminal emulation, data conversion and
database management. The contract expires in 1998. 1996 revenues were
approximately $32 million.
VETERANS BENEFIT ADMINISTRATION MODERNIZATION. This eight-year contract
was awarded in December 1992 and provides for the modernization of the
information technology environment in regional offices of the VBA. Products
and services provided include hardware, software, maintenance, support desk,
training, installation and technical support services. The Company is
providing LAN servers and workstations which connect to Honeywell
mainframes. The contract expires in 2000. 1996 revenues were approximately
$28 million.
INVENTORY CONTROL POINTS II. Awarded in 1992, this five-year contract
calls for the Company to provide hardware, software and services to
modernize portions of the Navy's logistics support services. The contract
expires in 1997. 1996 revenues were approximately $18 million.
DEPARTMENT OF STATE. This seven-year contract was awarded in 1994 and
calls for the Company to augment and replace existing IBM mainframe systems
and their components at five Department of State processing hubs. The
contract expires in 2001. 1996 revenues were approximately $11 million.
DEPARTMENT OF VETERANS AFFAIRS. Awarded in 1991, this ten-year contract
calls for the Company to provide IBM systems in support of Veterans
Administration on-line processing systems. The contract expires in 2001.
1996 revenues were approximately $10 million.
NIH CERTAN CORPORATE COMPUTING SYSTEMS. This eight-year contract was
awarded in December 1996 and involves the provision and support of both new
and existing IBM mainframes and open systems, and the provision of related
software. In addition, the Company will install and provide post-
installation support of DEC AlphaServers and install Oracle software. The
contract expires in 2004. No revenues were realized under this contract in
1996.
SERVICES GROUP
The Company's technology services offerings are focused predominantly on
providing sophisticated professional and outsourcing services to various
Government agencies. These activities are concentrated in two key areas:
information technology services and engineering services.
INFORMATION TECHNOLOGY SERVICES. The Company operates under approximately
35 separate contracts for information technology services, through which it
provides program management, software development and software maintenance
functions for various Government agencies and prime contractors to the
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Government. Specific activities include providing software engineering services
to support the maintenance and modification of the FAA's Air Traffic Control
Operational Computer Program at seven FAA Enroute Centers and at the FAA
Technical Center; supporting the design, development and implementation and
maintenance of systems and programs for spacecraft mission operations at the
California Institute of Technology Jet Propulsion Laboratory ("JPL"); performing
acceptance testing and supporting integration and test activities and quality
assurance for the Earth Observing System Data and Information System, a network
to support a constellation of earth observing spacecraft for NASA; and
monitoring contractor activities under the HUD Integrated Information Service,
including contracts administration, negotiations, budget analysis, quality
control and other services.
ENGINEERING SERVICES. The Company provides engineering services primarily
through NYMA, which provides support to NASA, the FAA, other Government agencies
and private industry. Operating under two large NASA cost-plus contracts to
provide comprehensive engineering support for NASA's Lewis Research Center in
Cleveland, Ohio and Langley Research Center in Hampton, Virginia, the Company
provides engineering services in the areas of aeromechanics, aerospace
technology, space experimentation, structures, materials, instrumentation and
aeronautics.
The Company's 300 employees at Lewis Research Center, over 25% of whom have
PhDs, perform research into rocket propulsion, space power, space propulsion,
wind tunnels and other test facilities support, structural analysis for
spacecraft materials and materials research. Specific projects include the
conceptual design and performance modeling for the national aerospace plane, the
advanced subsonic transport and high speed research engines; aerodynamic and
mission analysis for single- and two-stage-to-orbit vehicles and high speed
supersonic civilian transports; icing research studies; and the design of
propulsion system aeroacoustics and turbomachinery technologies, such as an
energy efficient engine. The group at Lewis is also responsible for building
space flight hardware for NASA space experiments including hardware for
microgravity experiments on the Space Shuttle, the Mir space station, sounding
rockets and the planned International Space Station. To date, NYMA has been
involved in the development of over 50 payloads flown on 15 Space Shuttle
missions.
Langley research relating mainly to aeronautics involves approximately 120
employees, and is focused in the areas of aeronautical systems analysis,
spacecraft mission analysis and engineering and flight operations support. The
Langley unit provides a full range of systems analysis and integration studies
including systems analysis for advanced military and civil aircraft designs,
conceptual design studies of critical and high-payoff technologies,
multi-discipline studies of unique military aircraft configurations, airframe
and engine design studies on hypersonic vehicles, scramjet integrated design
studies and spacecraft mission and system performance analysis. The Company
provides engineering and operations support in such areas as the design,
engineering and development of flight projects; the development of ground test
systems and test techniques (such as the development of innovative wind
tunnels); and the maintenance and operations of aircraft and aircraft systems
including research vehicles and experimental avionics systems.
As a result of its work at the two NASA centers, the Services Group
generated approximately $1 million in additional 1996 revenues by providing
similar engineering services to approximately ten private aerospace companies.
Listed below are summary descriptions of major contracts and programs of the
Services Group. The term of each contract specified is the maximum term under
the contract including all options. The Government has typically exercised all
options under the Services Group's contracts. Although the future status of any
contract is uncertain after contract expiration, the Company expects the
customer under each of these contracts to continue to require the services being
performed after the contract expires and expects such services to be the subject
of a new bidding competition for a new contract, either alone or in combination
with other services. For a description of different types of Government
contracts, see "--Government Contracts."
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SCIENTIFIC, ENGINEERING, TECHNICAL AND ADMINISTRATIVE RELATED
SERVICES. This five-year cost-plus-award-fee contract was awarded under
Section 8(a) to NYMA in 1994 by NASA's Lewis Research Center, as described
above. After the acquisition of NYMA by the Company, NYMA's continued
participation as a prime contractor under Section 8(a) contracts required a
waiver from the Administrator of the Small Business Administration, as
discussed under "Risk Factors--Government Contracting Risks." NASA has
recently notified NYMA that it does not plan to request a waiver or to
exercise the final option year of the contract when the current option
expires on December 31, 1997. The Government has advised the Company that it
plans to procure the goods and services currently provided by NYMA under a
new Section 8(a) set-aside contract on which NYMA would be ineligible to
participate as a prime contractor. NYMA intends to pursue continued
participation in the program in a reduced role as a subcontractor on the new
contract in 1998, although such participation would generate lower revenues
and EBITDA than NYMA has historically earned, and there can be no assurance
that such a subcontract will be obtained. 1996 revenues were approximately
$33 million.
HOST SOFTWARE SUPPORT. This twelve-year fixed-price labor hour contract
was awarded to NYMA in 1986. The Company is a subcontractor to Lockheed
Martin and provides software support to 7 FAA Enroute Air Traffic Control
Centers east of the Mississippi River. The Enroute system monitors and
directs aircraft between airports. Approximately 70 employees perform
project activities including software engineering and maintenance, systems
enhancements, systems programming and data reduction and analysis. The
contract expires in 1998. 1996 revenues were approximately $8 million.
MISSION OPERATIONS SUPPORT SERVICES. This five-year cost-plus-fixed-fee
contract was awarded in 1994 by the JPL and provides NASA flight project
mission operations support systems at the JPL. Company personnel support
Galileo, Voyager, Topex, Cassini, New Millennium, Mars Global Surveyor and
the Multi-Mission Ground System Office. The contract expires in 1999. 1996
revenues were approximately $7 million.
SYSTEMS ANALYSIS AND ENGINEERING RESEARCH SUPPORT. This five and
one-half year cost-plus-award-fee contract was awarded in 1997 by NASA's
Langley Research Center, as described above. The contract expires in 2002.
PRODUCT SALES GROUP
The Company is a leading value-added reseller of hardware, software and
related services to the Government. Consistent with the Company's strategy of
offering solutions based on open computing architectures, the Company has
focused its reselling activities on workstations, servers, enterprise networking
hardware and related peripherals and software. Along with providing a broad
range of top quality products through supplier and teaming relationships with
hardware and software original equipment manufactures ("OEMs"), the Company
makes its technical personnel available to provide its customers with customized
"value-added" technical support services. Information technology product sales
have been a core business for the Company and have provided it with the
marketing platform to become a major open systems solutions provider in the
Government marketplace. The Company substantially expanded its capabilities in
this area through the Sylvest Acquisition.
The Product Sales Group employs approximately 60 sales, marketing, business
development and contract representatives and 40 technical personnel, each of
whom has been recruited based on his or her extensive knowledge of a particular
customer group, particular products sold by the Company, or both. The sales
force's extensive training in various Government procurement rules allows them
to guide customers to the most efficient acquisition vehicle for the Company's
products, whether that vehicle is an agency-specific IDIQ contract, a MAC
contract or a GSA Schedule. See "--Government Contracts." These representatives
maintain regular contact and working relationships with a set of vendors and
existing or potential customers.
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The Company's product reselling activities add value for both information
technology manufacturers and Government customers. Manufacturers gain access to
the Company's sales force and its experience in the Government procurement and
sales process, including capabilities and experience in electronic commerce,
order entry and invoicing. Customers benefit from the Company's technical
knowledge of available products and vendors, and also from the Company's
procurement expertise, which helps them select the optimal procurement vehicle
to meet their needs. The Company's procurement personnel also make it easier for
Government customers to place orders and configure and set-up new systems.
Management believes that the new contract vehicles resulting from Government
procurement reform (see "--Government Contracts") could enhance the Company's
opportunities to provide value-added services to both suppliers and customers by
allowing the Company to demonstrate how these vehicles can be used by suppliers
to sell more products and by customers to buy more products and services.
Management believes the Company is on the leading edge of electronic
commerce for sales of information technology to the Government. The Company has
developed Internet facilities including a World Wide Web Site to support
"paperless" contracting with the GSA Schedules and under the NIH Electronic
Computer Store ("ECS"). The ECS is a MAC contract vehicle providing an
electronic catalog from which agencies may place individual orders ranging in
value from a few thousand dollars to several million dollars. The Company is one
of seventeen vendors providing products under the ECS vehicle and is able
quickly to add new products as they become available and requested by its
customers. Customers typically select from among the participating vendors based
on prior or existing service relationships, breadth of product offerings,
reputation and price. Management believes the Company is well positioned to
benefit from its electronic commerce capabilities as more and more government
procurement vehicles are requiring these competencies as a condition for award.
The Company also provides expertise in the Government procurement process as
a subcontractor to OEMs, providing services including initial bid and proposal
preparation, contract management, customer support services, technical
management services and electronic commerce services. By providing these
services, the Company allows the OEMs to sell to the Government as if they were
direct marketers of hardware and software. Under a NASA Scientific and
Engineering Workstation Program II ("SEWP II") subcontract, the Company will
provide several of these subcontracting services to a leading microcomputer and
workstation manufacturer for a specified percentage of revenues.
SOLUTIONS GROUP
The Solutions Group provides information technology solutions designed to
address six discrete customer needs: document management, Microsoft consulting,
executive management consulting, point of sale systems implementations,
electronic commerce and training. In providing these solutions, the Company
combines its in-house expertise with appropriate products of different vendors.
Management believes the Company's expertise in these key substantive areas
provides an effective marketing tool in sales of other products and services.
Through its DoxSys subsidiary, the Company provides complete image-based
document management solutions tailored to customers. These systems are primarily
based on a line of products manufactured by Mosaix, Inc. Management believes
that the Company has one of the largest installed bases of document management
workflow systems in the Government.
The executive management consulting group seeks to help Government agencies
respond to recent legislation including the Chief Financial Officer Act, the
Government Performance and Results Act and the Information Technology Management
Reform Act. Subject matter topics include integrated financial management
solutions, financial management improvement, financial management operations,
internal management controls, fraud detection and prevention, strategic
information management, software process improvement, performance-based
budgeting and strategic and performance plans. These projects are
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often similar to the Company's systems integration activities but are usually
smaller and involve a higher content of pre-packaged systems or specialized
subject matter.
The Company is a Microsoft Solutions provider. Microsoft Solutions is an
intensive program developed by Microsoft to train information technology
professionals in five key functional areas: messaging, Internet, intranet,
extranet and large data center replacement applications. The group provides
infrastructure analysis and migration to Windows NT, enterprise-wide messaging
design and implementation, Internet and intranet design and deployment and
mainframe replacement, migration and connectivity.
The Company operates an authorized and certified training and education
center for Microsoft and maintains four fully-equipped classrooms devoted to
Microsoft training. In on-site and off-site services, the Company trained over
14,000 people in 1996, including Government and private sector clients as well
as Company personnel. Management believes that these training services can play
a large role in retaining customers and key Company personnel.
The point of sale business of the Solutions Group provides customized
software and hardware systems to movie theaters and quick service restaurants.
The systems allow for advanced day theater ticket sales, customer order entry,
multi-point inventory, "real time" agents and up-to-the-minute operations
reports. The theater system also provides a module to schedule movies so as to
maximize concessions revenues. Current customers include United Artist Theaters,
Arby's franchisees and Dairy Queen franchisees in selected cities.
COMPETITION
In providing a broad range of services and products that address the
complete information technology needs of its clients, the Company participates,
to varying degrees, in multiple segments of the information technology market,
including markets for systems engineering, development and integration;
networking; document imaging services; and product and component sales. Each
market segment in which the Company operates experiences vigorous competition.
Within each segment, the Company competes against different firms of varying
sizes, with different specializations and skills. The number and size of
competitors vary among operating groups and within the individual divisions of
each group. Frequently, the number and identity of competitors vary even from
program to program within a given business area. Many of the Company's
competitors are significantly larger and have greater financial resources than
the Company. Some of these competitors are divisions or subsidiaries of large,
diversified companies that have access to the financial resources of their
parent companies. In the Product Sales Group, the Company competes with certain
computer manufacturers (including the Company's suppliers), who occasionally
sell directly to the U.S. Government market, as well as a substantial number of
systems integrators, resellers and distributors. To a lesser extent, the Company
competes with Government agencies themselves which are permitted to sell
services to other Government agencies as a result of procurement reform.
The Company believes that the principal competitive factors in the
Government services market are technical knowledge, management capability, past
contract performance, personnel qualifications and price. During its recent
history, the Company has been successful in winning new and repeat contract
awards in each of its businesses and in getting customers to exercise contract
option years in its services business, both of which the Company believes are
attributable to the strength of its past contract performance, its technical
knowledge, and its competitive prices. Further, the Company's senior management
team has extensive, industry-specific technical and managerial experience. As a
result, the Company believes that it has generally been able to compete
successfully on each of the principal competitive factors within each of its
business lines.
BACKLOG
Many of the Company's Government contracts contain a total contract capacity
reflecting the maximum amount that the Government can purchase under the
contract. Contract backlog is a portion of
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total contract capacity and represents management's estimate (based on known
orders and those management believes are probable under the circumstances) of
the aggregate contract revenues that will be earned by the Company over the life
of the contract, including option periods.
The Company's estimated contract backlog as of June 30, 1997 was $1.0
billion. Due to the Government's ability to select multiple suppliers under its
IDIQ contracts, as well as its right to limit orders to any particular awardee,
there can be no assurances that contract backlog will result in actual orders.
GOVERNMENT CONTRACTS
The Company derives substantially all of its revenues from business
performed under Government contracts. These include services, systems
integration and other contracts obtained through a negotiated procurement
process, as well as product sales contracts made under GSA Schedules, MACs and
similar IDIQ vehicles.
Traditional negotiated procurement contracts typically authorize a single
contractor or team of contractors to provide a defined set of services and
products to a single government agency. These contracts include
cost-reimbursement contracts (both cost-plus-fixed-fee and cost-plus-award-fee),
time and materials contracts, fixed-price contracts and IDIQ contracts.
Cost-plus-fixed-fee contracts generally provide for the reimbursement of
incurred costs during contract performance, to the extent that such costs are
allowable and allocable, and the payment of a fee, the size of which is fixed in
the contract. Cost-plus-award-fee contracts typically provide for the
reimbursement of costs with a base fee and an additional fee that is based upon
a periodic evaluation of the contractor's performance against specified
criteria. Under time and materials contracts, the contractor agrees to provide
certain categories of labor and materials at negotiated rates. To the extent a
contractor's costs differ from the negotiated rates, the contractor realizes all
of the benefit or detriment resulting from the difference between the contract
price and the contractor's cost for a unit of labor or product. Risks associated
with these fluctuations have been mitigated for information technology providers
by the consistent decline in product costs over time, although these reductions
must frequently be anticipated in the proposal process. Under fixed-price
contracts, the contractor agrees to perform specified work for a fixed price
and, accordingly, realizes all the benefit or detriment resulting from decreases
or increases in the cost of performing the work.
The IDIQ contracts historically negotiated by the Company typically specify
the prices at which certain services and/or products are to be provided. These
contracts have been and continue to be used for large-scale Government purchases
of integrated systems that include a significant service or maintenance
component, along with the provision of computer hardware and software. These
IDIQ contracts are typically awarded to a single bidder or team of bidders
chosen through a formal competitive bid process. The periods of performance for
IDIQ contracts typically span a base year and a number of option years. IDIQ
contracts do not obligate the Government to purchase goods or services at the
levels set out in the request for proposal, and allow the Government to
terminate the contract if it is dissatisfied with the contractor's pricing or
performance, or simply for convenience. Alternatively, IDIQ vehicles offer both
the Government and the contractor flexibility to introduce new products and
services as technology changes over the life of the contract.
Over the past few years, reforms of the Government procurement process have
introduced a dramatic increase in the flexibility and alternatives available to
the federal information technology buyer. Onerous regulations that effectively
encouraged large scale, long term, single award procurements have given way to a
more "commercial" buying approach. Government customers, particularly those
buying computer hardware and software without a custom service element, are
spending an increasing share of their procurement budgets through smaller scale,
shorter term, multiple award, multiple agency contract vehicles. While each of
these flexible contractual vehicles has its own unique characteristics, they
have
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several major elements in common. Because these vehicles do not require the
Government to make specific purchases, they are generally characterized as IDIQ
contracts, and function as procurement "schedules" or catalogs. Although
contractors must compete for the right to participate in these multi-agency,
multi-vendor vehicles, winning the right to participate does not guarantee
revenues, which require an effective post-award sales effort.
In addition to purchasing from multiple IDIQ contracts, Government agencies
may also purchase from GSA Schedules or MACs. Historically, the GSA would
produce schedules for each agency, after extensive bidding and review processes,
that would dictate the products, prices and vendors for all purchases by that
agency. As a result of recent changes to the rules governing use of GSA
Schedules for Government agency purchases of hardware, software and services,
GSA Schedules now frequently act as broadly defined IDIQ contracts under which
multiple Government agencies may procure hardware, software or related services
from contractors authorized to sell under such GSA Schedules without minimum or
maximum order limitations. Contractors participating in the GSA Schedule program
are eligible to market their products to a broad range of Government customers.
The GSA Schedules together with related basic purchasing agreements for larger
volume purchases at reduced prices ("BPAs") offer Government agencies the
advantage of an established contracting infrastructure including staff who are
expert in the technologies offered by various vendors, volume driven pricing,
access to the latest technology and streamlined purchasing mechanisms.
At the time of initial award, prices to the end-users under the Company's
GSA Schedules are set, either at a specified level for the duration of the
contract or at specified levels varying over time. In addition, under certain
circumstances, the Company is required under the terms of its GSA Schedules to
pass on any savings, resulting from supplier discounts or other price
reductions, to the Government in the form of corresponding price reductions. GSA
Schedules do not have pre-set delivery schedules or minimum purchase levels. The
uncertainties related to future contract performance costs, quantities to be
shipped and dates of delivery make it difficult to predict the future revenues
and profitability performance that may be associated with any particular GSA
Schedule.
Similar to GSA Schedules, MACs offer multiple agencies the opportunity to
procure products from a broad range of vendors. For example, 17 contractors,
including FDC and Sylvest, now hold MACs through the NIH's ECS, which is a
series of electronic hardware and software catalogs from which any Government
agency that elects to participate may order. MACs specify products and prices
and are issued by a specific government agency to multiple contractors. The
agency which selects the vendors and maintains the products list and takes a
small percentage of each order for administering the contract, and multiple
agencies are permitted to place orders under the MAC.
The evolution of procurement methods has had the effect of making the
procurement of information technology in the Government more similar to that in
the commercial sector. The new procurement methods allow for more timely
purchases of information technology products and for multiple vendors selling
the same products and services, resulting in increasing competition for contract
orders. Thus, whereas historically a contract award typically assured the
winning bidder of a predictable amount of revenue, in the current environment
the contractor's post-award sales, marketing, and customer service effectiveness
frequently dictate the amount and timing of all revenue to be realized under the
contract or schedule. In effect, the new vehicles necessitate two selling
cycles: one to win participation as a vendor under the umbrella contract and a
second to actually win specific orders after contract award.
SALES AND MARKETING
Sales and marketing efforts are split into contract pre-award and post-award
activities. Employees in the Corporate Marketing Group focus on pre-award sales
and marketing, including identifying new contracts, qualifying the Company to
bid on such contracts and then bidding on such contracts. Once a contract is
awarded, the business unit responsible for the new contract leads the technical
performance
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and/or post-award sales and marketing effort intended to maximize sales. Under
IDIQ contracts, the Company's post-award activities are the most significant
factor in determining the amount of revenue realized.
Within the Corporate Marketing Group, senior management and the Company's
own professional staff of engineers, analysts and other personnel conduct the
Company's sales and marketing activities. The Corporate Marketing Group employs
approximately 50 people, the majority of which are engaged in the preparation
and negotiation of major proposals.
MAJOR CUSTOMERS
The Company has derived and expects to continue to derive substantially all
of its total revenues from Government contracts. Contracts with the U.S. Navy,
NASA and the Veterans Administration represented approximately 15%, 13% and 11%
of pro forma 1996 revenues, respectively. The various Government customers
exercise independent purchasing decisions, and sales to the Government are
generally not regarded as constituting sales to one customer. Instead, each
contracting entity is considered to be a separate customer.
EMPLOYEES
On August 31, 1997, the Company employed 1,059 persons, 727 of these
employees were technical, 104 were marketing/sales personnel and 228 were other
administrative staff. Of the total, 249 employees held advanced degrees. The
Company believes that it is competitive in hiring and retaining qualified
personnel. Less than 2% of the Company's employees are covered by collective
bargaining agreements with labor unions. The Company considers its relations
with its employees to be good and has not experienced any significant labor
problems.
FACILITIES
The Company leases all of the offices and facilities used in connection with
its operations. The following table sets forth information relating to the
significant facilities leased by the Company. In addition, the Company leases
several other customer support offices near customer facilities in various
states.
<TABLE>
<CAPTION>
EXPIRATION
OF
LOCATION PURPOSE SQUARE FOOTAGE LEASES(S)
- ----------------- -------------------------------------------------------- --------------- -----------
<S> <C> <C> <C>
Bethesda, MD Corporate Headquarters 67,602 12/31/04
Cleveland, OH NASA Lewis Support Facility 90,000 12/31/98
Greenbelt, MD Services Group Headquarters 69,600 12/31/98
Landover, MD Product Sales Group Headquarters 23,777 2/28/98
</TABLE>
LEGAL MATTERS
The Company is not involved in any material legal proceedings. From time to
time, the Company or its competitors file protests, as permitted under
procurement regulations, in connection with specific contract awards.
Historically, these proceedings have not had any material effect on the
Company's financial condition, results of operations, or cash flow. There can be
no assurance that the Company will not become involved in material legal
proceedings or contract bid protest proceedings in the future.
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MANAGEMENT
The following table sets forth certain information with respect to the
members of the Board of Directors and the executive officers of the Company.
Executive officers of the Company are chosen by the Board of Directors and serve
at its discretion.
<TABLE>
<CAPTION>
NAME TITLE AGE
- ----------------------------- ------------------------------------------------------------------------- ---
<S> <C> <C>
William E. Conway, Jr........ Chairman 48
Allan M. Holt................ Director 45
C. Robert Hanley............. Director and Chairman Emeritus 64
Daniel R. Young.............. Director, President and CEO 63
Peter J. Clare............... Director 32
Harry T. Marren.............. Director, President--FDC Technologies, Inc. 63
Paul A. Taltavull............ Senior Vice President, Solutions Group--FDC Technologies, Inc. 43
John W. Wayne................ Vice President--FDC Technologies, Inc. 41
James M. Dean................ Vice President, Chief Financial Officer and Treasurer of the Company; 50
Treasurer--FDC Technologies, Inc.
Michael D. Brant............. President--DoxSys, Inc. 50
Sterling E. Phillips, Jr..... Vice President, Corporate Marketing--FDC Technologies, Inc. 50
Charles M. Mathews, Jr....... Vice President, Product Sales Group--FDC Technologies, Inc. 38
Peter C. Belford, Sr......... Vice President, Services Group--FDC Technologies, Inc. and President and 50
Chief Operating Officer--NYMA, Inc.
</TABLE>
William E. Conway, Jr. was elected as a Director of the Company in 1996. He
has been a Managing Director of The Carlyle Group, a Washington, D.C.-based
private merchant bank, since 1987. Mr. Conway was Senior Vice President and
Chief Financial Officer of MCI Communications Corporation from 1984 until 1987,
and was a Vice President and Treasurer of MCI from 1981 to 1984. Mr. Conway
presently serves on the Board of Directors of BDM International, Inc., GTS
Duratek, Inc., Nextel Communications, Inc., Tracor Inc. and several privately
held companies.
Allan M. Holt was elected as a Director of the Company in 1996. He is a
Managing Director of The Carlyle Group, a Washington, D.C.-based private
merchant bank which he joined in 1991. He was previously with Avenir Group, a
private investment and advisory group, and from 1984 to 1987 was Director of
Planning and Budgets at MCI Communications Corporation, which he joined in 1982.
Mr. Holt currently serves on the boards of several privately held companies.
C. Robert Hanley has been a Director of the Company since its founding in
1969. Mr. Hanley was President and Chief Executive Officer of the Company from
1969 until 1985, when he became its Chairman and Chief Executive Officer. He
retired in January 1996 and now serves as a consultant to the Company.
Daniel R. Young has been a Director of the Company since 1977 and its
President and Chief Executive Officer since 1996. Mr. Young joined the Company
in 1976 as its Executive Vice President and became its President and Chief
Operating Officer in 1985. Prior to joining the Company, Mr. Young was employed
by Data Transmission Company as Executive Vice President and held various
management positions at Texas Instruments Incorporated.
Peter J. Clare was elected as a Director of the Company in 1996. He is
currently a Principal with The Carlyle Group, a Washington, D.C.-based private
merchant bank which he joined in 1992. Mr. Clare was previously with First City
Capital, a private investment group. From 1987 to 1989, he worked in the mergers
and acquisitions and merchant banking groups at Prudential-Bache. Mr. Clare
currently serves on the boards of several privately held companies.
63
<PAGE>
Harry T. Marren was elected as a Director of the Company in 1997. He has
been President of FDC Technologies, Inc. and its predecessor organization,
Federal Data Systems Corporation, since 1989. Mr. Marren joined the Company in
1977 as General Manager of Operations and was promoted to Vice President in 1980
and Senior Vice President in 1988.
Paul A. Taltavull has been Senior Vice President of the Solutions Group
within FDC Technologies, Inc. since April 1997. Mr. Taltavull joined the Company
in 1982 as a Federal Marketing Representative and has held a series of marketing
management positions with the Company, including Senior Vice President of
Marketing from 1992 to 1997. Before joining the Company, Mr. Taltavull was a
sales representative for Hewlett-Packard Company and a practicing engineer for
the U.S. Government.
John W. Wayne has been Vice President of the Systems Integration Group of
FDC Technologies, Inc. since 1990. He previously directed the Company's systems
design and engineering group. He joined Federal Data Corporation in 1981 as an
Operations Project Manager and was subsequently promoted to Director of
Technical Services. Prior to joining the Company, Mr. Wayne was employed as a
Systems Engineer with Inforex Incorporated and by TRW Data Systems as a Customer
Engineer.
James M. Dean has been Vice President and Chief Financial Officer of the
Company since 1986 and its Treasurer since 1987. Mr. Dean joined Federal Data
Corporation in 1983 as its Controller. He was previously employed by Price
Waterhouse as a Senior Audit Manager.
Michael D. Brant has been President of DoxSys, Inc. since April 1997. He
joined FDC Technologies, Inc. in 1993 as Vice President and General Manager of
DoxSys. From 1972 to 1992, Mr. Brant held various marketing positions with Xerox
Corporation, including Vice President of Custom Systems Integration.
Sterling E. Phillips, Jr. has been Vice President of corporate marketing of
FDC Technologies, Inc. since April 1997. He joined FDC Technologies, Inc. in
1996 as Vice President of its Services Group. He was previously employed as
Chief Operating Officer of TRI-COR Industries, Inc. and President of Business
Development of the federal business unit of Computer Sciences Corporation. From
1968 through 1992, Mr. Phillips held various positions in management, sales and
marketing with The IBM Corporation.
Charles M. Mathews, Jr. has been Vice President of the Product Sales Group
of FDC Technologies, Inc. since 1996. From 1990 through 1994, Mr. Mathews was
President of Bohdan Associates, Inc. and President of the Atlantic region of
AmeriData, Inc. from 1994 through 1995.
Peter C. Belford, Sr. has been Vice President of the Services Group of FDC
Technologies, Inc. since 1997 and President and Chief Operating Officer of NYMA,
Inc. since 1994. Mr. Bedford joined NYMA in 1985 as its Executive Vice
President. Mr. Belford was previously employed by Computer Sciences Corporation
("CSC") as Vice President, Product Management and Product Assurance. He joined
CSC in 1977 as a Program Manager and became Assistant to the President of the
System Sciences Division of that company, with executive management
responsibilities.
The Company does not currently pay any fees or remuneration to its directors
for service on the Board and the Board has not established committees of the
Board of Directors.
CONSULTING AGREEMENTS
In January 1996, the Company and C. Robert Hanley entered into a 3-year
consulting agreement. Under the terms of the agreement, Mr. Hanley consults on
certain aspects of the Company's business and receives a consulting fee of
$200,000 per year, maintains an office at the Company's Bethesda headquarters
and participates in the Company's health insurance plan.
64
<PAGE>
EXECUTIVE COMPENSATION
The following table sets forth information with respect to the compensation
paid by the Company for services rendered during the year ended December 31,
1996 to the Chief Executive Officers and to each of the four other most highly
compensated executive officers of the Company (the "Named Executive Officers").
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM COMPENSATION
ANNUAL COMPENSATION --------------------------------------------------
----------------------------------- SECURITIES
OTHER RESTRICTED UNDERLYING
ANNUAL STOCK OPTIONS/ LTIP ALL OTHER
NAME AND SALARY BONUS(1) COMPENSATION(2) AWARD(S) SARS(3) PAYOUTS COMPENSATION(4)
PRINCIPAL POSITION ($) ($) ($) ($) (#) ($) ($)
- ---------------------------------------- ------- -------- --------------- ---------- ---------- ------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C>
Daniel R. Young(5) ..................... 225,012 300,000 -- -- 75,000 -- 430,351
(Chief Executive Officer)
C. Robert Hanley(6) .................... 10,418 -- -- -- -- -- 2,341,260
(Chief Executive Officer)
Harry T. Marren ........................ 150,000 250,000 -- -- 40,000 -- 168,086
(President, FDC Technologies, Inc.)
Paul A. Taltavull ...................... 150,000 150,000 -- -- 25,000 -- --
(Senior Vice President)
John W. Wayne .......................... 102,000 160,000 -- -- 15,000 -- --
(Vice President)
James M. Dean .......................... 110,000 130,000 -- -- 10,000 -- --
(Vice President and Chief Financial
Officer)
</TABLE>
- ------------------------
(1) Bonus awards are reflected in the year to which they are attributable and
not the year in which they are actually paid. Bonuses are awarded at the
discretion of management subject to review by the Board of Directors.
(2) Fringe benefit amounts are omitted to the extent the aggregate value of such
benefits is less than 10% of the salary and bonus, or $50,000.
(3) The options listed were awarded in 1996 pursuant to the Company's Stock
Option Plan for Executives and Other Key Employees (the "Plan"). Under the
Plan, 6% of the options granted become exercisable on December 31 of each
year beginning on December 31, 1996 and ending December 31, 2001. The
remaining 70% of the options granted become exercisable throughout a
five-year period beginning December 31, 1996 based on satisfaction of
certain financial criteria, including earnings and cash flow targets.
(4) Amounts shown include the dollar value of life insurance premiums paid on
behalf of Messrs. Young ($430,351), Hanley ($2,149,593) and Marren
($168,086). Mr. Hanley also received $191,667 in consulting fees.
(5) Mr. Young was appointed Chief Executive Officer in January 1996.
(6) Resigned in January 1996.
65
<PAGE>
The following table sets forth information regarding the Company's Option
Grants during the fiscal year ended December 31, 1996. The Company has granted
no stock appreciation rights.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
POTENTIAL
REALIZABLE
VALUE AT ASSUMED
ANNUAL RATES OF
INDIVIDUAL GRANTS STOCK
------------------------------ PRICE
NUMBER OF APPRECIATION
SECURITIES PERCENT OF TOTAL FOR OPTION TERM
UNDERLYING OPTIONS GRANTED EXERCISE OR ----------------
OPTIONS TO EMPLOYEES IN BASE PRICE EXPIRATION 5% 10%
NAME GRANTED (#) FISCAL YEAR ($/SH) DATE ($) ($)
- ---------------------------------------- ----------- ---------------- ----------- ---------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Daniel R. Young......................... 75,000 30% 10 03/31/01 207,211 457,883
C. Robert Hanley........................ -- -- -- -- -- --
Harry T. Marren......................... 40,000 16% 10 03/31/01 110,513 244,204
Paul A. Taltavull....................... 25,000 10% 10 03/31/01 69,070 152,627
John W. Wayne........................... 15,000 6% 10 03/31/01 41,442 91,577
James M. Dean........................... 10,000 4% 10 03/31/01 27,628 61,051
</TABLE>
The following table sets forth for each of the Named Executive Officers the
number of, and the value of, the exercisable and unexercisable stock options
each of them held at December 31, 1996. None of the Named Executive Officers
exercised a stock option during 1996.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND
FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN THE MONEY
OPTIONS OPTIONS AT FISCAL
AT FISCAL YEAR-END (#) YEAR-END ($)(1)
--------------------------- ---------------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---------------------------------------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Daniel R. Young......................... 4,500 70,500 76,500 1,198,500
C. Robert Hanley........................ -- -- -- --
Harry T. Marren......................... 2,400 37,600 40,800 639,200
Paul A. Taltavull (2)................... 1,500 23,500 25,500 399,500
John W. Wayne (3)....................... 900 14,100 15,300 239,700
James M. Dean (2)....................... 600 9,400 10,200 159,800
</TABLE>
- ------------------------
(1) No valuation of the common stock was made at year-end. The assumed value of
$27.00 per share is based on the price paid for the common stock by all
investors at the time of the NYMA Acquisition in May 1997, which management
believes to be substantially higher than the year-end valuation.
(2) Excludes options to purchase 30,000 shares granted prior to the
Recapitalization pursuant to FDC's 1987 Stock Incentive Plan, which options
will be replaced with immediately exercisable options to purchase shares of
FDC in a quantity and at a price that will preserve the economic value of
the options prior to the Recapitalization.
(3) Excludes options to purchase 5,000 shares granted prior to the
Recapitalization pursuant to FDC's 1987 Stock Incentive Plan, which options
will be replaced with immediately exercisable options to purchase shares of
FDC in a quantity and at a price that will preserve the economic value of
the options prior to the Recapitalization.
66
<PAGE>
PRINCIPAL STOCKHOLDERS
The following table sets forth the ownership of common stock of the Company
by each person known by the Company to be the owner of 5% or more of the
Company's outstanding common stock, by each person who is a director or Named
Executive Officer of the Company and by all directors and executive officers of
the Company as a group.
<TABLE>
<CAPTION>
PERCENTAGE OF
NUMBER ALL OUTSTANDING
BENEFICIAL OWNER(1) OF SHARES COMMON STOCK
- ------------------------------------------------------------------ ---------- ---------------
<S> <C> <C>
TCG Holdings, L.L.C.(2)........................................... 2,447,272 84.1
William E. Conway, Jr.(3)......................................... -- --
Allan M. Holt(3).................................................. -- --
C. Robert Hanley(4)............................................... 73,172 2.5
Daniel R. Young(5)(6)............................................. 155,407 5.6
Peter J. Clare(3)................................................. -- --
Harry T. Marren(6)................................................ 31,000 1.1
Paul A. Taltavull(6).............................................. 14,880 *
James M. Dean(6).................................................. 5,920 *
John W. Wayne(6).................................................. 12,000 *
All directors and executive offers as a group (13 persons)........ 345,288 11.9
</TABLE>
- ------------------------
* less than one percent
(1) TCG Holdings, L.L.C., a Delaware limited liability company, is the sole
managing member of TC Group, L.L.C., a Delaware limited liability company,
which is the sole general partner of Carlyle Partners II, L.P., a Delaware
limited partnership, Carlyle Partners III, L.P., a Delaware limited
partnership, Carlyle International Partners II, L.P., a Cayman Islands
limited partnership, Carlyle International Partners III, L.P., a Cayman
Islands limited partnership, and certain other partnerships formed by
Carlyle. The address of TCG Holdings L.L.C. is c/o The Carlyle Group, 1001
Pennsylvania Avenue, N.W., Washington, D.C. 20004.
(2) Beneficial ownership is determined in accordance with the rules of the SEC.
Except as otherwise indicated, each beneficial owner has the sole power to
vote, as applicable, and to dispose of all units owned by such beneficial
owner.
(3) The address of such person is c/o The Carlyle Group, 1001 Pennsylvania
Avenue, N.W., Washington, D.C. 20004.
(4) The address of C. Robert Hanley is 2808 Tarflower Way, Naples, Florida
34105.
(5) 7,000 of these shares (0.3% of the total outstanding shares of the Company)
are owned by the Daniel R. Young Irrevocable Unitrust U/A dated November 16,
1994, for which Daniel R. Young is the trustee.
(6) The address of such person is 4800 Hampden Lane, Bethesda, Maryland 20814.
67
<PAGE>
CERTAIN TRANSACTIONS
Concurrently with the acquisition of the Company by Carlyle in 1995, the
Company entered into a management agreement (the "Management Agreement") with
Carlyle for certain management and financial advisory services to be provided to
the Company and its subsidiaries. The Management Agreement provides for the
payment of annual management fees in an amount equal to $300,000.
Carlyle received fees of $1.5 million and $0.5 million for advisory and
other services rendered in connection with the Recapitalization and the NYMA
Acquisition, respectively. Carlyle received a fee of $1.5 million for advisory
and other services rendered in connection with the Sylvest Acquisition, the
offering of the Private Notes and the Refinancing.
In connection with the Recapitalization, the Company sold an airplane, the
Company's financial services division, and a 10% limited partnership interest in
a bankrupt partnership that previously held title to the office building in
which the Company is located to an entity controlled by C. Robert Hanley, a
Director of the Company and its former chief executive officer. Mr. Hanley
purchased the above-described assets and assumed the related liabilities for
approximately $2.4 million, the aggregate independent appraised value of the
airplane and the financial services division. The Company attributed no value to
the partnership interest. The Company entered into a three-year consulting
agreement with Mr. Hanley and a three-year agreement for use of the airplane
from an affiliate of Mr. Hanley. The consulting agreement provides for annual
payments of $200,000, and the lease of the airplane provides for annual payments
of $300,000 plus a usage charge which amounted to $55,632 during the year ended
December 31, 1996.
In connection with the Recapitalization, the stockholders of the Company
executed a Holders Agreement dated as of November 30, 1995 (as amended,
supplemented or replaced, the "Holders Agreement"). The Holders Agreement
restricts transfer of the common stock of the Company (except to affiliates, to
the public in a registered offering or pursuant to Rule 144 under the Securities
Act, transfers in a merger or sale of the Company, or transfer pursuant to
certain rights under the Holders Agreement). The Holders Agreement also provides
for tag-along rights on transfers of more than 15% of the common stock, bring
along rights with respect to more than 50% of the common stock and registration
rights.
68
<PAGE>
DESCRIPTION OF CERTAIN INDEBTEDNESS
NEW SENIOR CREDIT FACILITY
As a part of the refinancing of the Company, FDC entered into a new senior
secured credit agreement (the "New Senior Credit Facility") shortly after the
offering of the Private Notes. The New Senior Credit Facility is among the
Company, its subsidiaries (as Subsidiary Guarantors), Bankers Trust Company (as
agent) and the lenders party thereto. The New Senior Credit Facility consists of
a $75.0 million revolving credit facility, including a subfacility for letters
of credit (the "Revolving Loan").
The Revolving Loan is evidenced by notes and matures on or before the fifth
anniversary of the closing of the New Senior Credit Facility. Availability of
Loans and Letters of Credit are subject to a borrowing base comprised of 85% of
Eligible Receivables and 60% of Eligible Inventory (as such terms are defined in
the New Senior Credit Facility).
Mandatory reductions of outstanding principal amounts under the New Senior
Credit Facility are required upon the occurrence of certain events.
All outstanding loans under the New Senior Credit Facility bear interest at
the Company's option at the base rate in effect from time to time plus 1.25% or
the eurodollar rate plus 2.25% plus an additional 2.0% on overdue amounts.
Interest in respect of base rate loans is payable quarterly in arrears on the
last business day of each fiscal quarter. Interest in respect of eurodollar
loans is payable at the end of the applicable interest period or, if earlier,
quarterly.
FDC's obligations under the New Senior Credit Facility are guaranteed by all
direct and indirect domestic subsidiaries of FDC and are secured by a lien on
all assets (present and future, tangible and intangible) of FDC and the
Subsidiary Guarantors, with such exceptions as are satisfactory to the lenders.
The New Senior Credit Facility contains customary covenants restricting the
incurrence of debt (except for the Notes and the existing Floor Plan Financing
Facility (as defined), as amended, modified or replaced), and encumbrances on or
sales of assets, limiting mergers and acquisitions except Permitted Acquisitions
(as defined in the New Senior Credit Facility) and restricting dividends,
investments and changes of control, providing for the maintenance of certain
financial ratios and various other financial and other covenants and
restrictions.
FLOOR PLAN FINANCING FACILITY
On September 17, 1996, Sylvest entered into the Agreement for Wholesale
Financing and the STAR Agreement (Short Term Accounts Receivable Program) with
Deutsche Financial Services Corporation ("DFS") (as amended or replaced from
time to time, collectively, the "Floor Plan Financing Facility") to facilitate
the purchase of inventory by Sylvest from approved vendors for prompt resale to
customers. In return, Sylvest granted DFS a first priority security interest in
the assets financed by DFS and certain other rights and assets. The Floor Plan
Financing Facility currently contains certain financial covenants, which if
breached may require FDC to return to Sylvest moneys paid by Sylvest to FDC in
the previous month to the extent such repayments are necessary to cure such
breach.
SELLER NOTES
On January 4, 1996, in connection with the Recapitalization, the Company
issued an aggregate principal amount of $7.0 million of 9% Increasing Rate
Subordinated Notes (the "FDC Notes") due on the later of (i) six months after
the indefeasible payment of all amounts owed under the Company's senior credit
facility (including any refinancing thereof), to the extent the term of the
senior credit facility is extended in connection with a default or anticipated
default and (ii) July 4, 2003. The FDC Notes accrue interest at 9% from January
4, 1996 through January 3, 1999, 11% from January 4, 1999 through December 31,
2002 and 13% thereafter. Interest on the FDC Notes is payable semi-annually
beginning
69
<PAGE>
July 4, 1996; provided, however, that any amount of cash interest which is not
paid on the FDC Notes as a result of payment restrictions under any "senior
debt" (as defined in the FDC Notes) will be paid by the issuance of
payment-in-kind notes. The interest payments of $316,485 due July 4, 1996 and
$330,727 due January 4, 1997 were made through the issuance of payment-in-kind
notes.
On May 2, 1997, in connection with the NYMA Acquisition, the Company issued
an aggregate principal amount of $5.0 million of 9% Increasing Rate Subordinated
Notes (the "NYMA Notes") due on the later of (i) six months after the
indefeasible payment of all amounts owed under the Company's senior credit
facility (including any refinancing thereof), to the extent the term of the
senior credit facility is extended in connection with a default or anticipated
default and (ii) November 2, 2004. The NYMA Notes accrue interest at 9% from May
2, 1997 through May 2, 2000, 11% from May 3, 2000 through May 3, 2003 and 13%
thereafter. Interest on the NYMA Notes will be payable semi-annually beginning
November 2, 1997; provided, however, that any amount of cash interest which is
not paid on the NYMA Notes as a result of payment restrictions under any "senior
debt" (as defined in the NYMA Notes) will be paid by the issuance of
payment-in-kind notes.
On June 30, 1997, in connection with the Sylvest Acquisition, the Company
issued an aggregate principal amount of $7.0 million of 9% Increasing Rate
Subordinated Notes (the "Sylvest Notes") due on the (i) later of six months
after the indefeasible payment of all amounts owed under the Company's senior
credit facility (including any refinancing thereof), to the extent the term of
the senior credit facility is extended in connection with a default or
anticipated default and (ii) December 31, 2004. The Sylvest Notes accrue
interest at 9% from June 30, 1997 through June 30, 1999, 11% from July 1, 1999
through June 30, 2001 and 13% thereafter. Interest on the Sylvest Notes will be
payable semi-annually beginning December 31, 1997; provided, however, that any
amount of cash interest which is not paid on the Sylvest Notes as a result of
payment restrictions under any "senior debt" (as defined in the Sylvest Notes)
will be paid by the issuance of payment-in-kind notes.
Each of the Seller Notes contain financial covenants. A portion of the
outstanding FDC Notes and Sylvest Notes were repaid with the proceeds of the
offering of the Private Notes.
70
<PAGE>
DESCRIPTION OF NOTES
GENERAL
The Notes were issued under an Indenture (the "Indenture") dated as of July
15, 1997, by and among the Company, the Subsidiary Guarantors and Norwest Bank,
Minnesota, National Association, as Trustee (the "Trustee").
The following summaries of certain provisions of the Indenture hereunder do
not purport to be complete and are subject to, and are qualified in their
entirety by reference to, all the provisions of the Indenture, including the
definitions therein of certain terms included herein. Wherever particular
defined terms of the Indenture are referred to herein, such defined terms shall
be incorporated herein by reference. Unless the context otherwise requires,
references to defined terms refer to defined terms of the Indenture.
The Notes are unsecured senior subordinated obligations of the Company, are
guaranteed on a senior subordinated unsecured basis by the Subsidiary
Guarantors, are limited to $175,000,000 aggregate principal amount, of which
$105,000,000 aggregate principal amount were issued in the offering of the
Private Notes, and mature on August 1, 2005. Additional amounts may be issued in
one or more series from time to time subject to the limitations set forth under
"--Certain Covenants--Limitation on Indebtedness" and the restrictions contained
in the Senior Credit Facility. The Notes are subordinated to Senior Indebtedness
of the Company as described below under "--Subordination."
As of the consummation of the offering of the Private Notes, all of the
Company's Subsidiaries are Restricted Subsidiaries. However, under certain
circumstances, the Company will be able to designate current or future
Subsidiaries as Unrestricted Subsidiaries. Unrestricted Subsidiaries will not be
subject to any of the restrictive covenants set forth in the Indenture.
TERMS OF NOTES
The Notes mature on August 1, 2005, and bear interest at the rate per annum
stated on the cover page hereof from the date of issuance, payable semiannually
in arrears on each February 1 and August 1 commencing on February 1, 1998, to
the persons who are registered holders thereof at the close of business on the
January 15 or July 15 preceding the applicable interest payment date. The Notes
are payable both as to principal and interest at the office of the agent of the
Company maintained for such purpose within the City and State of New York, or,
at the option of the Company, payment of interest may be made by check mailed to
the holders of the Notes at their respective addresses set forth in the Notes
holder register. Unless otherwise designated by the Company, the Company's agent
in New York will be at the office of the Trustee maintained for such purpose.
Interest on the Notes will be computed on the basis of a 360-day year of twelve
30-day months. The Notes are transferable and exchangeable at the offices of the
Registrar. The Notes were issued in fully registered form, without coupons, in
principal amounts of $1,000 and any integral multiple thereof.
OPTIONAL REDEMPTION
Except as provided below, the Notes may not be redeemed prior to August 1,
2001. On or after such date, the Notes may be redeemed at the option of the
Company, at any time as a whole, or from time to time in part, on not less than
30 nor more than 60 days' notice, at the following redemption prices (expressed
as percentages of principal amount), plus accrued and unpaid interest (if any)
to the date of
71
<PAGE>
redemption (subject to the rights of holders of record on the relevant record
date to receive interest due on the relevant interest payment date), if redeemed
during the 12-month periods commencing August 1:
<TABLE>
<CAPTION>
REDEMPTION
PRICE
-----------
<S> <C>
2001............................................................................. 105.063%
2002............................................................................. 103.375%
2003............................................................................. 101.688%
2004 and thereafter.............................................................. 100.000%
</TABLE>
Notwithstanding the foregoing, at any time prior to August 1, 2000, the
Company may redeem, in part and from time to time, with the net proceeds of one
or more Public Equity Offerings, up to 35% aggregate principal amount of the
Notes originally issued in the offering of the Private Notes at a redemption
price equal to 110.125% of the aggregate principal amount thereof plus accrued
and unpaid interest thereon, if any, to the redemption date; PROVIDED that at
least 65% of the aggregate principal amount of the Notes originally issued in
the offering of the Private Notes remain outstanding immediately after the
occurrence of any such redemption and that any such redemption occurs within 90
days following the closing of any such Public Equity Offering.
At any time on or prior to August 1, 2001, the Notes may also be redeemed as
a whole at the option of the Company upon the occurrence of a Change of Control,
upon not less than 30 nor more than 60 days prior notice (but in no event more
than 90 days after the occurrence of such Change of Control), at a redemption
price equal to 100% of the principal amount thereof plus the Applicable Premium
as of, and accrued and unpaid interest, if any, to, the date of redemption (the
"Redemption Date") (subject to the right of holders of record on the relevant
record date to receive interest due on the relevant interest payment date). The
Company may not redeem Notes pursuant to this paragraph if it has made a Change
of Control Offer (as defined) with respect to such Change of Control.
NOTICES AND SELECTIONS
In the event of a redemption of less than all of the Notes, the Notes will
be selected for redemption by the Trustee PRO RATA, by lot or by any other
method that the Trustee considers fair and appropriate and, if the Notes are
listed on any securities exchange, by a method that complies with the
requirements of such exchange; PROVIDED, HOWEVER, that if partial redemption is
made with the proceeds of a Public Equity Offering prior to August 1, 2000,
selection of the Notes or portions thereof for redemption shall be made by the
Trustee only on a PRO RATA basis unless such method is otherwise prohibited.
Notice of redemption will be mailed at least 30 days but not more than 60 days
before the redemption date to each holder of Notes to be redeemed at such
holder's registered address. On and after the redemption date, interest will
cease to accrue on Notes or portions thereof called for redemption (unless the
Company shall default in the payment of the redemption price or accrued
interest). Notes that are redeemed by the Company or that are purchased by the
Company pursuant to a Net Proceeds Offer as described under "--Limitation on
Asset Sales" or pursuant to a Change of Control Offer as described under
"--Change of Control" or that are otherwise acquired by the Company will be
surrendered to the Trustee for cancellation.
SUBORDINATION
The payment of all obligations on the Notes is subordinated in right of
payment to the prior payment in full, in cash or Cash Equivalents, of all
Obligations on the Senior Indebtedness. Upon any payment or distribution of
assets of the Company to the creditors upon any liquidation, dissolution,
winding up, reorganization, assignment for the benefit of creditors or
marshaling of assets of the Company or in a bankruptcy, reorganization,
insolvency, receivership or similar proceeding relating to the Company or its
property, whether voluntary or involuntary, all obligations with respect to all
Senior Indebtedness shall first be paid in full, in cash or Cash Equivalents,
before any payment or distribution is made on account of any
72
<PAGE>
Obligations on the Notes, or for the acquisition of any of the Notes for cash or
property or otherwise; and until all such Obligations with respect to all Senior
Indebtedness are paid in full, in cash or Cash Equivalents, any distribution to
which the holders of the Notes would be entitled but for the subordination
provisions will be made to the holders of Senior Indebtedness as their interests
may appear. If (i) any default occurs and is continuing in the payment when due,
whether at maturity, upon any redemption, by declaration or otherwise, of any
principal of, interest on, or other amounts due and owing on, any Senior
Indebtedness or (ii) any default occurs and is continuing with respect to any
Significant Senior Indebtedness resulting in the acceleration of the maturity of
all or any portion of any Significant Senior Indebtedness, no payment shall be
made by or on behalf of the Company or any of its Subsidiaries or any other
person on its or their behalf with respect to any Obligations on the Notes or to
acquire any of the Notes for cash or property or otherwise, except out of a
trust theretofore established pursuant to the provisions of the Indenture
described under "Satisfaction and Discharge of the Indenture; Covenant
Defeasance" (PROVIDED that payment into such trust was not made during any
period in which payment on the Notes is blocked pursuant to the subordination
provisions of the Indenture) and except by issuance of Junior Securities. In
addition, if any other event of default occurs and is continuing (or if such an
event of default would occur upon any payment with respect to the Notes) with
respect to the Designated Senior Indebtedness, as such event of default is
defined in the instrument creating or evidencing such Designated Senior
Indebtedness permitting the holders of such Designated Senior Indebtedness then
outstanding, or their Representative, to accelerate the maturity thereof and if
the Representative for the Designated Senior Indebtedness gives written notice
of the event of default to the Trustee (a "Default Notice"), then, unless and
until the date, if any, on which all Designated Senior Indebtedness to which
such event of default relates is discharged or the Representative for the
Designated Senior Indebtedness gives notice that all events of default have been
cured or waived or have ceased to exist or the Trustee receives written notice
from the Representative for the Designated Senior Indebtedness terminating the
Blockage Period (as defined below), during the 179 days after the delivery of
such Default Notice (the "Blockage Period"), none of the Company or any of its
Subsidiaries or any other person on its or their behalf shall (x) make any
payment with respect to any Obligations on the Notes or (y) acquire any of the
Notes for cash or property or otherwise. Notwithstanding anything herein to the
contrary, in no event will a Blockage Period extend beyond 179 days from the
date the payment on the Notes was due. Only one such Blockage Period may be
commenced within any 360 consecutive days. No event of default which existed or
was continuing (it being acknowledged that any action of the Company or its
Subsidiaries occurring subsequent to delivery of a Default Notice that would
give rise to any event of default pursuant to any provision under which an event
of default previously existed (or was continuing at the time of delivery of such
Default Notice) shall constitute a new event of default for this purpose) on the
date of the commencement of any Blockage Period with respect to the Designated
Senior Indebtedness shall be, or be made, the basis for the commencement of a
second Blockage Period by the Representative of the Designated Senior
Indebtedness whether or not within a period of 360 consecutive days, unless such
event of default shall have been cured or waived for a period of not less than
90 consecutive days.
By reason of such subordination, in the event of the insolvency of the
Company, creditors of the Company who are not holders of Senior Indebtedness,
including the holders of the Notes, may recover less, ratably, than holders of
Senior Indebtedness.
At June 30, 1997, after giving effect to the offering of the Private Notes
and application of the net proceeds therefrom, the Company would have had $10.2
million of Senior Indebtedness (representing revolving line of credit borrowings
of $6.2 million and $4.0 million of undrawn letters of credit) and $113.0
million of senior subordinated indebtedness (representing $105.0 million of
Private Notes and $8.0 million of Seller Notes) outstanding and the Subsidiary
Guarantors would have had $6.4 million of Guarantor Senior Indebtedness
outstanding (excluding guarantees of Indebtedness under the New Senior Credit
Facility). The Subsidiary Guarantors also would have had $14.2 million of
secured nonrecourse notes and nonrecourse obligations under capital leases.
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CHANGE OF CONTROL
Upon a Change of Control, each holder of Notes shall have the right to
require that the Company repurchase all or a portion of such holder's Notes at a
repurchase price in cash equal to 101% of the principal amount thereof plus
accrued and unpaid interest, if any, to any Repurchase Date (subject to the
rights of the holders of record on the relevant record date to receive interest
on the relevant interest payment date), in accordance with the terms set forth
below (the "Change of Control Offer").
Within 30 days following the date upon which the Change of Control occurred,
if the Company has not made a redemption offer pursuant to the third paragraph
under "Optional Redemption", the Company must send, by first class mail, a
notice to each holder, with a copy to the Trustee, which notice shall govern the
terms of the Change of Control Offer. Such notice shall state, among other
things, the purchase date, which must be not earlier than 30 days nor later than
60 days from the date such notice is mailed, other than as may be required by
law (the "Change of Control Payment Date"). Holders electing to have a Note
purchased pursuant to a Change of Control Offer will be required to surrender
the Note, with the form entitled "Option of Holder to Elect Purchase" on the
reverse of the Note completed, to the Paying Agent at the address specified in
the notice prior to the close of business on the Business Day prior to the
Change of Control Payment Date.
The Indenture requires that if the Senior Credit Facility is in effect, or
any amounts are owing thereunder, at the time of the occurrence of a Change of
Control, prior to the mailing of the notice to holders described in the
preceding paragraph, but in any event within 30 days following any Change of
Control, the Company covenants to (i) repay in full all Obligations under the
Senior Credit Facility or offer to repay in full all Obligations under the
Senior Credit Facility and repay the Obligations under the Senior Credit
Facility of each lender who has accepted such offer or (ii) obtain the requisite
consent under the Senior Credit Facility to permit the repurchase of the Notes
as described above. The Company must first comply with the covenant described in
the preceding sentence before it shall be required to purchase Notes in the
event of a Change of Control; PROVIDED that the Company's failure to comply with
the covenant described in the preceding sentence constitutes an Event of Default
described in clause (c) under "Events of Default" below if not cured within 30
days after the notice required by such clause. As a result of the foregoing, a
holder of the Notes may not be able to compel the Company to purchase the Notes
unless the Company is able at the time to refinance all of the Senior Credit
Facility or obtain requisite consents under the Senior Credit Facility. Failure
by the Company to make a Change of Control Offer when required by the Indenture
constitutes a Default under the Indenture and, if not cured within 30 days after
notice, constitutes an Event of Default.
The Company will comply with all applicable securities laws in connection
with any Change of Control Offer, including Rule 14e-1 under the Exchange Act.
CERTAIN COVENANTS
LIMITATION ON INDEBTEDNESS
The Company may not create, incur, issue, assume, guarantee or otherwise
become liable for, contingently or otherwise (collectively, "issue"), directly
or indirectly, any Indebtedness, and may not permit any Restricted Subsidiary to
issue, directly or indirectly, any Indebtedness; PROVIDED that the Company or a
Subsidiary Guarantor may issue Indebtedness if the Operating Coverage Ratio of
the Company is greater than (x) 1.75 to 1.0, if the date of such issuance is on
or prior to August 1, 1999, or (y) 2.00 to 1.0, if the date of such issuance is
after August 1, 1999.
The above limitation will not apply to the issuance of the following
Indebtedness: (a)(1) Indebtedness pursuant to the Senior Credit Facility, in an
aggregate principal amount at any time outstanding not to exceed the greater of
(x) $75.0 million and (y) the sum of 85% of Eligible Receivables and 60% of
Eligible Inventory, in each case, as defined in the Senior Credit Facility (but
including accounts and inventory in
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which the lenders under any Floor Plan Financing Facility have a security
interest), as in effect on the Issue Date (the "Borrowing Base") less, in either
case, the aggregate principal amount of Indebtedness then outstanding pursuant
to clause (a)(2) below, permanently reduced by repayments of term loans or
revolving loans out of the Excess Net Proceeds of Asset Sales actually made
(other than temporary reductions of revolving loan balances pending application
as permitted by the covenant described under "Limitation on Asset Sales"), and
(2) Indebtedness pursuant to any Floor Plan Financing Facility in an aggregate
principal amount not to exceed the greater of (x) $75.0 million and (y) the
Borrowing Base less, in either case, the aggregate principal amount of
Indebtedness then outstanding pursuant to the Senior Credit Facility; (b) the
Notes and the Subsidiary Guarantees; (c) Indebtedness owed to the Company or a
Restricted Subsidiary by the Company or a Restricted Subsidiary; PROVIDED,
HOWEVER, that any transfer of such Indebtedness (excluding a pledge or other
transfer thereof intended to create a security interest therein, but including
any enforcement thereof other than an enforcement that results in the repayment
of an obligation permitted by the terms of this covenant) to a person other than
the Company or a Restricted Subsidiary will be deemed for the purposes of this
covenant to constitute, in each case, the issuance of such Indebtedness by the
issuer thereof; (d) Indebtedness of the Company or any Restricted Subsidiary
(other than Indebtedness described in clause (a), (b) or (c) above) outstanding
as of the Issue Date, which Indebtedness is not contemplated to be repaid with
the proceeds of the offering of the Private Notes; (e) Indebtedness of the
Company or a Restricted Subsidiary issued in exchange for, or the proceeds of
which are used to refinance, extend, renew, substitute, replace or refund or pay
at maturity (including any mandatory sinking fund payment), any Indebtedness
issued pursuant to the covenant described in the first paragraph of this
"Limitation on Indebtedness" covenant or clauses (b) and (d) above and (j) below
(the "Refinancing Indebtedness"); PROVIDED that (l) the principal amount of such
Refinancing Indebtedness (or, if such Indebtedness is issued with original issue
discount, the amount equal to the original issue price of such Indebtedness plus
accretion, if any) shall not exceed the principal amount and accrued interest of
the Indebtedness so refinanced (plus the amount of any premiums required to be
paid under the terms of the instrument governing such Indebtedness and plus the
amount of reasonable expenses incurred by the Company or such Restricted
Subsidiary in connection therewith), (2) the Refinancing Indebtedness shall have
a Weighted Average Life to Maturity equal to or greater than the Weighted
Average Life to Maturity of the Indebtedness being refinanced, (3) if the
Indebtedness being refinanced is subordinate in right of payment to the Notes or
any Guarantee, the Refinancing Indebtedness shall be subordinated in right of
payment to the Notes or any Guarantee, on terms, considered as a whole, at least
as favorable to the holders of Notes as those contained in the documentation
governing the Indebtedness being refinanced, if any; and (4) if the Indebtedness
to be refinanced is Indebtedness of the Company, such Refinancing Indebtedness
will only be permitted by this clause (e) if it is Indebtedness of the Company;
(f) Indebtedness incurred by the Company or any Restricted Subsidiary under
Hedging Obligations; PROVIDED that (x) in the case of an Interest Rate
Agreement, the notional principal amount thereof does not exceed the principal
amount of the Indebtedness to which such Interest Rate Agreement relates and (y)
in the case of a Currency Agreement, such Currency Agreement does not increase
the Indebtedness of the Company and its Subsidiaries other than as a result of
fluctuations in foreign currency exchange or by reason of fees, indemnities and
compensation payable thereunder; (g) Indebtedness incurred by the Company or any
Restricted Subsidiary under performance bonds, letter of credit obligations to
provide security for worker's compensation claims, payment obligations in
connection with self-insurance or similar requirements and bank overdrafts
incurred in the ordinary course of business; PROVIDED that any Obligations
arising in connection with such bank overdraft Indebtedness is extinguished
within five business days; (h) Indebtedness incurred by the Company or any
Restricted Subsidiary and arising from agreements providing for indemnification,
adjustment of purchase price or similar obligations, from guarantees or letters
of credit, surety bonds or performance bonds securing any Obligations of the
Company or any Restricted Subsidiary pursuant to such agreements, in any case
incurred in connection with the disposition of any business, assets or
Restricted Subsidiary other than guarantees of Indebtedness incurred by any
person acquiring all or any portion of such business, assets or Restricted
Subsidiary for the purpose of financing such acquisition, in a principal amount
not to exceed the gross proceeds (with proceeds other
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than cash or Cash Equivalents being valued at the fair market value thereof as
determined by the Board of Directors of the Company in good faith) actually
received by the Company or any Restricted Subsidiary in connection with such
dispositions; (i) Indebtedness of the Company in an aggregate principal amount
not to exceed $5.0 million at any time outstanding in connection with the
purchase, redemption, acquisition, cancellation or other retirement for value of
shares of Capital Stock of the Company or any corporation of which the Company
is a Subsidiary, options on any such shares or related stock appreciation rights
or similar securities held by officers or employees or former officers or
employees of the Company or any Subsidiary of the Company (or their estates or
beneficiaries under their estates) and which were issued pursuant to any stock
option or other equity incentive plan, upon death, disability, retirement,
termination of employment or pursuant to the terms of such stock option or other
equity incentive plan or any other agreement under which such shares of capital
stock, options, related rights or similarly securities were issued; PROVIDED
that (1) such Indebtedness, by its terms or by the terms of any agreement or
instrument pursuant to which such Indebtedness is issued, is expressly made
subordinate in right of payment to the Notes at least to the extent that the
Notes are subordinated in right of payment to Senior Indebtedness, and (2) such
Indebtedness, by its terms or by the terms of any agreement or instrument
pursuant to which such Indebtedness is issued, provides that no payments of
principal of such Indebtedness by way of sinking fund, mandatory redemption or
otherwise (including defeasance) may be made at any term prior to one year after
the stated maturity of the Notes; (j) Acquired Indebtedness that is without
recourse to the Company or any of its Restricted Subsidiaries or any of their
respective assets (other than the Subsidiary acquired subject to such Acquired
Indebtedness and its assets), and is not guaranteed by any such person; PROVIDED
that, with respect to the incurrence of more than $5.0 million of such Acquired
Indebtedness at any time outstanding, after giving PRO FORMA effect to the
incurrence thereof, the Company could incur at least $1.00 of Indebtedness under
the first paragraph of this "Limitation on Indebtedness" covenant; (k)
Indebtedness issued as pay-in-kind interest in lieu of cash interest under the
terms of and pursuant to the Seller Notes or any other Indebtedness that is
incurred in accordance with the Indenture which is expressly subordinated in
right of payment to the Notes to at least the same extent as payment on the
Notes is subordinated to payment on Senior Indebtedness; (l) Indebtedness
represented by Capitalized Lease Obligations and Purchase Money Indebtedness of
the Company and Restricted Subsidiaries, in each case incurred for the purpose
of financing all or any part of the purchase price or cost of construction or
improvement of property, plant or equipment used in the business of the Company
or such Restricted Subsidiary, in aggregate principal amount not to exceed $5.0
million at any time outstanding; (m) lease financings and notes payable of the
Company or its Restricted Subsidiaries which are classified as nonrecourse in
accordance with GAAP, in each case entered into in the ordinary course of
business and consistent with past practice and secured solely by the equipment,
proceeds therefrom and associated lease payments in an aggregate principal
amount at any time outstanding not to exceed 20% of the Total Assets at the time
of issuance of such Indebtedness; and (n) additional Indebtedness of the Company
and Restricted Subsidiaries, which may, but need not be incurred under the
Senior Credit Facility, in an aggregate principal amount not to exceed $7.5
million at any time outstanding. Notwithstanding any other provision of this
covenant, a guarantee by a Subsidiary Guarantor or the Company of Indebtedness
incurred in accordance with the terms of the Indenture at the time such
Indebtedness was incurred will not constitute a separate incurrence of
Indebtedness.
For purposes of determining compliance with this covenant, in the event that
an item of Indebtedness meets the criteria of more than one of the categories
described in clauses (a) through (n) in the second paragraph of this covenant or
is entitled to be incurred pursuant to the first paragraph of this covenant, the
Company shall, in its sole discretion, classify such item of Indebtedness in any
manner that complies with this covenant and such item of Indebtedness will be
treated as having been incurred pursuant to only one of such clauses or pursuant
to the first paragraph hereof; PROVIDED that all outstanding Indebtedness under
the Senior Credit Facility or any Floor Plan Financing Facility immediately
following the offering of the Private Notes shall be deemed to have been
incurred pursuant to clause (a) of the second paragraph of this covenant.
Accrual of interest and the accretion of accreted value will not be deemed to be
an incurrence of Indebtedness for purposes of this covenant.
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LIMITATION ON ADDITIONAL SENIOR SUBORDINATED DEBT
Neither the Company nor any Subsidiary Guarantor will incur, create, issue,
assume, guarantee or otherwise become liable for any Indebtedness that is
expressly by its terms subordinate or junior in right of payment to any
Indebtedness of such person and senior in any respect of payment to the Notes or
the Guarantee of such Subsidiary Guarantor, as the case may be.
LIMITATION ON RESTRICTED PAYMENTS
The Company will not, and will not permit any Restricted Subsidiary to,
directly or indirectly (i) declare or pay any dividend or make any distribution
in either case on account of the Company's Capital Stock to the holders of the
Company's Capital Stock (except dividends or distributions payable in the
Company's Capital Stock), (ii) purchase, redeem or otherwise acquire or retire
for value any Capital Stock (including any option or warrant to purchase Capital
Stock) of the Company, (iii) purchase, repurchase, redeem, defease or otherwise
acquire or retire for value, prior to scheduled maturity, scheduled repayment or
scheduled sinking fund payment any Subordinated Obligations or the Seller Notes,
or (iv) make any Investment other than a Permitted Investment (any such
dividend, distribution, payment, purchase, redemption, defeasance, other
acquisition or retirement or Investment being hereinafter referred to as a
"Restricted Payment") if at the time the Company or such Restricted Subsidiary
makes such Restricted Payment: (a) a Default or Event of Default has occurred
and is continuing (or would result therefrom); (b) the Company is not able to
incur $1.00 of additional Indebtedness under the first paragraph of the covenant
described under "Limitation on Indebtedness"; or (c) the aggregate amount of
such Restricted Payment and all other Restricted Payments subsequent to the
Issue Date would exceed the sum of (A) the aggregate Net Cash Proceeds received
by the Company from any offering of the Qualified Capital Stock of the Company,
or of any entity of which the Company is a direct or indirect Subsidiary, to the
extent the proceeds thereof shall have been contributed as common equity to the
Company, and the amount of any other capital contributions received by the
Company in cash subsequent to the Issue Date and on or prior to the date the
Restricted Payment occurs (the "Reference Date"), (B) 50% of the cumulative
Consolidated Net Income of the Company subsequent to the Issue Date and on or
prior to the Reference Date or minus 100% of any cumulative deficit in
Consolidated Net Income during such period, (C) to the extent that any
Investment (other than a Permitted Investment) that was made after the Issue
Date is sold for cash or otherwise liquidated or repaid for cash, or any
Unrestricted Subsidiary which is designated as an Unrestricted Subsidiary
subsequent to the Issue Date is sold or liquidated for cash, the lesser of (1)
the cash return of capital with respect to such Investment (less the cost of
disposition, if any) and (2) the initial amount of such Investment (in each case
to the extent not included in clause (B) above), and (D) $5.0 million.
Notwithstanding the foregoing, the provisions set forth in the immediately
preceding paragraph will not prevent (i) the declaration and payment of any
dividends paid within 60 days after the date of declaration thereof if, at such
date of declaration, such dividend would have complied with this covenant, (ii)
if no Default or Event of Default shall have occurred and be continuing as a
consequence thereof, any purchase or redemption of Capital Stock or any
Subordinated Obligations of the Company made by exchange for, or out of the
proceeds of the substantially concurrent sale of, Qualified Capital Stock of the
Company (other than Capital Stock issued or sold to a Restricted Subsidiary),
(iii) if no Default or Event of Default shall have occurred and be continuing as
a consequence thereof, the repurchase, redemption or other repayment of any
Subordinated Obligations in exchange for or solely out of the proceeds of the
substantially concurrent sale (other than to a Restricted Subsidiary) of
Subordinated Obligations with a Weighted Average Life to Maturity equal to or
greater than the then remaining Weighted Average Life to Maturity of the
Subordinated Obligations repurchased, redeemed or repaid, (iv) any payment by
the Company or any Restricted Subsidiary of the Company (a) in connection with
repurchases of Equity Interests or Subordinated Obligations of the Company
following the death, disability or termination of employment of members of
management, and (b) of amounts (to the extent such payments would
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otherwise constitute Restricted Payments) required to be paid by the Company or
any of its Restricted Subsidiaries to participants in employee benefit plans
upon termination of employment by such participants, as provided in the
documents related thereto, in an aggregate amount (for both clauses (a) and (b))
not to exceed $2.0 million in any fiscal year; PROVIDED that any unused amounts
may be carried over to any subsequent fiscal year subject to a maximum amount of
$5.0 million in any fiscal year; PROVIDED, FURTHER, that such amount in any
fiscal year may be increased by an amount not to exceed (i) the cash proceeds
from the sale of Equity Interests of the Company to members of management,
directors or consultants of the Company and its Subsidiaries that occurs after
the Issue Date (to the extent the cash proceeds from the sale of such Equity
Interests have not otherwise been applied to the payment of Restricted Payments
by virtue of subclause (c) of the preceding paragraph) plus (ii) the cash
proceeds of key man life insurance policies received by the Company and its
Restricted Subsidiaries after the Issue Date less (iii) the amount of any
Restricted Payments previously made pursuant to clauses (i) and (ii); and
PROVIDED, FURTHER, that the cancellation of Indebtedness owing to the Company
from members of management of the Company or any of its Restricted Subsidiaries
in connection with a repurchase of Equity Interests of the Company will not be
deemed to constitute a Restricted Payment for purposes of this covenant or any
other provision of the Indenture, (v) Investments in securities not constituting
cash or Cash Equivalents and received in connection with an Asset Sale made
pursuant to the provisions of the covenant described under "--Certain
Covenants--Limitation on Asset Sales" below or any other disposition of assets
not constituting an Asset Sale by reason of the $500,000 threshold contained in
the definition thereof, (vi) repurchases of Equity Interests deemed to occur
upon exercise of stock options if such Equity Interests represent a portion of
the exercise of such options, (vii) Investments in Unrestricted Subsidiaries
that are made with Excluded Contributions, (viii) if no Default or Event of
Default shall have occurred and be continuing as a consequence thereof, the
declaration and payment of dividends to holders of any class or series of
Designated Preferred Stock issued after the Issue Date; PROVIDED, HOWEVER, that
for the most recently ended four full fiscal quarters for which internal
financial statements are available immediately preceding the date of issuance of
such Designated Preferred Stock, after giving effect to such issuance on a pro
forma basis, the Company and its Restricted Subsidiaries would have had an
Operating Coverage Ratio greater than (x) 1.75 to 1.0, if the date of such
incurrence is on or prior to August 1, 1999, or (y) 2.00 to 1.0, if the date of
incurrence is after August 1, 1999, (ix) Investments in Unrestricted
Subsidiaries having an aggregate fair market value, taken together with all
other Investments made pursuant to this clause (ix) that are at that time
outstanding, not to exceed $5.0 million at the time of such Investment (with the
fair market value of each Investment being measured at the time made and without
giving effect to subsequent changes in value) and (x) prepayments of Seller
Notes in an amount not to exceed $11.7 million in connection with the
Transactions and, after the Issue Date, additional prepayments of Seller Notes
in an amount not to exceed $2.0 million in any fiscal year; PROVIDED that any
unused amounts may be carried over to any subsequent fiscal year; PROVIDED that,
for purposes of determining whether Restricted Payments can be made pursuant to
the previous paragraph, all payments made pursuant to clauses (i), (iv), (viii)
and (ix) shall be included and payments made pursuant to all other clauses
specified above shall not be so included.
LIMITATION ON PAYMENT RESTRICTIONS AFFECTING SUBSIDIARIES
The Company will not, and will not permit any Restricted Subsidiary to,
directly or indirectly, create or otherwise cause or suffer to exist or become
effective any consensual encumbrance or restriction on the ability of any
Restricted Subsidiary to: (i) pay dividends or make any other distributions on
its Capital Stock or pay any Indebtedness or other obligation owed to the
Company or a Restricted Subsidiary, (ii) make any loans or advances to the
Company or a Restricted Subsidiary or (iii) transfer any of its property or
assets to the Company, except any such encumbrance or restriction under or by
reason of (a) applicable law or any applicable rule, regulation or order, (b)
the Indenture and the Notes, (c) the Senior Credit Facility or any Floor Plan
Financing Facility, (d) secured Indebtedness otherwise permitted to be incurred
pursuant to the provisions of the covenants described under "--Limitation on
Liens" that
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limit the right of the debtor to dispose of the assets securing such
Indebtedness, (e) customary net worth provisions contained in leases and other
agreements entered into in the ordinary course of business, (f) customary
restrictions with respect to a Restricted Subsidiary pursuant to an agreement
that has been entered into for the sale or disposition of all or substantially
all of the Capital Stock or assets of such Restricted Subsidiary, (g) provisions
with respect to the disposition or distribution of assets or property in joint
venture agreements and other similar agreements, (h) any other instrument
governing Indebtedness incurred on or after the Closing Date or any refinancing
thereof that is incurred in accordance with the Indenture, PROVIDED that the
encumbrance or restriction contained in any such Indebtedness or any such
refinancing thereof is no more restrictive and no more unfavorable to the
holders of the Notes than that contained in the Senior Credit Facility or any
Floor Plan Financing Facility as in effect on the Closing Date, (i) customary
provisions restricting subletting or assignment of any lease governing a
leasehold interest of a Restricted Subsidiary, (j) Acquired Indebtedness;
PROVIDED that (x) such restriction is not applicable to any person, or the
properties or assets of any person, other than the person acquired, and (y) such
Indebtedness is otherwise permitted to be incurred pursuant to the "Limitation
on Indebtedness" covenant and (k) restrictions on cash or other deposits or net
worth imposed by customers under contracts entered into in the ordinary course
of business.
LIMITATION ON ASSET SALES
The Company may not, and may not permit any Restricted Subsidiary to,
consummate any Asset Sale unless (i) the Company (or the Restricted Subsidiary,
as the case may be) receives consideration at the time of each such Asset Sale
at least equal to the fair market value (as specified in an Officers'
Certificate with respect to any Asset Sale of less than $2.0 million and as
determined by the Board of Directors of the Company in good faith with respect
to Asset Sales in excess of $2.0 million) of the assets sold; (ii) not less than
75% (100% in the case of lease payments) of the consideration received by the
Company (or such Restricted Subsidiary, as the case may be) is in the form of
cash; PROVIDED that any note or other obligation received by the Company (or
such Restricted Subsidiary, as the case may be) that is converted into cash
within 30 days after receipt and any liabilities (as shown on the Company's or
such Restricted Subsidiary's most recent balance sheet) of the Company or any
Restricted Subsidiary (other than Contingent Liabilities and liabilities that
are by their terms subordinated to the Notes or any guarantee thereof) that are
assumed by the transferee of any such assets shall be deemed to be cash for
purposes of this clause (ii); and (iii) the Company within 365 days of such
Asset Sale (x) reinvests or causes a Restricted Subsidiary to reinvest
(including by way of acquisitions) the Net Cash Proceeds of any Asset Sale into
one or more of the then existing businesses of the Company and its Subsidiaries
or any Similar Business; or (y) applies or causes to be applied such Net Cash
Proceeds to the permanent reduction of outstanding Senior Indebtedness or
Guarantor Senior Indebtedness, as the case may be; or (z) after such time as the
accumulated Excess Net Proceeds equal or exceed $10.0 million, applies or causes
to be applied such Excess Net Proceeds to the purchase of Notes tendered to the
Company for purchase at a price equal to 100% of the principal amount thereof
plus accrued interest thereon to the date of purchase pursuant to an offer to
purchase by the Company (a "Net Proceeds Offer") as set forth below; PROVIDED,
HOWEVER, that the Company shall have the right to exclude Asset Sales the net
proceeds of which in the aggregate do not exceed $2.0 million annually from the
calculation of accumulated Net Cash Proceeds; PROVIDED, FURTHER, to the extent
Net Cash Proceeds have not been applied pursuant to clause (x), (y) or (z) above
within 325 days of an Asset Sale, such Net Cash Proceeds shall be held in a
segregated account pending such application. Pending the final application of
any such Net Cash Proceeds, the Company or Restricted Subsidiary, as the case
may be, may temporarily reduce Senior Indebtedness or Guarantor Senior
Indebtedness, as the case may be, or otherwise invest such Net Cash Proceeds in
any manner not prohibited by the Indenture.
The Company will be required under the Senior Credit Facility to apply
certain net proceeds of asset sales to the repayment of Obligations thereunder.
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Each Net Proceeds Offer will be mailed to record Holders of Notes as shown
on the register of Holders not less than 365 nor more than 395 days after the
relevant Asset Sale, with a copy to the Trustee, shall specify the purchase date
(which shall be no earlier than 30 days nor later than 60 days from the date
such notice is mailed) and shall otherwise comply with the procedures set forth
in the Indenture. Upon receiving notice of the Net Proceeds Offer, Holders may
elect to tender their Notes in whole or in part in integral multiples of $1,000
in exchange for cash. To the extent Holders properly tender Notes in an amount
exceeding the Net Proceeds Offer, Notes of tendering Holders will be repurchased
on a pro rata basis (based on amounts tendered). If the aggregate purchase price
of Notes tendered pursuant to the Net Proceeds Offer is less than the Net Cash
Proceeds allotted to the purchase of the Notes, the Company may apply the
remaining Net Cash Proceeds for general corporate purposes.
The Company will comply with all applicable securities laws in connection
with any Net Proceeds Offer, including Rule 14e-1 under the Exchange Act.
LIMITATION ON LIENS
The Company will not, and will not permit any of its Restricted Subsidiaries
to, create, incur or otherwise cause or suffer to exist or become effective any
Liens of any kind (other than Permitted Liens) upon any property or asset of the
Company or any Restricted Subsidiary or any shares of stock or debt of any
Restricted Subsidiary which owns property or assets, now owned or hereafter
acquired, unless (i) if such Lien secures Indebtedness which is PARI PASSU with
the Notes or a Guarantee, then the Notes or such Guarantee, as the case may be,
are secured on an equal and ratable basis with the obligations so secured until
such time as such obligation is no longer secured by a Lien or (ii) if such Lien
secures Indebtedness which is subordinated to the Notes or a Guarantee, any such
Lien shall be subordinated to the Lien granted to the holders of the Notes or
such Guarantee, as the case may be, to the same extent as such Subordinated
Obligations are subordinated to the Notes.
LIMITATION ON CAPITAL STOCK OF RESTRICTED SUBSIDIARIES
The Company will not, if such action would cause a Subsidiary not to be a
Controlled Subsidiary, (i) sell, pledge, hypothecate or otherwise convey or
dispose of any Capital Stock of a Restricted Subsidiary (other than Liens on
such Capital Stock securing Obligations under Senior Indebtedness or Guarantor
Senior Indebtedness) or (ii) permit any of its Restricted Subsidiaries to issue
any Capital Stock, other, in any such case, than to the Company or a Controlled
Subsidiary. The foregoing restrictions shall not apply to an Asset Sale made in
compliance with "--Limitation on Asset Sales" or the issuance of Preferred Stock
in compliance with the covenant described under "--Limitation on Indebtedness."
GUARANTEES OF CERTAIN INDEBTEDNESS
The Company will not permit any of its Subsidiaries, directly or indirectly,
to incur, guarantee or secure through the granting of Liens the payment of any
Indebtedness under the Senior Credit Facility or any refunding or refinancing
thereof in each case unless such Subsidiary, the Company and the Trustee execute
and deliver a supplemental indenture evidencing such Subsidiary's Guarantee,
such Guarantee to be a senior subordinated unsecured obligation of such
Subsidiary. Neither the Company nor any Subsidiary Guarantor shall be required
to make a notation on the Notes or the Guarantees to reflect any such subsequent
Guarantee. Nothing in this covenant shall be construed to permit any Subsidiary
of the Company to incur Indebtedness otherwise prohibited by the "Limitation on
Indebtedness" covenant.
LIMITATION ON TRANSACTIONS WITH AFFILIATES
The Company will not, and will not permit any Restricted Subsidiary to,
directly or indirectly, following the Issue Date, enter into or permit to exist
any transaction with any Affiliate of the Company or any Significant Stockholder
of the Company (an "Affiliate Transaction") unless such transaction is on
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terms that are fair and reasonable to the Company or such Subsidiary and no less
favorable to the Company or such Subsidiary than those that could be obtained in
a comparable arm's length transaction with an entity that is not an Affiliate of
the Company or a Significant Stockholder of the Company; PROVIDED that in the
event such transaction or series of related transactions involves aggregate
consideration in excess of $2.0 million, the foregoing determination as to
fairness shall be made by a majority of the Disinterested Directors of the Board
of Directors of the Company as evidenced by a Board Resolution; PROVIDED,
FURTHER, that in the event such transaction or series of related transactions
involves aggregate consideration in excess of $10.0 million, the Company shall,
in addition to obtaining the approval of the Disinterested Directors of its
Board of Directors, obtain a written opinion of an Independent Financial Advisor
stating that the terms of such transaction are fair and reasonable to the
Company or such Subsidiary from a financial point of view; PROVIDED, HOWEVER,
that (i) reasonable and customary directors' fees, indemnification and similar
arrangements and payments thereunder, (ii) transactions between or among or for
the benefit of the Company and its Subsidiaries, which are not otherwise
prohibited by the Indenture, (iii) any employment agreement entered into by the
Company or any of its Subsidiaries in the ordinary course of business, (iv)
Restricted Payments permitted by the provisions of the Indenture described above
under "--Limitation on Restricted Payments," (v) provision of administrative or
management services by the Company or its Subsidiaries or any of their officers
to any of their respective Subsidiaries in the ordinary course of business, (vi)
arm's length transactions entered into in the ordinary course of business
between the Company or any Restricted Subsidiary and any Affiliate of the
Company or any Significant Stockholder of the Company engaged in a Similar
Business and (vii) transactions contemplated by any agreement as in effect as of
the Closing Date or any amendment thereto so long as any such amendment is not
disadvantageous to the Holders of the Notes in any material respect and so long
as the amounts paid by the Company and the Restricted Subsidiaries under any
such amended agreement do not exceed the amounts payable by the Company and the
Restricted Subsidiaries on the Closing Date, in each case, shall not be deemed
Affiliate Transactions.
LIMITATION ON MERGERS AND CERTAIN OTHER TRANSACTIONS
The Company, in a single transaction or through a series of related
transactions, shall not consolidate with or merge with or into any other person,
or transfer (by lease, assignment, sale or otherwise) all or substantially all
of its properties and assets unless (i) either the Company shall be the
continuing person, or the person (if other than the Company) formed by such
consolidation or into which the Company is merged or to which all or
substantially all of the properties and assets of the Company are transferred
(the Company or such other person hereinafter referred to as the "Surviving
person") shall be a corporation organized and validly existing under the laws of
the United States, any state thereof or the District of Columbia, and if other
than the Company shall expressly assume, by an indenture supplement, all of the
obligations of the Company under the Notes and the Indenture; (ii) immediately
after and giving effect to such transaction and the assumption contemplated by
clause (i) above and the incurrence or anticipated incurrence of any
Indebtedness to be incurred in connection therewith, the Surviving person could
incur at least $1.00 of Indebtedness pursuant to the first paragraph under the
"Limitation on Indebtedness" covenant and (iii) immediately before and
immediately after and giving effect to such transaction and the assumption of
the obligations as set forth in clause (i) above and the incurrence or
anticipated incurrence of any Indebtedness to be incurred in connection
therewith, no Default or Event of Default shall have occurred and be continuing;
and (iv) the Surviving person shall have delivered to the Trustee an officers'
certificate stating that such consolidation, merger, sale, assignment, transfer,
lease, conveyance or other disposition and, if a supplemental indenture is
required in connection with such transaction, such supplemental indenture comply
with the applicable provisions of the Indenture and that all conditions
precedent in the Indenture relating to such transaction have been satisfied.
For purposes of the foregoing, the transfer (by lease, assignment, sale or
otherwise, in a single transaction or series of transactions) of all or
substantially all of the properties and assets of one or more Subsidiaries of
the Company the Capital Stock of which constitutes all or substantially all of
the properties
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and assets of the Company shall be deemed to be the transfer of all or
substantially all of the properties and assets of the Company. Notwithstanding
the foregoing clauses (ii) and (iii), (a) any Restricted Subsidiary of the
Company may consolidate with, merge into or transfer all or part of its
properties and assets to the Company or a Subsidiary Guarantor and (b) the
Company may merge with an Affiliate incorporated solely for the purpose of
reincorporating the Company in another jurisdiction.
The Indenture provides that upon any consolidation, combination or merger or
any transfer of all or substantially all of the assets of the Company in
accordance with the foregoing, the surviving entity shall succeed to, and be
substituted for, and may exercise every right and power of, the Company under
the Indenture and the Notes with the same effect as if such surviving entity had
been named as such.
GUARANTEES
Each Subsidiary Guarantor unconditionally guarantees, jointly and severally,
to each holder and the Trustee, subject to subordination provisions
substantially the same as those described above, the full and complete payment
of principal of and interest on the Notes. Upon (i) the release by the lenders
under the Senior Credit Facility, related documents and future refinancings
thereof of all guarantees of a Subsidiary Guarantor and all Liens on the
property and assets of such Subsidiary Guarantor relating to such Indebtedness,
or (ii) the sale or disposition of a Subsidiary Guarantor (or all or
substantially all of its assets) to an entity which is not a subsidiary of the
Company, which is otherwise in compliance with the Indenture, such Subsidiary
Guarantor shall be deemed released from all its obligations under the Indenture
and its Guarantee; PROVIDED, HOWEVER, that any such termination shall occur only
to the extent that all obligations of such Subsidiary Guarantor under the Senior
Credit Facility and all of its guarantees of, and under all of its pledges of
assets or other security interests which secure, Indebtedness of the Company
shall also terminate upon such release, sale or transfer.
The Indebtedness evidenced by each Guarantee (including the payment of
principal of, premium, if any, and interest on the Notes) will be subordinated
on the same basis to Guarantor Senior Indebtedness (defined with respect to the
Indebtedness of a Guarantor in the same manner as Senior Indebtedness is defined
with respect to the Company) as the Notes are subordinated to Senior
Indebtedness. See "--Subordination" above.
The obligations of each Subsidiary Guarantor are limited to the maximum
amount as will, after giving effect to all other contingent and fixed
liabilities of such Subsidiary Guarantor (including, without limitation, any
guarantees under the Senior Credit Facility) and after giving effect to any
collections from or payments made by or on behalf of any other Subsidiary
Guarantor in respect of the obligations of such other Subsidiary Guarantor under
the Guarantee, not constitute a fraudulent conveyance or fraudulent transfer
under federal or state law. Each Subsidiary Guarantor that makes a payment or
distribution under a Guarantee shall be entitled to a contribution from each
other Subsidiary Guarantor in a PRO RATA amount based on the Adjusted Net Assets
of each Subsidiary Guarantor.
Each Subsidiary Guarantor may consolidate with or merge into or sell its
assets to the Company or another Subsidiary Guarantor without limitation. Each
Subsidiary Guarantor may consolidate with or merge into or sell all or
substantially all its assets to a corporation other than the Company or another
Subsidiary Guarantor (whether or not affiliated with the Subsidiary Guarantor):
PROVIDED that either (x) the transaction is an Asset Sale consummated in
accordance with the "Limitation on Asset Sales" covenant or (y)(a) if the
surviving corporation is not the Subsidiary Guarantor, the surviving corporation
agrees to assume such Subsidiary Guarantor's Guarantee and all its obligations
pursuant to the Indenture and (b) such transaction does not (i) violate any
covenants set forth in the Indenture or (ii) result in a Default or Event of
Default immediately thereafter that is continuing.
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Separate financial statements of the Subsidiary Guarantors are not included
herein because such Subsidiary Guarantors are jointly and severally liable with
respect to the Company's obligations pursuant to the Notes, and the aggregate
net assets, earnings and equity of the Subsidiary Guarantors are substantially
equivalent to the net assets, earnings and equity of the Company on a
consolidated basis.
EVENTS OF DEFAULT
An "Event of Default" is defined in the Indenture to mean (a) default in the
payment of any installment of interest upon any of the Notes as and when the
same shall become due and payable, and continuance of such default for a period
of 30 days (whether or not prohibited by the subordination provisions of the
Indenture); (b) default in the payment of all or any part of the principal on
any of the Notes when the same shall become due and payable, either at maturity,
upon any redemption, by declaration or otherwise (whether or not prohibited by
the subordination provisions of the Indenture); (c) failure on the part of the
Company or any Subsidiary Guarantor duly to observe or perform any other of the
covenants or agreements on the part of the Company or any Subsidiary Guarantor
in the Notes or in the Indenture for a period of 30 days after receipt of
written notice specifying such failure, stating that such notice is a "Notice of
Default" under the Indenture and demanding that the Company or such Subsidiary
Guarantor, as the case may be, remedy the same, shall have been given by
registered or certified mail, return receipt requested, to the Company by the
Trustee, or to the Company and the Trustee by the holders of at least 25% in
aggregate principal amount of the Notes at the time outstanding; (d) a default
under any Indebtedness of the Company or any of its Restricted Subsidiaries,
whether such Indebtedness now exists or shall hereinafter be created, if both
(A) such default either (i) results from the failure to pay principal on
Indebtedness at the final maturity of the respective issue of Indebtedness and
such failure continues for a period of 10 days or more, or (ii) results in the
holder or holders of such Indebtedness causing such Indebtedness to become due
prior to its stated maturity and such acceleration has not been rescinded,
canceled or otherwise cured within 10 days after receipt of notice of
acceleration by the Company and (B) the principal amount of such Indebtedness,
together with the principal amount of any other such Indebtedness in default for
failure to pay principal at final maturity or the maturity of which has been so
accelerated, in each case with respect to which the 10-day period described
above has passed, aggregates in excess of $10.0 million at any one time; (e) any
final judgment or order for the payment of money shall be rendered against the
Company or any Significant Subsidiary of the Company by a court of competent
jurisdiction in excess of $10.0 million individually or in the aggregate for all
such judgments or orders against all such persons that are not stayed, bonded or
discharged and there is a period of 60 consecutive days, after written notice
has been given by the Trustee or the holders of at least 25% in aggregate
principal amount of the Notes then outstanding, during which a stay of
enforcement of such judgment or order, by reason of pending appeal or otherwise,
shall not be in effect; (f) certain events of bankruptcy with respect to the
Company and its Significant Subsidiaries; or (g) any Subsidiary Guarantee shall
for any reason cease to be in full force and effect or be declared null and void
or any responsible officer of the Company or any Guarantor denies that it has
any further liability under any Subsidiary Guarantee or gives notice to such
effect (other than by reason of the termination of the Indenture or the release
of any such Subsidiary Guarantee in accordance with the Indenture).
If an Event of Default (other than an Event of Default specified in clause
(f) above with respect to the Company) occurs and is continuing, either the
Trustee or the holders of at least 25% in aggregate principal amount of the
Notes then outstanding, by notice in writing to the Company and the Trustee
specifying the respective Event of Default and that it is a "notice of
acceleration" (the "Acceleration Notice"), may declare the entire principal
amount of and accrued interest on the Notes to be due and payable immediately,
and the same (i) shall become immediately due and payable or (ii) if there are
any amounts outstanding under the Senior Credit Facility, shall become due and
payable upon the first to occur of an acceleration under the Senior Credit
Facility, or 5 business days after receipt by the Company and the Representative
under the Senior Credit Facility of such Acceleration Notice, unless all Events
of Default specified in such Acceleration Notice (other than any Event of
Default in respect of non-payment of
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principal) shall have been cured or waived. In the event of a declaration
because an Event of Default set forth in clause (d) of the preceding paragraph
has occurred and is continuing, such declaration of acceleration shall be
automatically annulled if the missed payments in respect of such Indebtedness
have been paid or if the holders of the Indebtedness that is subject to
acceleration have rescinded their declaration of acceleration and the Trustee
has received written notice of such Indebtedness having been repaid in full, in
each case within 60 days thereof and if (i) the annulment of such acceleration
would not conflict with any judgment or decree of a court of competent
jurisdiction, (ii) all existing Events of Default, except non-payment of
principal or interest which have become due solely because of the acceleration,
have been cured or waived and (iii) the Company has delivered an Officer's
Certificate to the Trustee to the effect of clauses (i) and (ii) above. If an
Event of Default specified in clause (f) above occurs with respect to the
Company, the principal amount of and accrued interest on the Notes shall become
and be immediately due and payable without any declaration or other act on the
part of the Trustee or any holder.
The declaration of acceleration is subject to the condition that if, at any
time after the principal of the Notes shall have been so declared due and
payable, and before any judgment or decree for the payment of the moneys shall
have been obtained or entered as hereinafter provided, the Company shall pay or
shall deposit with the Trustee a sum sufficient to pay all matured installments
of interest upon all the Notes and the principal of any and all Notes which
shall have become due otherwise than by acceleration (with interest upon such
principal and, to the extent that payment of such interest is unenforceable
under applicable law, on overdue installments of interest, at the same rate as
the rate of interest specified in the Notes, to the date of such payment or
deposit) and such amount as shall be sufficient to cover reasonable compensation
to the Trustee and each predecessor Trustee, their respective agents, attorneys
and counsel, and all other expenses and liabilities incurred, and all advances
made, by the Trustee and each predecessor Trustee except as a result of
negligence or bad faith, and if any and all Events of Default under the
Indenture, other than the non-payment of the principal of Notes which shall have
become due by acceleration, shall have been cured, waived or otherwise remedied
as provided in the Indenture, then and in every such case the holders of a
majority in aggregate principal amount of the Notes then outstanding, by written
notice to the Company and to the Trustee, may waive all defaults and rescind and
annul such declaration and its consequences, but no such waiver or rescission
and annulment shall extend to or shall affect any subsequent default or shall
impair any right consequent thereon.
The holders of a majority in outstanding aggregate principal amount of the
Notes by notice to the Trustee may on behalf of the holders of the Notes waive
any existing Default or Event of Default under the Indenture and its
consequences, except a continuing Default or Event of Default in the payment of
interest on, or the principal of, the Notes.
No holder of any of the Notes has any right to institute any proceeding with
respect to the Indenture or any remedy thereunder, unless the holders of at
least 25% in principal amount of the outstanding Notes have made written
request, and offered indemnity, to the Trustee to institute such proceeding as
Trustee, the Trustee has failed to institute such proceeding within 30 days
after receipt of such notice and the Trustee has not within such 30-day period
received directions inconsistent with such written request by holders of a
majority in principal amount of the outstanding Notes. Such limitations do not
apply, however, to a suit instituted by a holder of a Note for the enforcement
of the payment of the principal of, premium, if any, or accrued interest on,
such Note on or after the respective due dates expressed in such Note.
The Indenture provides that if a Default occurs and is continuing and is
known to the Trustee, the Trustee must mail to each holder of the Notes notice
of the Default within 90 days after it occurs. Except in the case of a Default
in the payment of principal, premium (if any) or interest on any Note, the
Trustee may withhold notice if and so long as a committee of its trust officers
determines that withholding notice is in the interest of the holders of the
Notes. In addition, the Company is required to deliver to the Trustee, within
120 days after the end of each fiscal year, a certificate indicating whether the
signers thereof know of any Default that occurred under the Indenture during the
previous year. The Company is also required to deliver to the Trustee, within 30
days after the occurrence thereof, written notice of events which would
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constitute certain Defaults under the Indenture, their status and what action
the Company is taking or proposes to take in respect thereof.
TRANSFER
The Notes were issued in registered form and are transferable only upon the
surrender of the Notes being transferred for registration of transfer. The
Company may require payment of a sum sufficient to pay all taxes, assessments or
other governmental charges. The Notes were issued in a transaction exempt from
registration under the Act and are subject to transfer restrictions. The
registered holder of a Note may be treated as the owner of it for all purposes.
NO PERSONAL LIABILITY OF DIRECTORS, OFFICERS, EMPLOYEES AND STOCKHOLDERS
No director, officer, employee or stockholder, as such, of the Company or
any Subsidiary shall have any liability for any obligations of the Company or
any Subsidiary under the Notes, any Subsidiary Guarantee or the Indenture. Each
holder of the Notes by accepting a Note waives and releases all such liability.
The waiver and release are part of the consideration for issuance of the Notes.
This provision does not affect any possible claims under the federal securities
laws.
SATISFACTION AND DISCHARGE OF THE INDENTURE; COVENANT DEFEASANCE
The Indenture will cease to be of further effect as to all outstanding Notes
(except as to (a) rights of registration of transfer, substitution, exchange and
the Company's right of optional redemption and prepayment, (b) rights of holders
to receive payments of principal of and interest on the Notes and any other
rights of the holders thereof with respect to the amounts deposited with the
Trustee under the provisions referred to in this paragraph, (c) the rights,
obligations and immunities of the Trustee under the Indenture and (d) certain
other specified provisions in the Indenture) when (x) all outstanding Notes
(except lost, stolen or destroyed Notes which have been replaced or paid) have
been delivered to the Trustee for cancellation or (y) the Company shall have
paid or caused to be paid the principal of and interest on the Notes as and when
the same shall have become due and payable or (z)(i) the Notes not previously
delivered to the Trustee for cancellation shall have become due and payable, or
are by their terms to become due and payable within one year or are to be called
for redemption upon delivery of notice and (ii) the Company shall have deposited
with the Trustee, as trust funds, the entire amount in cash sufficient to pay
the principal of and interest on the outstanding Notes to maturity or
redemption, as the case may be.
The Indenture will also cease to be in effect (except as aforesaid) on the
91st day after the deposit by the Company with the Trustee, in trust for the
benefit of the holders of Notes, of (a) money in an amount or (b) U.S.
government obligations which through the payment of interest and principal in
accordance with their terms will provide, not later than one business day before
the due date of payments in respect of the Notes, money in an amount, or (c) a
combination thereof, sufficient in the opinion of a nationally recognized
independent public accounting firm to pay and discharge without consideration of
reinvestment of such interest each installment of principal and interest on the
Notes then outstanding at the maturity date of such principal or installment of
principal and interest. Such a trust may only be established if the Company has
delivered to the Trustee an opinion of counsel acceptable to the Trustee (who
may be counsel to the Company) to the effect that (i) the defeasance and
discharge will not be deemed, or result in, a taxable event, with respect to
holders of the Notes, (ii) the creation of the trust will not violate the
Investment Company Act of 1940 and (iii) after the passage of 90 days following
the deposit of the trust funds, such funds will not be subject to any
bankruptcy, insolvency, reorganization or other similar law affecting creditors'
rights generally. The Indenture will not be discharged if, among other things,
an Event of Default, or an event which with notice or lapse of time would have
become an Event of Default, shall have occurred and be continuing on the date of
such deposit or during the period ending on the 91st day
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after such date. In the event of any such defeasance and discharge, Note holders
will thereafter be able to look only to such trust fund for payment of principal
and interest on the Notes.
The Indenture provides that the Company may cease to comply with certain
covenants imposing restrictions on the incurrence of Indebtedness by the Company
and its Subsidiaries, and limitations on certain Restricted Payments,
disposition of assets of the Company and its Subsidiaries, limitations on
payment of dividends and other distributions or payments by Subsidiaries,
transactions with Affiliates, mergers and consolidations, limitations on Capital
Stock of Restricted Subsidiaries, limitations on Guarantees of certain
Indebtedness, limitations on Liens and Change in Control transactions if the
Company deposits with the Trustee money and/or U.S. government obligations,
which, through the payment of interest and principal thereof in accordance with
their terms, will provide, not later than one business day before the date
payments in respect of the Notes are payable, money in an amount sufficient in
the opinion of a nationally recognized independent public accounting firm to pay
principal of and interest on the outstanding Notes (without consideration of the
reinvestment of such interest) or installments of principal or interest. The
obligations of the Company under the Indenture other than with respect to the
covenants referred to above shall remain in full force and effect. Such a trust
may only be established if the Company has delivered to the Trustee an opinion
of counsel acceptable to the Trustee (who may be counsel to the Company) to the
effect that (i) the deposit and related covenant defeasance will not be deemed,
or result in, a taxable event with respect to holders of Notes; and (ii) the
creation of the trust will not violate the Investment Company Act of 1940.
MODIFICATION OF THE INDENTURE
The Indenture and the Notes may be amended or supplemented (and compliance
with any provision thereof may be waived) by the Company, the Trustee and the
holders of not less than a majority in aggregate principal amount of the Notes
then outstanding, except that without the consent of each holder affected, no
such amendment, supplement or waiver may (1) change the principal amount of
Notes whose holders must consent to an amendment, supplement or waiver of any
provision of the Indenture or the Notes; (2) reduce the rate or extend the time
for payment of interest on any Note; (3) reduce the principal amount of any
Note; (4) change the Maturity Date of any Note or alter the redemption
provisions in a manner adverse to any holder (except that provisions affecting
the requirement to repurchase Notes following a Change of Control or certain
asset sales may be amended by the Company, the Trustee and the holders of not
less than a majority in aggregate principal amount of the Notes then
outstanding); (5) make any changes in the provisions concerning waivers of
Defaults or Events of Default by holders or the rights of holders to recover the
principal of, premium (if any) or interest on or redemption payment with respect
to any Note; (6) make the principal of, or interest on, any Note payable with
anything other than as provided for in the Indenture and the Notes; and (7) make
any change to the subordination provisions of the Indenture and the Notes in a
manner that adversely affects the holders.
In addition, the Company and the Trustee may amend the Indenture and the
Notes for certain specified purposes, including, among other things, (a) to cure
any ambiguity, defect or inconsistency therein; PROVIDED that such amendment or
supplement does not adversely affect the rights of any holder, (b) to comply
with requirements of the Commission in order to effect or maintain the
qualification of the Indenture under the Trust Indenture Act of 1939 or (c) to
make any other change that does not adversely affect the rights of any holder.
Notwithstanding the foregoing, no amendment shall modify any provision of the
Indenture so as to adversely affect the rights of any holder of Senior
Indebtedness without the consent of such holder.
THE TRUSTEE
The holders of a majority in principal amount of the outstanding Notes may
remove the Trustee and appoint a successor trustee with the Company's consent,
by so notifying the trustee to be so removed and the Company. In addition, the
holders of a majority in principal amount of the outstanding Notes have the
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right, subject to certain limitations, to direct the time, method and place of
conducting any proceeding for any remedy available to the Trustee or of
exercising any trust or power conferred on such Trustee.
The Indenture provides that, in case a Default or an Event of Default has
occurred and is continuing, the Trustee thereunder shall exercise such of the
rights and powers vested in it by the Indenture, and use the same degree of care
and skill in the exercise thereof, as a prudent person would exercise or use
under the circumstances in the conduct of his own affairs. Subject to the latter
provision, the Trustee is under no obligation to exercise any of its rights or
powers under the Indenture at the request, order or direction of any of the
holders, unless they shall have offered to the Trustee reasonable security or
indemnity against the costs, expenses and liabilities which may be incurred
thereby.
The Indenture contains limitations on the rights of the Trustee, should it
become a creditor of the Company, to obtain payment of claims in certain cases
or to be realized on certain property received by it in respect of any such
claims, securities or otherwise. The Trustee is permitted to engage in other
transactions: however, if the Trustee acquires any "conflicting interest," it
must eliminate such conflict or resign.
REPORTS
So long as the Notes are outstanding, the Company will furnish to the
Trustee and holders of the Notes all quarterly and annual financial reports that
the Company is required to file with the Commission under the Exchange Act (or
similar reports in the event that the Company is not at the time required to
file such reports with the Commission). The Indenture provides that even if the
Company is entitled under the Exchange Act not to furnish such information to
the Commission or the holders of the Notes, it will nonetheless continue to
furnish such information to the Commission (to the extent the Commission is
accepting such reports) and holders of the Notes.
CERTAIN DEFINITIONS
"ACQUIRED INDEBTEDNESS" means (i) with respect to any person that becomes a
Restricted Subsidiary, Indebtedness of such person at the time such person
becomes a Restricted Subsidiary and not incurred in connection with, or in
contemplation of, such person becoming a Restricted Subsidiary, treating for
purposes of this definition as Indebtedness the unused portion of any revolving
loan commitments provided in agreements to which such person is a party as
borrower or guarantor and (ii) with respect to the Company or any of its
Restricted Subsidiaries, any Indebtedness assumed by the Company or any of its
Restricted Subsidiaries in connection with the acquisition of any assets from
another person (other than the Company or any of its Restricted Subsidiaries),
and which was not incurred by such other person in connection with or, in
contemplation of, such acquisition.
"ACT" means the Securities Act of 1933, as amended.
"ADJUSTED NET ASSETS" of a Subsidiary Guarantor at any date shall mean the
lesser of the amount by which (i) the fair value of the property of such
Subsidiary Guarantor exceeds the total amount of liabilities, including, without
limitation, contingent liabilities (after giving effect to all other fixed and
contingent liabilities incurred or assumed on such date), but excluding
liabilities under the Subsidiary Guarantee, of such Subsidiary Guarantor at such
date and (ii) the present fair salable value of the assets of such Subsidiary
Guarantor at such date exceeds the amount that will be required to pay the
probable liability of such Subsidiary Guarantor on its debts (after giving
effect to all other fixed and contingent liabilities incurred or assumed on such
date and after giving effect to any collection from any Subsidiary of such
Subsidiary Guarantor in respect of the obligations of such Subsidiary under the
Subsidiary Guarantee), excluding debt in respect of the Subsidiary Guarantee, as
they become absolute and matured.
"AFFILIATE" of any specified person means any other person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified person. For the purposes of
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this definition, "control" when used with respect to any person means the power
to direct the management and policies of such person, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise;
and the terms "affiliated," "controlling" and "controlled" have meanings
correlative to the foregoing.
"APPLICABLE PREMIUM" means, with respect to a Note at any Redemption Date,
the greater of (i) 1.0% of the principal amount of such Note and (ii) the excess
of (A) the present value at such time of (1) the redemption price of such Note
at August 1, 2001 (such redemption price being described under "--Optional
Redemption") plus (2) all required interest payments due on such Note through
August 1, 2001, computed using a discount rate equal to the Treasury Rate plus
50 basis points, over (B) the principal amount of such Note.
"ASSET SALE" means any direct or indirect sale, issuance, conveyance,
transfer, lease, assignment or other transfer for value (including any sale and
leaseback transaction) by the Company or any of its Restricted Subsidiaries to
any person other than the Company or any wholly owned Restricted Subsidiary of
(i) any Capital Stock of any Restricted Subsidiary; or (ii) any other property
or assets of the Company or any Restricted Subsidiary other than in the ordinary
course of business, in each case, resulting in Net Cash Proceeds to the Company
and its Restricted Subsidiaries of $500,000 or more, provided that the sale,
conveyance, transfer, assignment or other transfer of substantially all of the
assets of the Company and its Restricted Subsidiaries taken as a whole will be
governed by the terms of the Indenture described above under the caption
"Limitation on Mergers and Certain Other Transactions"; provided, however, an
Asset Sale shall not mean (a) a disposition of Cash Equivalents or Investment
Grade Securities or obsolete equipment in the ordinary course of business; (b)
the disposition of all or substantially all of the assets in a manner permitted
pursuant to the provisions described under "Limitation on Mergers and Certain
Other Transactions" or any disposition that constitutes a Change of Control
pursuant to the Indenture; (c) any Restricted Payment that is permitted to be
made, and is made, under the first paragraph of the covenant described above
under "Limitation on Restricted Payments"; and (d) any disposition by a
Restricted Subsidiary to the Company or by the Company or a Restricted
Subsidiary to a Wholly Owned Restricted Subsidiary.
"CAPITAL STOCK" means, with respect to any person, any and all shares,
interests, participations or other equivalents (however designated) of corporate
stock, including each class of common stock and preferred stock of such person,
including, without limitation, if such person is a partnership, partnership
interests (whether general or limited) and 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, such partnership.
"CAPITALIZED LEASE OBLIGATION" means obligations under a lease that is
required to be capitalized for financial reporting purposes in accordance with
GAAP, and the amount of Indebtedness represented by such obligations shall be
the capitalized amount of such obligations determined in accordance with GAAP.
"CASH EQUIVALENTS" means (i) obligations issued or unconditionally
guaranteed by the United States of America or any agency thereof, or obligations
issued by any agency or instrumentality thereof and backed by the full faith and
credit of the United States of America, (ii) commercial paper rated the highest
grade by Moody's Investors Service, Inc. ("Moody's") and Standard & Poor's
Corporation ("S&P") and maturing not more than one year from the date of
creation thereof, (iii) demand and time deposits with, and certificates of
deposit and banker's acceptances issued by, any bank having capital surplus and
undivided profits aggregating at least $250 million and maturing not more than
one year from the date of creation thereof, (iv) repurchase agreements that are
secured by a perfected security interest in an obligation described in clause
(i) and are with any bank described in clause (iii), (v) readily marketable
direct obligations issued by any state of the United States of America or any
political subdivision thereof having one of the two highest rating categories
obtainable from either Moody's or S&P and (vi) investments in money market funds
which invest substantially all of their assets in securities of the types
described in clauses (i) through (v) above.
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"CHANGE OF CONTROL" means the occurrence of one or more of the following
events: (i) any sale, lease, exchange or other transfer (in one transaction or a
series of related transactions) of all or substantially all of the assets of the
Company to any person or group of related persons for purposes of Section 13(d)
of the Exchange Act (a "Group") together with any Affiliates thereof (whether or
not otherwise in compliance with the provisions of the Indenture); (ii) the
approval by the holders of Capital Stock of the Company of any plan or proposal
for the liquidation or dissolution of the Company (whether or not otherwise in
compliance with the provisions of the Indenture); or (iii) the acquisition in
one or more transactions, of beneficial ownership (within the meaning of Rule
13d-3 under the Exchange Act) by (x) any person or Group (other than a Group the
majority in economic interests and voting or similar rights is owned by
Permitted Holders) that either (A) beneficially owns (within the meaning of Rule
13d-3 under the Exchange Act), directly or indirectly, (I) at least 30% (or, in
the case of a transaction or transactions approved before the consummation of
same by a majority of the directors of the Company, 35%) of the Company's then
outstanding voting securities entitled to vote on a regular basis for the Board
of Directors of the Company and (II) a greater beneficial interest than the
Permitted Holders, or (B) otherwise has the ability to elect, directly or
indirectly, a majority of the members of the Company's Board of Directors,
including without limitation by the acquisition of revocable proxies for the
election of directors. Clause (i) of the definition of "Change of Control"
includes a sale, lease, exchange or other transfer of "all or substantially all"
of the assets of the Company to a Group. There is little case law interpreting
the phrase "all or substantially all" in the context of an indenture. Because
there is no precise established definition of this phrase, the ability of a
holder of Notes to require the Company to repurchase such Notes as a result of a
sale, lease, exchange or other transfer of all or substantially all of the
Company's assets to person or a Group may be uncertain.
"COMPANY" means Federal Data Corporation, a Delaware corporation and its
successors that become a party to the Indenture in accordance with its terms.
"CONSOLIDATED EBITDA" of the Company means, for any period, the sum (without
duplication) of (i) Consolidated Net Income, (ii) to the extent Consolidated Net
Income has been reduced thereby, all income taxes of the Company and its
Restricted Subsidiaries paid or accrued in accordance with GAAP for such period,
Consolidated Interest Expense, amortization expense (including write-off of
intangible assets and deferred financing costs), depreciation expense, and any
restructuring reserve or charge recorded during such period in accordance with
GAAP, (iii) LIFO charge (credit) of the Company and its Restricted Subsidiaries
for such period, (iv) other non-cash items reducing Consolidated Net Income
(excluding any such charge which requires an accrual of or a cash reserve for
cash charges for any future period) and (v) cash received with respect to any
non-cash item previously deducted from Consolidated Net Income pursuant to
clause (x) below less (x) other non-cash items increasing Consolidated Net
Income (excluding any reversal of any non-cash item to the extent such reversed
non-cash item previously reduced an addition to Consolidated EBITDA pursuant to
the parenthetical to clause (iv) above) and (y) the amount of all cash payments
made by such person or its subsidiaries during such period to the extent that
such cash payment has been provided for in a reserve or charge referred to (and
previously added back to such Consolidated Net Income) in clause (ii) or (iv)
above (and were not otherwise deducted in the computation of Consolidated Net
Income of such person for such period), all as determined on a consolidated
basis for the Company and its Restricted Subsidiaries in conformity with GAAP.
"CONSOLIDATED INTEREST EXPENSE" of the Company means the aggregate of (i)
all cash and non-cash interest expense (minus amortization or write-off of
deferred financing costs included in cash or non-cash interest expense and minus
interest income (other than the interest income, if any, attributable to the
assets of the type financed pursuant to clause (m) of the second paragraph of
the covenant described under "--Limitation on Indebtedness") and capitalized
interest) with respect to all outstanding Indebtedness of the Company and its
Restricted Subsidiaries for such period (other than Indebtedness of the type
permitted to be incurred pursuant to clause (m) of the second paragraph of the
covenant described under "--Limitation on Indebtedness") plus (ii) the product
of (x) the amount of all cash dividend payments on any series of Preferred Stock
of the Company and its Restricted Subsidiaries (other than to or for the
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benefit of the Company or a Restricted Subsidiary); provided that with respect
to any series of Designated Preferred Stock that is Disqualified Capital Stock
(including, without limitation Designated Preferred Stock) that has not paid
cash dividends during such period but accrues dividends according to its terms
during any period prior to the maturity date of the Notes, cash dividends shall
be deemed to have been paid with respect to such series of Designated Preferred
Stock during such period for purposes of clause (i) of this definition; times
(y) a fraction, the numerator of which is one and the denominator of which is
one minus the then current effective consolidated federal, state and local tax
rate of the Company expressed as a decimal.
"CONSOLIDATED NET INCOME" of the Company means, for any period, the
aggregate net income (or loss) of the Company and its Restricted Subsidiaries
for such period on a consolidated basis, determined in accordance with GAAP;
provided that there shall be excluded therefrom (i) gains and losses from Asset
Sales or abandonments or reserves relating thereto and the related tax effects,
(ii) items classified as extraordinary, nonrecurring or unusual gains and
losses, and the related tax effects, each determined in accordance with GAAP,
(iii) the net income of any person acquired in a pooling of interests
transaction accrued prior to the date it becomes a Restricted Subsidiary of the
Company or is merged or consolidated with the Company or any Restricted
Subsidiary, (iv) the net income (or loss) of any Restricted Subsidiary to the
extent that the declaration of dividends or similar distributions by that
Restricted Subsidiary of that income was actually prevented by contract,
operation of law or otherwise and (v) the net income (or loss) of any person,
other than a Restricted Subsidiary, except to the extent of the lesser of (x)
cash dividends or distributions paid to the Company or a Restricted Subsidiary
of the Company by such person and (y) the net income of such person (but in no
event less than zero) and (vi) the cumulative effects of any change in
accounting principles.
"CONTINGENT OBLIGATIONS" means, with respect to any person, any obligation
of such person guaranteeing any leases, dividends or other obligations that do
not constitute Indebtedness ("primary obligations") of any other person (the
"primary obligor") in any manner, whether directly or indirectly, including,
without limitation, any obligation of such person, whether or not contingent,
(i) to purchase any such primary obligation or any property constituting direct
or indirect security therefor, (ii) to advance or supply funds (A) for the
purchase or payment of any such primary obligation or (B) to maintain working
capital or equity capital of the primary obligor or otherwise to maintain the
net worth or solvency of the primary obligor, or (iii) to purchase property,
securities or services primarily for the purpose of assuring the owner of any
such primary obligation of the ability of the primary obligor to make payment of
such primary obligation against loss in respect thereof.
"CONTROLLED SUBSIDIARY" of the Company means a Restricted Subsidiary (i) 90%
or more of the total Equity Interest or other ownership interests of which
(other than directors' qualifying shares) shall at the time be owned by the
Company (directly or through one or more Controlled Subsidiaries of the
Company), and (ii) of which the Company possesses, directly or indirectly, the
power to direct or cause the direction of the management or policies, whether
through the ownership of voting securities, by agreement or otherwise.
"CURRENCY AGREEMENT" means any foreign exchange contract, currency swap
agreement or other similar agreement or arrangement designed to protect the
Company or any Restricted Subsidiary against fluctuations in currency values.
"DEFAULT" means any event which is, or after notice or passage of time or
both would be, an Event of Default.
"DESIGNATED PREFERRED STOCK" means Preferred Stock of the Company that is
issued for cash (other than to a Restricted Subsidiary) and is so designated as
Designated Preferred Stock, pursuant to an Officers' Certificate executed by the
principal executive officer and the principal financial officer of the Company,
on the issuance date thereof, the cash proceeds of which are excluded from the
calculation set forth in clause (A) of the first paragraph of the "Limitation on
Restricted Payments" covenant.
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"DESIGNATED SENIOR INDEBTEDNESS" means any Indebtedness under or in respect
of the Senior Credit Facility or any other Senior Indebtedness designated as
such in an Officers' Certificate delivered to the Trustee, in aggregate
principal amount outstanding of $25.0 million or more.
"DISINTERESTED DIRECTOR" means, with respect to any transaction or series of
transactions in respect of which the Board of Directors is required to deliver a
resolution of the Board of Directors under the Indenture, a member of the Board
of Directors who does not have any material direct or indirect financial
interest in or with respect to such transaction or series of transactions
(except arising exclusively as a consequence of such member's relationship to
the Company).
"DISQUALIFIED CAPITAL STOCK" means, with respect to any person, any Capital
Stock which, by its terms (or by the terms of any security into which it is
convertible or for which it is exchangeable), or upon the happening of any event
(other than an event which would constitute a Change of Control), matures or is
mandatorily redeemable, pursuant to a sinking fund obligation or otherwise, or
is exchangeable for Indebtedness, or is redeemable at the option of the holder
thereof (except, in each case, upon the occurrence of a Change in Control), in
whole or in part, on or prior to the maturity date of the Notes.
"EQUITY INTEREST" means Capital Stock and all warrants, options or other
rights to acquire Capital Stock (but excluding any debt security that is
convertible into, or exchangeable for, Capital Stock).
"EXCESS NET PROCEEDS" shall mean Net Cash Proceeds of any Asset Sale not
applied in accordance with clause (iii)(x) or (y) of the "Limitation on Asset
Sales" covenant.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended.
"EXCLUDED CONTRIBUTIONS" means net cash proceeds received by the Company
after the Issue Date from (a) capital contributions and (b) the private sale of
common stock of the Company to Carlyle or its Affiliates, in each case
designated as Excluded Contributions pursuant to an Officers' Certificate
executed by the principal executive officer and the principal financial officer
of the Company on the date such capital contributions are made or the date such
Equity Interests are sold, as the case may be, the cash proceeds of which are
excluded from the calculation set forth in clause (c) of the first paragraph of
the "Limitation on Restricted Payments" covenant.
"FLOOR PLAN FINANCING FACILITY" means any facility (including without
limitation the Agreement for Wholesale Financing and the STAR Agreement (Short
Term Accounts Receivable Program) dated as of September 17, 1996 by and between
Deutsche Financial Services Corporation and Sylvest Management Systems
Corporation, as amended, extended, renewed, restated, supplemented, replaced or
otherwise modified (in whole or in part, and without limitation as to amount,
terms, conditions, covenants and other provisions) from time to time) entered or
to be entered into by the Company or any Restricted Subsidiary pursuant to which
the Company or such Restricted Subsidiary may (i) borrow funds to purchase
inventory from certain vendors for prompt resale to customers and to finance
related accounts receivable and (ii) grant a security interest in such entity's
assets (including the accounts receivable generated by such resales) to secure
such borrowings.
"GAAP" or "generally accepted accounting principles" means generally
accepted accounting principles in the United States as in effect from time to
time, including, without limitation, those set forth in the opinions and
pronouncements of the Accounting Principles Board of the American Institute of
Certified Public Accountants and statements and pronouncements of the Financial
Accounting Standards Board or in such other statements by such other entity as
approved by a significant segment of the accounting profession.
"GUARANTEE" means a guarantee, direct or indirect, in any manner of all or
any part of any Indebtedness.
"GUARANTOR SENIOR INDEBTEDNESS" means (i) indebtedness of a Subsidiary
Guarantor for money borrowed and all obligations, whether direct or indirect,
under guarantees, letters of credit, foreign
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currency or interest rate swaps, foreign exchange contracts, caps, collars,
options, hedges or other agreements or arrangements designed to protect against
fluctuations in currency values or interest rates, other extensions of credit,
expenses, fees, reimbursements, indemnities and all other amounts (including
interest at the contract rate accruing on or after the filing of any petition in
bankruptcy or reorganization relating to such Subsidiary Guarantor whether or
not a claim for post-filing interest is allowed in such proceeding) owed by such
Subsidiary Guarantor under, or with respect to, the Senior Credit Facility, (ii)
the principal of and premium, if any, and accrued and unpaid interest (including
interest at the contract rate accruing on or after the filing of any petition in
bankruptcy or for reorganization relating to a Subsidiary Guarantor whether or
not a claim for post-filing interest is allowed in such proceeding), whether
existing on the date hereof or hereafter incurred, in respect of (A)
indebtedness of such Subsidiary Guarantor for money borrowed, (B) express
written guarantees by such Subsidiary Guarantor of indebtedness for money
borrowed by any other person, (C) indebtedness evidenced by notes, debentures,
bonds, or other instruments of indebtedness for the payment of which such
Subsidiary Guarantor is responsible or liable, by guarantees or otherwise, (D)
obligations of such Subsidiary Guarantor for the reimbursement of any obligor on
any letter of credit, banker's acceptance or similar credit transaction, (E)
obligations of such Subsidiary Guarantor under any agreement to lease, or any
lease of, any real or personal property which, in accordance with GAAP, is
classified upon Subsidiary Guarantor's consolidated balance sheet as a
liability, and (F) obligations of such Subsidiary Guarantor under or
guaranteeing interest rate swaps, caps, collars, options and similar
arrangements and foreign currency hedges and (iii) modifications, renewals,
extensions, replacements, refinancings, and refundings of any such indebtedness,
obligations or guarantees, unless, in the instrument creating or evidencing the
same or pursuant to which the same is outstanding, it is expressly provided that
such indebtedness, obligations or guarantees, or such modifications, renewals,
extensions, replacements, refinancings, or refundings thereof, are not superior
in right of payment to the Guarantee of such Subsidiary Guarantor; provided,
that Guarantor Senior Indebtedness will not be deemed to include (a) any
liability for Federal, state, local or other taxes owed or owing by a Subsidiary
Guarantor, (b) any accounts payable or other liability to trade creditors
arising in the ordinary course of business, (c) any Indebtedness, guarantee or
obligation of a Subsidiary Guarantor which is expressly subordinate or junior by
its terms in any respect to any other Indebtedness, guarantee or obligations of
such Subsidiary Guarantor, (d) Indebtedness incurred in violation of the
"Limitation on Indebtedness" covenant or (e) Indebtedness of a Subsidiary
Guarantor which is classified as nonrecourse in accordance with GAAP or any
unsecured claim arising in respect thereof by reason of the application of
section 1111(b)(1) of the Bankruptcy Code.
"HEDGING OBLIGATIONS" means, with respect to the Company or a Restricted
Subsidiary, (i) the obligations of such person under Interest Rate Agreements,
(ii) the obligations of such person under Currency Agreements and (iii)
obligations under agreements or arrangements designed to protect such person
against fluctuations in the value of commodities entered into in such person's
business.
"INDEBTEDNESS" of any person means, at any time, without duplication: (i)
the principal of and, if any is due and payable at such time, premium in respect
of (A) indebtedness of such person for money borrowed and (B) indebtedness
evidenced by notes, debentures, bonds, or other similar instruments for the
payment of which such person is responsible or liable; (ii) all Capitalized
Lease Obligations of such person; (iii) all obligations of such person issued or
assumed as the deferred purchase price of property, all conditional sale
obligations of such person and all obligations of such person under any title
retention agreement (but excluding trade accounts payable arising in the
ordinary course of business); (iv) all obligations of such person for the
reimbursement of any obligor on any letter of credit, banker's acceptance or
similar credit transaction (other than obligations with respect to letters of
credit securing obligations (other than obligations described in (i) through
(iii) above) entered into in the ordinary course of business of such person;
PROVIDED that, for the purpose of determining Events of Default referred to in
clause (d) under the caption "--Events of Default", obligations with respect to
letters of credit securing obligations entered into in the ordinary course of
business shall be excluded only to the extent such letters of credit are not
drawn upon or, if and to the extent drawn upon, such drawing is reimbursed no
later than the third
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Business Day following receipt by such person of a demand for reimbursement
following payment on the letter of credit); (v) the principal amount of all
obligations of such person with respect to the redemption, repayment or other
purchase of any Disqualified Capital Stock; (vi) in the case of the Company, any
Preferred Stock of a Restricted Subsidiary, valued at the aggregate liquidation
preference thereof plus accrued and unpaid dividends thereon; (vii) all
obligations of the type referred to in clauses (i) through (vi) above of other
persons and all dividends of other persons the payment of which, in either case,
such person is responsible or liable for as obligor, guarantor or otherwise; and
(viii) all obligations of the type referred to in clauses (i) through (vii) of
other persons secured by a lien, mortgage, pledge or encumbrance of any kind on
any property or asset of such person (whether or not such obligation is assumed
by such person), the amount of such obligation being deemed to be the lesser of
the value of such property or assets or the amount of the obligation so secured;
provided, however, that Indebtedness shall not include any interest, commitment
or other fees.
"INDEPENDENT FINANCIAL ADVISOR" means a reputable accounting, appraisal or
investment banking firm that is, in the reasonable judgment of the Board of
Directors of the Company, qualified to perform the task for which such firm has
been engaged hereunder and disinterested and independent with respect to the
Company and its Affiliates.
"INITIAL PURCHASERS" means BT Securities Corporation and Lehman Brothers
Inc.
"INTEREST RATE AGREEMENTS" means, with respect to the Company and the
Restricted Subsidiaries, any arrangements with any other person, whereby,
directly or indirectly, such person is entitled to receive from time to time
periodic payments calculated by applying either a floating or a fixed rate of
interest on a stated notional amount in exchange for periodic payments made by
such other person calculated by applying a fixed or a floating rate of interest
on the same notional amount and shall include, without limitation, interest rate
swaps, caps, floors, collars and similar agreements.
"INVESTMENT" means, with respect to any person, all investments by such
person in other persons (including Affiliates of such person) in the form of
loans, guarantees, advances of assets or capital contributions (excluding
commission, travel and similar advances to, and compensation and benefits of,
officers and employees of such person made in the ordinary course of business),
purchases or other acquisitions for consideration of Indebtedness, Capital Stock
or other securities and all other items that are or would be classified as
investments on a balance sheet prepared in accordance with GAAP. In addition,
the fair market value (as determined by the Board of Directors of the Company in
good faith) of the assets of any Subsidiary of the Company at the time that such
Subsidiary is designated as an Unrestricted Subsidiary shall be deemed to be an
Investment made by the Company in such Unrestricted Subsidiary at such time.
"Investment" shall exclude (i) extensions of trade credit by the Company and the
Restricted Subsidiaries on commercially reasonable terms in the ordinary course
of business and (ii) sales, assignments, transfers, contributions, licenses or
other dispositions of patents, copyrights, applications with respect thereto,
and other trademarks, intellectual property and other technological "know-how"
(collectively, "Intellectual Property") to joint ventures in which the Company
or a wholly-owned Restricted Subsidiary owns at least 50% of the equity
interests (PROVIDED, that if the equity interest of the Company or such
Restricted Subsidiary, as the case may be, in such joint venture is reduced
below 50%, the Company shall have been deemed to make an Investment in such
joint venture in an amount equal to the fair market value (as determined by the
Board of Directors of the Company in good faith) of such Intellectual Property).
"INVESTMENT GRADE SECURITIES" means (i) securities issued or directly and
fully guaranteed or insured by the United States government or any agency or
instrumentality thereof (other than Cash Equivalents), (ii) debt securities or
debt instruments with a rating of BBB- or higher by S&P or Baa3 or higher by
Moody's or the equivalent of such rating by such rating organization, or, if no
rating of S&P or Moody's then exists, the equivalent of such rating by any other
nationally recognized securities rating agency, but excluding any debt
securities or instruments constituting loans or advances among the Company and
its Subsidiaries, and (iii) investments in any fund that invests exclusively in
investments of the type described in clauses (i) and (ii) which fund may also
hold immaterial amounts of cash pending investment and/or distribution.
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"ISSUE DATE" means the date of first issuance of the Notes under the
Indenture.
"JUNIOR SECURITIES" means Equity Interests of the Company or debt securities
that are subordinated to all Senior Indebtedness (and any debt securities issued
in exchange for Senior Indebtedness) to substantially the same extent as, or
greater extent than, the Notes are subordinated to Senior Indebtedness pursuant
to the Indenture.
"LIEN" means with respect to any property or assets of any person, any
mortgage or deed of trust, pledge, hypothecation, assignment, deposit
arrangement, security interest, lien, charge, easement, encumbrance, preference,
priority, or other security agreement or preferential arrangement of any kind or
nature whatsoever on or with respect to such property or assets (including,
without limitation, any Capitalized Lease Obligation, conditional sales, or
other title retention agreement having substantially the same economic effect as
any of the foregoing).
"NET CASH PROCEEDS" means cash payments received (including any cash
payments received by way of deferred payment of principal pursuant to a note or
installment receivable or otherwise, but only as and when received) from any
sale, lease, transfer or other disposition of Capital Stock of the Company or a
Restricted Subsidiary or property or other assets of the Company or a Restricted
Subsidiary, in each case net of (i) any reserve for adjustment in respect of the
sale price of such asset or assets as required by GAAP (provided, that upon the
payment of such adjustment amount the excess, if any, of the amount so reserved
over the amount so paid shall be deemed "Net Cash Proceeds"), (ii) repayment of
any Purchase Money Indebtedness secured by a Lien on the sold asset or assets
and (iii) all legal, title and recording tax expenses, commissions and other
fees and expenses incurred, and any taxes payable and reasonably estimated
income taxes, as a consequence of such sale, lease, transfer or other
disposition.
"NET WORTH" of any person means the total of the amounts shown on the
balance sheet of such person, as of the end of the most recent fiscal quarter of
such person ending at least 45 days prior to the taking of any action for the
purpose of which the determination is being made, as the sum of (i) par or
stated value for all outstanding Capital Stock of such person plus (ii) paid-in
capital or capital surplus relating to such Capital Stock plus (iii) any
retained earnings or earned surplus less (x) any accumulated deficit and (y) any
amounts attributable to Disqualified Capital Stock.
"OBLIGATIONS" means all obligations for principal, premium, interest,
penalties, fees, indemnifications, reimbursements, damages and other liabilities
payable under, or with respect to, the documentation governing any Indebtedness.
"OPERATING COVERAGE RATIO" means the ratio of Consolidated EBITDA of the
Company and the Restricted Subsidiaries during the four most recent full fiscal
quarters for which financial information is available (the "Four Quarter
Period") ending not more than 135 days prior to the date of the transaction
giving rise to the need to calculate the Operating Coverage Ratio (the
"Transaction Date") of the Company and the Restricted Subsidiaries for the Four
Quarter Period to Consolidated Interest Expense of the Company and the
Restricted Subsidiaries for the Four Quarter Period. In addition to and without
limitation of the foregoing, for purposes of this definition, "Consolidated
EBITDA" and "Consolidated Interest Expense" shall be calculated after giving
effect on a PRO FORMA basis for the Four Quarter Period to (i) the incurrence or
repayment of any Indebtedness (excluding the incurrence of Indebtedness under
any revolving credit facility and including repayments of Indebtedness under any
revolving credit facility only to the extent that such repayment effects, or is
accompanied by, a permanent reduction in the availability thereunder) or the
issuance of any Designated Preferred Stock (and the application of the proceeds
of such Indebtedness or Designated Preferred Stock) of the Company and the
Restricted Subsidiaries at any time subsequent to the last day of the Four
Quarter Period and on or prior to the Transaction Date, as if such incurrence or
repayment or issuance, as the case may be (and the application of the proceeds
thereof), occurred on the first day of the Four Quarter Period and (ii) any
Asset Sales (and the application of proceeds thereof) or asset acquisitions
(including Capital Stock) outside the ordinary course of business in excess of
$100,000 occurring during the Four Quarter Period or at any time subsequent to
the last day of
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the Four Quarter Period and on or prior to the Transaction Date, as if such
Asset Sale (and the application of proceeds thereof) or asset acquisition
occurred on the first day of the Four Quarter Period, without giving effect to
the limitations set forth in clause (iii) of the definition of Consolidated Net
Income. If the Company or any of its Restricted Subsidiaries directly or
indirectly guarantees Indebtedness of a third person (other than the Company or
any of its Restricted Subsidiaries), the preceding sentence shall give effect to
the incurrence of such guaranteed Indebtedness as if such person or any
subsidiary (other than an Unrestricted Subsidiary) of such person had directly
incurred or otherwise assumed such guaranteed Indebtedness. Furthermore, in
calculating "Consolidated Interest Expense," (A) interest on Indebtedness or
dividends on Designated Preferred Stock determined on a fluctuating basis as of
the Transaction Date and which will continue to be so determined thereafter
shall be deemed to have accrued at a fixed rate per annum equal to the rate of
interest on such Indebtedness in effect on the Transaction Date, (B) if interest
on any Indebtedness actually incurred on the Transaction Date may optionally be
determined at an interest rate based upon a factor of a prime or similar rate, a
eurocurrency interbank offered rate, or other rates, then the interest rate or
dividend rate in effect on the Transaction Date will be deemed to have been in
effect during the Four Quarter Period and (C) notwithstanding clause (A) above,
interest on Indebtedness determined on a fluctuating basis, to the extent such
interest is covered by Interest Rate Agreements, shall be deemed to accrue at
the rate per annum resulting after giving effect to the operation of such
Interest Rate Agreements. Any such PRO FORMA calculation may include (a) any
adjustments, that would, in the reasonable determination of the Company set
forth in an Officers' Certificate, satisfy the requirements of Rule 11-02(a) of
Regulation S-X as if included in a registration statement filed with the
Commission, and (b) any other operating expense reductions reasonably expected
to result from any acquisition of assets (including any Permitted Investment
provided for in clause (iv) of the definition of such term), if such expected
reductions are (i) set forth in reasonable detail in a plan approved by or
resolutions of the Board of Directors, and (ii) limited to operating expenses
specified in such plan (and, if any such reductions are set forth as a range,
the lowest amount of such range) that would otherwise have resulted in the
payment of cash within twelve months after the date of consummation of such
transaction, net of any operating expenses (other than extraordinary items,
non-recurring or temporary charges and other similar one-time expenses)
reasonably expected to be incurred to implement such plan or to obtain goods or
services (including without limitation personnel, occupancy and transportation
expenses) in replacement of goods and services that are being curtailed or
eliminated to result in such expected reductions, and that are to be paid in
cash during such twelve-month period, and such Officers' Certificate so states.
"PERMITTED HOLDERS" or "Carlyle" means TC Group, L.L.C., a Delaware limited
liability company, and its Affiliates, and any successors thereof that are
Permitted Holders.
"PERMITTED INVESTMENT" means (i) cash and Cash Equivalents; (ii) any
Investment in the Company or in a Controlled Subsidiary of the Company; (iii)
any Investment by the Company or any Subsidiary existing on the Closing Date;
(iv) any Investment by the Company or any Subsidiary of the Company in a person,
if as a result of such Investment (A) such person becomes a Controlled
Subsidiary of the Company or (B) such person is merged, consolidated or
amalgamated with or into, or transfers or conveys substantially all of its
assets to, or is liquidated into, the Company or a Controlled Subsidiary of the
Company; (v) advances to employees in an aggregate principal amount not to
exceed $500,000 at any time outstanding; (vi) any Investment acquired by the
Company or any of its Restricted Subsidiaries (a) in exchange for any other
Investment or accounts receivable held by the Company or any such Restricted
Subsidiary in connection with or as a result of a bankruptcy, workout,
reorganization or recapitalization of the issuer of such other Investment or
accounts receivable or (b) as a result of a foreclosure by the Company or any of
its Restricted Subsidiaries with respect to any secured Investment or other
transfer of title with respect to any secured Investment in default; (vii)
Hedging Obligations; (viii) loans and advances to officers, directors and
employees for business-related travel expenses, moving expenses and other
similar expenses, in each case incurred in the ordinary course of business; (ix)
Investments the payment for which consists of Equity Interests of the Company
(exclusive of Disqualified Capital Stock); PROVIDED, HOWEVER, that such Equity
Interests will not increase the amount available for Restricted Payments under
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clause (c) of the first paragraph of the "Limitation on Restricted Payments"
covenant; and (x) additional Investments having an aggregate fair market value,
taken together with all other Investments made pursuant to this clause (x) that
are at that time outstanding, not to exceed $5.0 million at the time of such
Investment (with the fair market value of each Investment being measured at the
time made and without giving effect to subsequent changes in value) (subject in
each case to the restrictions described under "--Limitation on Indebtedness" and
"--Limitation on Mergers and Certain Other Transactions").
"PERMITTED LIENS" means (i) Liens on property or assets of, or any shares of
stock of or secured debt of, any corporation existing at the time such
corporation becomes a Restricted Subsidiary of the Company or at the time such
corporation is merged into the Company or any of its Restricted Subsidiaries,
provided that such Liens are not incurred in connection with, or in
contemplation of, such corporation becoming a Restricted Subsidiary of the
Company or merging into the Company or any of its Restricted Subsidiaries, (ii)
Liens securing Refinancing Indebtedness; PROVIDED that any such Lien does not
extend to or cover any Property, shares or debt other than the Property, shares
or debt securing the Indebtedness so refunded, refinanced or extended, (iii)
Liens in favor of the Company or any of its Restricted Subsidiaries, (iv) Liens
securing industrial revenue bonds, (v) Liens to secure Purchase Money
Indebtedness that is otherwise permitted under the Indenture; PROVIDED that (A)
any such Lien is created solely for the purpose of securing Indebtedness
representing, or incurred to finance, refinance or refund, the cost (including
sales) and excise taxes, installation and delivery charges and other direct
costs of, and other direct expenses paid or charged in connection with, such
purchase or construction) of such Property, (B) the principal amount of the
Indebtedness secured by such Lien does not exceed 100% of such costs, and (C)
such Lien does not extend to or cover any Property other than such item of
Property and any improvements on such item, (vi) statutory Liens or landlords',
carriers', warehousemen's, mechanics', suppliers', materialmen's, repairmen's or
other like Liens arising in the ordinary course of business which do not secure
any Indebtedness and with respect to amounts not yet delinquent or being
contested in good faith by appropriate proceedings, if a reserve or other
appropriate provisions, if any, as shall be required in conformity with GAAP
shall have been made therefor, (vii) Liens in favor of the Trustee under the
Indenture and any substantially equivalent Lien granted to any trustee or
similar institution under any indenture for Indebtedness permitted by the terms
of the Indenture, (viii) Liens incurred or pledges or deposits made in the
ordinary course of business to secure obligations under workers' compensation,
unemployment insurance or other types of social security or similar legislation,
(ix) Liens incurred or deposits made to secure the performance of tenders, bids,
leases, statutory obligations, surety and appeal bonds, government contracts,
performance and return of money bonds and other obligations of a like nature
incurred in the ordinary course of business (exclusive of obligations for the
payment of borrowed money), (x) Liens upon specific items of inventory or other
goods and proceeds of any person securing such person's obligations in respect
of bankers' acceptances issued or created for the account of such person to
facilitate the purchase, shipment or storage of such inventory or other goods in
the ordinary course of business, (xi) Liens securing reimbursement obligations
with respect to letters of credit which encumber documents and other property
relating to such letters of credit and the products and proceeds thereof, (xii)
Liens in favor of customs and revenue authorities arising as a matter of law to
secure payment of nondelinquent customs duties in connection with the
importation of goods, (xiii) judgment and attachment Liens not giving rise to a
Default or Event of Default, (xiv) leases or subleases granted to others not
interfering in any material respect with the business of the Company or any
Subsidiary, (xv) Liens encumbering customary initial deposits and margin
deposits, and other Liens incurred in the ordinary course of business that are
within the general parameters customary in the industry, in each case securing
Indebtedness under Hedging Obligations, (xvi) Liens encumbering deposits made in
the ordinary course of business to secure nondelinquent obligations arising from
statutory, regulatory, contractual or warranty requirements of the Company or
its Subsidiaries for which a reserve or other appropriate provision, if any, as
shall be required by GAAP shall have been made, (xvii) Liens arising out of
consignment or similar arrangements for the sale of goods entered into by the
Company or any Subsidiary in the ordinary course of business in accordance with
past practices, (xviii) any interest or title of a lessor in the property
subject to any lease, whether characterized
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as capitalized or operating other than any such interest or title resulting from
or arising out of a default by the Company or any Subsidiary of its obligations
under such lease, (xix) Liens arising from filing UCC financing statements for
precautionary purposes in connection with true leases of personal property that
are otherwise permitted under the applicable indenture and under which the
Company or any Subsidiary is lessee, (xx) other Liens securing obligations
incurred in the ordinary course of business which obligations or judgments do
not exceed $10.0 million in the aggregate at any one time outstanding, (xxi)
Liens securing Capitalized Lease Obligations permitted to be incurred; PROVIDED
that such Lien does not extend to any property other than that subject to the
underlying lease, (xxii) Liens on assets or capital stock of Unrestricted
Subsidiaries, (xxiii) Liens securing Indebtedness under the Senior Credit
Facility or any Floor Plan Financing Facility (xxiv) Liens existing on the
Closing Date, (xxv) Liens on assets of the Company securing Senior Indebtedness
and Liens on assets of a Subsidiary Guarantor securing Guarantor Senior
Indebtedness, (xxvi) any extensions, substitutions, replacements or renewals of
the foregoing, (xxvii) Liens for taxes, assessments or governmental charges that
are not delinquent or are being contested in good faith by appropriate
proceedings and (xxviii) easements or minor defects or irregularities in title
and other similar charges or encumbrances on property not interfering in any
material respect with the Company's use of such property.
"PERSON" means any individual, corporation, partnership, joint venture,
association, joint- stock company, trust, unincorporated organization or
government or other agency or political subdivision thereof.
"PREFERRED STOCK" means any Capital Stock of a person, however designated,
which entitles the holder thereof to a preference with respect to dividends,
distributions or liquidation proceeds of such person over the holders of other
Capital Stock issued by such person.
"PROPERTY" of any person means all types of real, personal, tangible,
intangible or mixed property owned by such person whether or not included in the
most recent consolidated balance sheet of such person and its Subsidiaries under
GAAP.
"PUBLIC EQUITY OFFERING" means an underwritten equity offering of the
Qualified Capital Stock of the Company, or of any entity of which the Company is
a direct or indirect subsidiary, to the extent the proceeds thereof shall have
been contributed to the Company, pursuant to an effective registration statement
under the Act.
"PURCHASE MONEY INDEBTEDNESS" means any Indebtedness incurred in the
ordinary course of business by a person to finance the cost (including the cost
of construction) of an item of property, the principal amount of which
Indebtedness does not exceed the sum of (i) 100% of such cost and (ii)
reasonable fees and expenses of such person incurred in connection therewith.
"QUALIFIED CAPITAL STOCK" means, with respect to any person, any Capital
Stock of such person that is not Disqualified Capital Stock.
"REPRESENTATIVE" means the agent or representative in respect of any
Designated Senior Indebtedness; provided that if, and for so long as, any
Designated Senior Indebtedness lacks such a representative, then the
Representative for such Designated Senior Indebtedness shall at all times
constitute the holders of a majority in outstanding principal amount of such
Designated Senior Indebtedness in respect of any Designated Senior Indebtedness.
"RESTRICTED SUBSIDIARY" means any Subsidiary that is not an Unrestricted
Subsidiary.
"SELLER NOTES" means the 9% Increasing Rate Subordinated Notes outstanding
on the Issue Date that were issued by the Company to certain present and former
shareholders of the Company and former shareholders of NYMA, Inc. and Sylvest
Management Systems Corporation, as in effect on the Issue Date.
"SENIOR CREDIT FACILITY" means the Credit Agreement to be entered into by
and among the Company, certain of its Subsidiaries, the lenders referred to
therein, Bankers Trust Company, as Agent, together with
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the related documents thereto (including, without limitation, any guarantees and
security documents), as amended, extended, renewed, restated, supplemented or
otherwise modified (in whole or in part, and without limitation as to amount,
terms, conditions, covenants and other provisions) from time to time, and any
agreement (and related documents) governing Indebtedness incurred to refund or
refinance the entirety of the borrowings and commitments then outstanding or
permitted to be outstanding under such Credit Agreement or a successor Senior
Credit Facility, whether by the same or any other lender or group of lenders.
The Company shall promptly notify the Trustee of any other lender or group of
lenders. The Company shall promptly notify the Trustee of any such refunding or
refinancing of the Senior Credit Facility.
"SENIOR INDEBTEDNESS" means (i) indebtedness of the Company for money
borrowed and all obligations, whether direct or indirect, under guarantees,
letters of credit, foreign currency or interest rate swaps, foreign exchange
contracts, caps, collars, options, hedges or other agreements or arrangements
designed to protect against fluctuations in currency values or interest rates,
other extensions of credit, expenses, fees, reimbursements, indemnities and all
other amounts (including interest at the contract rate accruing on or after the
filing of any petition in bankruptcy or reorganization relating to the Company
whether or not a claim for post-filing interest is allowed in such proceeding)
owed by the Company under, or with respect to, the Senior Credit Facility, or
any Floor Plan Financing Facility, (ii) the principal of and premium, if any,
and accrued and unpaid interest, whether existing on the date hereof or
hereafter incurred, in respect of (A) indebtedness of the Company for money
borrowed, (B) express written guarantees by the Company of indebtedness for
money borrowed by any other person, (C) indebtedness evidenced by notes,
debentures, bonds, or other instruments of indebtedness for the payment of which
the Company is responsible or liable, by guarantees or otherwise, (D)
obligations of the Company for the reimbursement of any obligor on any letter of
credit, banker's acceptance or similar credit transaction, (E) obligations of
the Company under any agreement to lease, or any lease of, any real or personal
property which, in accordance with GAAP, is classified on the Company's
consolidated balance sheet as a liability, and (F) obligations of the Company
under interest rate swaps, caps, collars, options and similar arrangements and
foreign currency hedges and (iii) modifications, renewals, extensions,
replacements, refinancings and refundings of any such indebtedness, obligations
or guarantees, unless, in the instrument creating or evidencing the same or
pursuant to which the same is outstanding, it is expressly provided that such
indebtedness, obligations or guarantees, or such modifications, renewals,
extensions, replacements, refinancings or refundings thereof, are not superior
in right of payment to the Notes; PROVIDED that Senior Indebtedness will not be
deemed to include (a) any obligation of the Company to any Subsidiary (other
than obligations pledged pursuant to the Senior Credit Facility, as security for
the obligations of the Company thereunder), (b) any liability for federal,
state, local or other taxes owed or owing by the Company, (c) any accounts
payable or other liability to trade creditors arising in the ordinary course of
business, (d) any Indebtedness, guarantee or obligation of the Company which is
expressly subordinate or junior by its terms in any respect to any other
Indebtedness, guarantee or obligation of the Company, (e) Indebtedness with
respect to the Seller Notes, (f) that portion of any Indebtedness incurred in
violation of the "Limitation on Indebtedness" covenant or (g) Indebtedness of
the Company which is classified as nonrecourse in accordance with GAAP or any
unsecured claim arising in respect thereof by reason of the application of
section 1111(b)(1) of the Bankruptcy Code. Notwithstanding clause (f) of the
foregoing proviso, any Indebtedness incurred pursuant to the Senior Credit
Facility in reliance of an Officers' Certificate with respect to the amount of
Indebtedness outstanding pursuant to the Floor Plan Financing Facility shall be
deemed Senior Indebtedness.
"SIGNIFICANT SENIOR INDEBTEDNESS" means any Indebtedness under or in respect
of the Senior Credit Facility or Senior Indebtedness with principal amount due
(or accreted value with respect to Senior Indebtedness issued at a discount) in
excess of $5.0 million upon initial issuance thereof.
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"SIGNIFICANT STOCKHOLDER" means, with respect to any person, any other
person who is the beneficial owner (within the meaning of Rule 13d-3 under the
Exchange Act) of more than 5% of any class of equity securities of such person
that are entitled to vote on a regular basis for the election of directors of
such person.
"SIGNIFICANT SUBSIDIARY" means each Restricted Subsidiary of the Company
that is a "significant subsidiary" as defined in Rule 1-02(v) of Regulation S-X
under the Securities Act and the Exchange Act (as such regulation is in effect
on the date hereof).
"SIMILAR BUSINESS" means an information technology business the majority of
whose revenues are derived from government contracting or value added reselling
of goods or services or any business or activity that is reasonably similar
thereto or a reasonable extension, development or expansion thereof or ancillary
thereto.
"SUBORDINATED OBLIGATIONS" means any Indebtedness of the Company which is
expressly subordinated or junior in right of payment to the Notes.
"SUBSIDIARY" of any person means (i) a corporation a majority of whose
Capital Stock with voting power, under ordinary circumstances, to elect
directors is, at the date of determination, directly or indirectly, owned by
such person, by one or more subsidiaries of such person or by such person and
one or more subsidiaries of such person, or (ii) a partnership in which such
person or a subsidiary of such person is, at the date of determination, a
general partner of such partnership, but only if such person or its subsidiary
is entitled to receive more than fifty percent of the assets of such partnership
upon its dissolution, or (ii) any other person (other than a corporation or a
partnership) in which such person, a subsidiary of such person or such person
and one or more subsidiaries of such person, directly or indirectly, at the date
of determination, has (x) at least a majority ownership interest or (y) the
power to elect or direct the election of a majority of the directors or other
governing body of such person.
"SUBSIDIARY" means any subsidiary of the Company.
"SUBSIDIARY GUARANTEE" means the Guarantees executed and delivered by any
Subsidiary Guarantor with respect to the Company's obligations under the
Indenture and the Notes.
"SUBSIDIARY GUARANTOR" means (i) each of (a) FDCT Corp., (b) NYMA, Inc., (c)
Sylvest Management Systems Corporation, (d) FDC Technologies, Inc. (e) DoxSys,
Inc. and (f) VAD International, Inc., (ii) each of the Company's Subsidiaries
which becomes a guarantor of the Notes pursuant to the "Guarantees of Certain
Indebtedness" covenant, and (iii) each of the Company's Subsidiaries executing a
supplemental indenture in which such Subsidiary agrees to be bound by the terms
of the Indenture; provided that any person constituting a Subsidiary Guarantor
as described above shall cease to constitute a Subsidiary Guarantor when its
respective Subsidiary Guarantee is released in accordance with the terms
thereof.
"TOTAL ASSETS" means the total consolidated assets of the Company and its
Restricted Subsidiaries, as shown on the most recent balance sheet of the
Company.
"TRANSACTIONS" means the acquisition by the Company of NYMA, Inc. in May
1997 and of Sylvest Management Systems Corporation in June 1997, prepayment of
certain of the Seller Notes, entry into the Senior Credit Facility, the offering
of the Private Notes and the application of the proceeds of the offering of the
Private Notes.
"TREASURY RATE" means the yield to maturity at the time of computation of
United States Treasury securities with a constant maturity (as compiled and
published in the most recent Federal Reserve Statistical Release H.15 (519)
which has become publicly available at least two business days prior to the
Redemption Date (or, if such Statistical Release is no longer published, any
publicly available source or similar market date)) most nearly equal to the
period from the Redemption Date to August 1, 2001; provided, however, that if
the period from the Redemption Date to August 1, 2001 is not equal to the
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constant maturity of a United States Treasury security for which a weekly
average yield is given, the Treasury Rate shall be obtained by linear
interpolation (calculated to the nearest one-twelfth of a year) from the weekly
average yields of United States Treasury securities for which such yields are
given, except that if the period from the Redemption Date to August 1, 2001 is
less than one year, the weekly average yield on actually traded United States
Treasury securities adjusted to a constant maturity of one year shall be used.
"UNRESTRICTED SUBSIDIARY" of any person means (i) any Subsidiary of such
person that at the time of determination shall be or continue to be designated
an Unrestricted Subsidiary by the Board of Directors of such Person in the
manner provided below and (ii) any Subsidiary of an Unrestricted Subsidiary. The
Board of Directors may designate any Subsidiary (including any newly acquired or
newly formed Subsidiary) to be an Unrestricted Subsidiary unless such Subsidiary
owns any Capital Stock of, or owns or holds any Lien on any property of, the
Company or any other Subsidiary of the Company that is not a Subsidiary of the
Subsidiary to be so designated; provided that (x) the Company certifies to the
Trustee that such designation complies with the "Limitation on Restricted
Payments" covenant and (y) each Subsidiary to be so designated and each of its
Subsidiaries have not at the time of designation, and do not thereafter, create,
incur, issue, assume, guarantee or otherwise become directly or indirectly
liable with respect to any Indebtedness pursuant to which the lender has
recourse to any of the assets of the Company or any of its Restricted
Subsidiaries. The Board of Directors may designate any Unrestricted Subsidiary
to be a Restricted Subsidiary only if (x) immediately after giving effect to
such designation, the Company is able to incur at least $1.00 of additional
Indebtedness under the first paragraph of the covenant described under
"Limitation on Indebtedness" above and (y) immediately before and immediately
after giving effect to such designation, no Default or Event of Default shall
have occurred and be continuing. Any such designation by the Board of Directors
shall be evidenced to the Trustee by promptly filing with the Trustee a copy of
the resolution giving effect to such designation and an Officers' Certificate
certifying that such designation complied with the foregoing provisions.
"WEIGHTED AVERAGE LIFE TO MATURITY" means, when applied to any Indebtedness
at any date, the number of years obtained by dividing (a) the then outstanding
aggregate principal amount of such Indebtedness into (b) the sum of the total of
the products obtained by, multiplying (i) the amount of each then remaining
installment, sinking fund, serial maturity or other required payment of
principal, including payment at final maturity, in respect thereof by (ii) the
number of years (calculated to the nearest one-twelfth) which will elapse
between such date and the making of such payment.
BOOK ENTRY; DELIVERY AND FORM
Except as described in the next paragraph, the Notes (and the related
guarantees) initially will be represented by a single, permanent global
certificate in definitive, fully registered form (the "Global Note"). The Global
Note will be deposited on the Issue Date with, or on behalf of, The Depository
Trust Company, New York, New York ("DTC") and registered in the name of a
nominee of DTC. The Global Note will be subject to certain restrictions on
transfer set forth therein and will bear the legend regarding such restrictions
set forth under the heading "Transfer Restrictions" herein.
Notes (i) originally purchased by or transferred to "foreign purchasers" (as
defined in "Transfer Restrictions") or (ii) held by qualified institutional
buyers or Accredited Investors who are not QIBs who elect to take physical
delivery of their certificates instead of holding their interests through the
Global Note (collectively referred to herein as the "Non-Global Purchasers")
will be issued in registered form (the "Certificated Security"). The
Certificated Security will initially be registered in the name of DTC or the
nominee of DTC and will be deposited with the trustee or custodian on behalf of
DTC. Upon the transfer to a QIB of any Certificated Security initially issued to
a Non-Global Purchaser, such Certificated Security will, unless the transferee
requests otherwise or the Global Note has previously been exchanged in whole for
Certificated Securities, be exchanged for an interest in the Global Note.
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THE GLOBAL NOTE. The Company expects that pursuant to procedures
established by DTC (i) upon the issuance of the Global Note, DTC or its
custodian will credit, on its internal system, the principal amount of Notes of
the individual beneficial interests represented by such Global Note to the
respective accounts of persons who have accounts with such depositary and (ii)
ownership of beneficial interests in the Global Note will be shown on, and the
transfer of such ownership will be effected only through, records maintained by
DTC or its nominee (with respect to interests of participants) and the records
of participants (with respect to interests of persons other than participants).
Such accounts initially will be designated by or on behalf of the Initial
Purchasers and ownership of beneficial interests in the Global Note will be
limited to persons who have accounts with DTC ("participants") or person who
hold interests through participants. QIBs may hold their interests in the Global
Note directly through DTC if they are participants in such system, or indirectly
through organizations which are participants in such system.
So long as DTC, or its nominee, is the registered owner or holder of the
Notes, DTC or such nominee, as the case may be, will be considered the sole
owner or holder of the Notes represented by such Global Note for all purposes
under the Indenture. No beneficial owner of an interest in the Global Note will
be able to transfer that interest except in accordance with DTC's procedures, in
addition to those provided for under the Indenture with respect to the Notes.
Payments of the principal of, premium (if any) and interest (including
Liquidated Damages) on, the Global Note will be made to DTC or its nominee, as
the case may be, as the registered owner thereof. None of the Company, the
Trustee or any Paying Agent will have any responsibility or liability for any
aspect of the records relating to or payments made on account of beneficial
ownership interests in the Global Note or for maintaining, supervising or
reviewing any records relating to such beneficial ownership interest.
The Company expects that DTC or its nominee, upon receipt of any payment of
principal, premium, if any, or interest (including Liquidated Damages) in
respect of the Global Note, will credit participants' accounts with payments in
amounts proportionate to their respective beneficial interests in the principal
amount of the Global Note as shown on the records of DTC or its nominee. The
Company also expects that payments by participants to owners of beneficial
interests in the Global Note held through such participants will be governed by
standing instructions and customary practice, as is now the case with securities
held for the accounts of customers registered in the names of nominees for such
customers. Such payments will be the responsibility of such participants.
Transfers between participants in DTC will be effected in the ordinary way
through DTC's same-day funds system in accordance with DTC rules and will be
settled in federal funds. If a holder requires physical delivery of a
Certificated Security for any reason, including to sell Notes to persons in
states which require physical delivery of the Notes, or to pledge such
securities, such holder must transfer its interest in the Global Note, in
accordance with the normal procedures of DTC and with the procedures set forth
in the Indenture.
DTC has advised the Company that it will take any action permitted to be
taken by a holder of Notes (including the presentation of Notes for exchange as
described below) only at the direction of one or more participants to whose
account the DTC interests in the Global Note are credited and only in respect of
such portion of the aggregate principal amount of Notes as to which such
participant or participants has or have given such direction. However, if there
is an Event of Default under the Indenture, DTC will exchange the Global Note
for Certificated Securities, which it will distribute to its participants and
which will be legended as set forth under the heading "Transfer Restrictions."
DTC has advised the Company as follows: DTC is a limited purpose trust
company organized under the laws of the State of New York, a member of the
Federal Reserve System, a "clearing corporation" within the meaning of the
Uniform Commercial Code and a "Clearing Agency" registered pursuant to the
provisions of Section 17A of the Securities Exchange Act of 1934, as amended
(the "Exchange Act"). DTC was created to hold securities for its participants
and facilitate the clearance and settlement of securities
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transactions between participants through electronic book-entry changes in
accounts of its participants, thereby eliminating the need for physical movement
of certificates. Participants include securities brokers and dealers, banks,
trust companies and clearing corporations and certain other organizations.
Indirect access to the DTC system is available to others such as banks, brokers,
dealers and trust companies that clear through or maintain a custodial
relationship with a participant, either directly or indirectly ("indirect
participants").
Although DTC has agreed to the foregoing procedures in order to facilitate
transfers of interests in the Global Note among participants of DTC, it is under
no obligation to perform such procedures, and such procedures may be
discontinued at any time. Neither the Company nor the Trustee will have any
responsibility for the performance by DTC or its participants or indirect
participants of their respective obligations under the rules and procedures
governing their operations.
CERTIFICATED SECURITIES. If DTC is at any time unwilling or unable to
continue as a depositary for the Global Note and a successor depositary is not
appointed by the Company within 90 days, Certificated Securities will be issued
in exchange for the Global Note.
CERTAIN FEDERAL INCOME TAX CONSIDERATIONS
In the opinion of Latham & Watkins, counsel to the Company, the following
discussion describes the material federal income tax consequences expected to
result to holders whose Private Notes are exchanged for Exchange Notes in the
Exchange Offer. Such opinion is based upon current provisions of the Internal
Revenue Code of 1986, as amended, applicable Treasury regulations, judicial
authority and administrative rulings and practice. There can be no assurance
that the Internal Revenue Service ("the Service") will not take a contrary view,
and no ruling from the Service has been or will be sought with respect to the
Exchange Offer. Legislative, judicial or administrative changes or
interpretations may be forthcoming that could alter or modify the statements and
conclusions set forth herein. Any such changes or interpretations may or may not
be retroactive and could affect the tax consequences to holders. Certain holders
(including insurance companies, tax-exempt organizations, financial
institutions, broker-dealers, foreign corporations, and persons who are not
citizens or residents of the United States) may be subject to special rules not
discussed below. EACH HOLDER OF PRIVATE NOTES SHOULD CONSULT ITS OWN TAX ADVISOR
AS TO THE PARTICULAR TAX CONSEQUENCES OF EXCHANGING PRIVATE NOTES FOR EXCHANGE
NOTES, INCLUDING THE APPLICABILITY AND EFFECT OF ANY STATE, LOCAL OR FOREIGN
LAWS.
The exchange of Private Notes for Exchange Notes will be treated as a
"non-event" for federal income tax purposes. As a result, no material federal
income tax consequences will result to holders exchanging Private Notes for
Exchange Notes.
102
<PAGE>
PLAN OF DISTRIBUTION
Each broker-dealer that receives Exchange Notes for its own account pursuant
to the Exchange Offer must acknowledge that it will deliver a prospectus in
connection with any resale of such Exchange Notes. This Prospectus, as it may be
amended or supplemented from time to time, may be used by a broker-dealer in
connection with the resales of Exchange Notes received in exchange for Private
Notes where such Private Notes were acquired as a result of market-making
activities or other trading activities. The Company has agreed that for the
period required by the Securities Act, it will make this Prospectus, as amended
or supplemented, available to any broker-dealer that requests such document in
the Letter of Transmittal for use in connection with any such resale.
The Company will not receive any proceeds from any sale of Exchange Notes by
broker-dealers or any other persons. Exchange Notes received by broker-dealers
for their own account pursuant to the Exchange Offer may be sold from time to
time in one or more transactions in the over-the-counter market, in negotiated
transactions, through the writing of options on the Exchange Notes or a
combination of such methods of resale, at market prices prevailing at the time
of resale, at prices related to such prevailing market prices or negotiated
prices. Any such resale may be made directly to purchasers or to or through
brokers or dealers who may receive compensation in the form of commissions or
concessions from any such broker-dealers and/or the purchasers of any such
Exchange Notes. Any broker-dealer that resells Exchange Notes that were received
by it for its own account pursuant to the Exchange Offer and any broker or
dealer that participates in a distribution of such Exchange Notes may be deemed
to be an "underwriter" within the meaning of the Securities Act and any profit
on any such resale of Exchange Notes and any commissions or concessions received
by any such persons may be deemed to be underwriting compensation under the
Securities Act. The Letter of Transmittal states that by acknowledging that it
will deliver and by delivering a prospectus, a broker-dealer will not be deemed
to admit that it is an "underwriter" within the meaning of the Securities Act.
The Company has agreed to pay all expenses incident to the Company's
performance of, or compliance with, the Registration Rights Agreement and will
indemnify the holders of Private Notes (including any broker-dealers), and
certain parties related to such holders, against certain liabilities, including
liabilities under the Securities Act.
LEGAL MATTERS
The validity of the Exchange Notes offered hereby will be passed upon for
the Company by Latham & Watkins, Chicago, Illinois.
EXPERTS
The consolidated financial statements of Federal Data Corporation as of
December 31, 1995 and 1996, and for each of the three years in the period ended
December 31, 1996, included in this Prospectus have been so included in reliance
on the report of Price Waterhouse LLP, independent accountants, given on the
authority of said firm as experts in auditing and accounting.
The consolidated financial statements of NYMA, Inc., as of December 31, 1995
and 1996 and for each of the three years in the period ended December 31, 1996,
included in this Prospectus, have been audited by Deloitte & Touche LLP,
independent auditors, as stated in their report appearing herein, and have been
so included in reliance upon the report of such firm given upon their authority
as experts in accounting and auditing.
The balance sheets as of December 31, 1995 and 1996 and the statements of
operations, changes in shareholders' equity, and cash flows of Sylvest
Management Systems Corporation, for each of the three years in the period ended
December 31, 1996, included in this Prospectus, have been included herein in
reliance on the report of Coopers & Lybrand L.L.P., independent accountants,
given on the authority of that firm as experts in accounting and auditing.
103
<PAGE>
AVAILABLE INFORMATION
The Company has filed with the Commission a Registration Rights Agreement on
Form S-4 under the Securities Act with respect to the Exchange Notes offered
hereby. As permitted by the rules and regulations of the Commission, this
Prospectus omits certain information, exhibits and undertakings contained in the
Registration Statement. For further information with respect to the Company and
the Exchange Notes offered hereby, reference is made to the Registration
Statement, including the exhibits thereto and the financial statements, notes
and schedules filed as a part thereof. As a result of the Exchange Offer, the
Company will become subject to the informational requirements of the Exchange
Act. The Registration Statement (and the exhibits and schedules thereto), as
well as the periodic reports and other information filed by the Company with the
Commission, may be inspected and copied at the Public Reference Section of the
Commission at Room 1024, Judiciary Plaza, 450 Fifth Street, N.W., Washington,
D.C. 20549 and at the regional offices of the Commission located at 7 World
Trade Center, New York, New York 10048 and Suite 1400, Northwestern Atrium
Center, 500 West Madison Street, Chicago, Illinois 60661-2511. Copies of such
materials may be obtained from the Public Reference Section of the Commission,
Room 1024, Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549 and
its public reference facilities in New York, New York and Chicago, Illinois at
the prescribed rates. The Commission also maintains a web site (located at
http://www.sec.gov) that contains reports, proxy and information statements and
other information regarding registrants that file electronically with the
Commission. Statements contained in this Prospectus as to the contents of any
contract or other document are not necessarily complete, and in each instance
reference is made to the copy of such contract or document filed as an exhibit
to the Registration Statement, each such statement being qualified in all
respects by such reference.
Pursuant to the Indenture, the Company has agreed to furnish to the Trustee
and to registered holders of the Exchange Notes, without cost to the Trustee or
such registered holders, copies of all reports and other information that would
be required to be filed by the Company with the Commission under the Exchange
Act, whether or not the Company is then required to file reports with the
Commission. As a result of this Exchange Offer, the Company will become subject
to the periodic reporting and other informational requirements of the Exchange
Act. In the event that the Company ceases to be subject to the information
requirements of the Exchange Act, the Company has agreed that, so long as any
Exchange Notes remain outstanding, it will file with the Commission (but only if
the Commission at such time is accepting such voluntary filings) and distribute
to holders of the Notes copies of the financial information that would have been
contained in such annual reports and quarterly reports, including a
"Management's Discussion and Analysis of Financial Condition and Results of
Operations," that would have been required to be filed with the Commission
pursuant to the Exchange Act. The Company will also furnish such other reports
as it may determine or as may be required by law.
The principal address of the Company is 4800 Hampden Lane, Bethesda,
Maryland 20814 and the Company's telephone number is (301) 986-0800.
104
<PAGE>
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<S> <C>
Federal Data Corporation
Report of Independent Accountants.................................................. F-2
Consolidated Balance Sheets as of December 31, 1995 and 1996 and June 30, 1997
(unaudited)...................................................................... F-3
Consolidated Statements of Operations for the Years Ended December 31, 1994, 1995
and 1996 and for the Six Months Ended June 30, 1996 and 1997 (unaudited)......... F-4
Consolidated Statements of Stockholders' (Deficit) Equity for the Years Ended
December 31, 1994, 1995 and 1996 and for the Six Months Ended June 30, 1997
(unaudited)...................................................................... F-5
Consolidated Statements of Cash Flows for the Years Ended December 31, 1994, 1995
and 1996 and for the Six Months Ended June 30, 1996 and 1997 (unaudited)......... F-6
Notes to Consolidated Financial Statements......................................... F-7
NYMA, Inc.
Independent Auditors' Report....................................................... F-20
Consolidated Balance Sheets as of December 31, 1995 and 1996 and March 31, 1997
(unaudited)...................................................................... F-21
Consolidated Statements of Operations for the Years Ended December 31, 1994, 1995
and 1996 and for the Quarters Ended March 31, 1996 and 1997 (unaudited).......... F-22
Consolidated Statements of Stockholders' Equity for the Years Ended December 31,
1994, 1995 and 1996 and for the Quarter Ended March 31, 1997 (unaudited)......... F-23
Consolidated Statements of Cash Flows for the Years Ended December 31, 1994, 1995
and 1996 and for the Quarters Ended March 31, 1996 and 1997 (unaudited).......... F-24
Notes to Consolidated Financial Statements......................................... F-25
Sylvest Management Systems Corporation
Report of Independent Accountants.................................................. F-32
Balance Sheets as of December 31, 1995 and 1996 and June 30, 1997 (unaudited)...... F-33
Statements of Operations for the Years Ended December 31, 1994, 1995 and 1996 and
for the Six Months Ended June 30, 1996 (unaudited) and 1997 (unaudited).......... F-34
Statements of Changes in Shareholders' Equity for the Years Ended December 31,
1994, 1995 and 1996 and for the Six Months Ended June 30, 1997 (unaudited)....... F-35
Statements of Cash Flows for the Years Ended December 31, 1994, 1995 and 1996 and
for the Six Months Ended June 30, 1996 (unaudited) and 1997 (unaudited).......... F-36
Notes to Financial Statements...................................................... F-37
</TABLE>
F-1
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Stockholders
of Federal Data Corporation
In our opinion, the accompanying consolidated balance sheets and the related
consolidated statements of operations, of stockholders' (deficit) equity and of
cash flows present fairly, in all material respects, the financial position of
Federal Data Corporation and its subsidiaries at December 31, 1995 and 1996, and
the results of their operations and their cash flows for each of the three years
in the period ended December 31, 1996, in conformity with generally accepted
accounting principles. These financial statements are the responsibility of the
Company's management; our responsibility is to express an opinion on these
financial statements based on our audits. We conducted our audits of these
statements in accordance with generally accepted auditing standards which
require that we plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for the opinion expressed above.
PRICE WATERHOUSE LLP
Washington, D.C.
March 28, 1997
F-2
<PAGE>
FEDERAL DATA CORPORATION
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
DECEMBER 31,
----------------------
1995 1996
---------- ---------- JUNE 30,
1997
-----------
(UNAUDITED)
<S> <C> <C> <C>
ASSETS
Cash and cash equivalents................................................... $ 10,311 $ 1,191 $ 7,276
Merger consideration investments............................................ 51,762 -- --
Accounts receivable......................................................... 48,812 54,379 91,893
Net investment in sales-type leases......................................... 13,360 9,251 8,538
Deferred income taxes....................................................... 1,811 2,105 1,079
Other assets................................................................ 2,836 2,524 10,182
---------- ---------- -----------
Total current assets.................................................... 128,892 69,450 118,968
Net investment in sales-type leases......................................... 13,743 8,609 6,844
Leased and other property and equipment..................................... 1,341 1,462 3,990
Goodwill.................................................................... -- -- 57,512
Deferred income taxes....................................................... 2,800 1,092 1,260
Other assets................................................................ 3,326 2,673 5,815
---------- ---------- -----------
Total assets............................................................ $ 150,102 $ 83,286 $ 194,389
---------- ---------- -----------
---------- ---------- -----------
LIABILITIES AND STOCKHOLDERS' (DEFICIT) EQUITY
Notes payable-recourse...................................................... $ 15,799 $ 4,235 $ 7,884
Notes payable-nonrecourse................................................... 9,045 5,177 4,102
Obligations under capital leases-recourse................................... 1,683 1,614 1,767
Obligations under capital leases-nonrecourse................................ 4,267 4,255 4,017
Merger consideration payable................................................ 51,762 -- --
Accounts payable and other liabilities...................................... 35,311 37,920 56,380
---------- ---------- -----------
Total current liabilities............................................... 117,867 53,201 74,150
Notes payable-recourse...................................................... 26,333 40,250 106,117
Notes payable-nonrecourse................................................... 7,618 5,032 3,755
Obligations under capital leases-recourse................................... 4,131 2,586 1,688
Obligations under capital leases-nonrecourse................................ 5,330 2,302 2,316
Merger consideration payable................................................ 7,033 -- --
Other liabilities........................................................... 7,752 2,741 2,890
---------- ---------- -----------
Total liabilities....................................................... 176,064 106,112 190,916
---------- ---------- -----------
Stockholders' (deficit) equity
Common stock, $.01 par value: 8,000,000 shares authorized; shares issued
and outstanding, 1,910,896 in 1995 and 1996 and 2,910,896 in 1997....... 19 19 29
Capital in excess of par value............................................ 13,932 13,950 40,227
Accumulated deficit....................................................... (39,913) (36,795) (36,783)
---------- ---------- -----------
Total stockholders' (deficit) equity.................................... (25,962) (22,826) 3,473
---------- ---------- -----------
Commitments
Total liabilities and stockholders' (deficit) equity...................... $ 150,102 $ 83,286 $ 194,389
---------- ---------- -----------
---------- ---------- -----------
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
F-3
<PAGE>
FEDERAL DATA CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
SIX MONTHS ENDED
YEAR ENDED DECEMBER 31, JUNE 30,
------------------------------------ --------------------------
1994 1995 1996 1996 1997
---------- ---------- ------------ ------------ ------------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Revenues
Equipment and software sales................. $ 107,958 $ 81,038 $ 87,543 $ 25,693 $ 42,035
Maintenance and support services............. 31,424 43,750 59,871 26,118 44,029
Interest and other........................... 4,145 5,031 3,694 2,288 1,108
---------- ---------- ------------ ------------ ------------
Total revenues............................. 143,527 129,819 151,108 54,099 87,172
---------- ---------- ------------ ------------ ------------
Expenses
Cost of sales and services................... 114,038 107,366 114,248 41,314 70,277
Selling, general and administrative.......... 20,546 20,943 21,366 8,854 12,986
Interest..................................... 3,580 3,663 7,564 4,089 3,734
---------- ---------- ------------ ------------ ------------
Total expenses............................. 138,164 131,972 143,178 54,257 86,997
---------- ---------- ------------ ------------ ------------
Income (loss) before income taxes.............. 5,363 (2,153) 7,930 (158) 175
Income tax provision (benefit)................. 1,171 (3,950) 3,202 (63) 163
---------- ---------- ------------ ------------ ------------
Net income (loss).............................. $ 4,192 $ 1,797 $ 4,728 $ (95) $ 12
---------- ---------- ------------ ------------ ------------
---------- ---------- ------------ ------------ ------------
Net income (loss) per common share............. $ 2.43 $ (0.05) $ 0.01
------------ ------------ ------------
------------ ------------ ------------
Weighted average common shares and common share
equivalents.................................. 1,946,194 1,910,896 2,206,045
------------ ------------ ------------
------------ ------------ ------------
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
F-4
<PAGE>
FEDERAL DATA CORPORATION
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' (DEFICIT) EQUITY
FOR THE YEARS ENDED DECEMBER 31, 1994, 1995 AND 1996 AND
THE SIX MONTHS ENDED JUNE 30, 1997 (UNAUDITED)
(IN THOUSANDS, EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
RETAINED
COMMON STOCK CAPITAL IN EARNINGS
------------------------ EXCESS OF (ACCUMULATED
SHARES PAR VALUE PAR VALUE DEFICIT) TOTAL
----------- ----------- ----------- ------------ ----------
<S> <C> <C> <C> <C> <C>
Balance, December 31, 1993......................... 5,777,344 $ 58 $ 5,948 $ 9,305 $ 15,311
Net income......................................... -- -- -- 4,192 4,192
Redemption of common stock......................... (39,032) (1) (174) -- (175)
Deferred compensation.............................. -- -- 71 -- 71
----------- --- ----------- ------------ ----------
Balance, December 31, 1994......................... 5,738,312 57 5,845 13,497 19,399
Net income......................................... -- -- -- 1,797 1,797
Redemptions of common stock from Merger............ (5,313,814) (53) (4,094) (54,648) (58,795)
Other redemption of common stock................... (164,831) (1) (1,816) -- (1,817)
Shares exchanged, net.............................. 16,229 -- -- -- --
Proceeds from sale of common stock, net of expenses
of $2,158........................................ 1,635,000 16 13,926 -- 13,942
Distribution to liquidating trust.................. -- -- -- (559) (559)
Deferred compensation.............................. -- 71 -- 71
----------- --- ----------- ------------ ----------
Balance, December 31, 1995......................... 1,910,896 19 13,932 (39,913) (25,962)
Net income......................................... -- -- -- 4,728 4,728
Additional Merger expenses......................... -- -- (53) -- (53)
Distribution to be made to former stockholders..... -- -- -- (1,610) (1,610)
Deferred compensation.............................. -- -- 71 -- 71
----------- --- ----------- ------------ ----------
Balance, December 31, 1996......................... 1,910,896 19 13,950 (36,795) (22,826)
Net income (Unaudited)............................. -- -- -- 12 12
Proceeds from sale of common stock, net of expenses
of $817 (Unaudited).............................. 1,000,000 10 26,173 -- 26,183
Deferred compensation (Unaudited).................. -- -- 104 -- 104
----------- --- ----------- ------------ ----------
Balance, June 30, 1997 (Unaudited)................. 2,910,896 $ 29 $ 40,227 $ (36,783) $ 3,473
----------- --- ----------- ------------ ----------
----------- --- ----------- ------------ ----------
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
F-5
<PAGE>
FEDERAL DATA CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
<TABLE>
<CAPTION>
SIX MONTHS ENDED
YEAR ENDED DECEMBER 31, JUNE 30,
---------------------------------- ----------------------
1994 1995 1996 1996 1997
---------- ---------- ---------- ---------- ----------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Cash flows from operating activities:
Net income (loss)................................... $ 4,192 $ 1,797 $ 4,728 $ (95) $ 12
Adjustments to reconcile net income (loss) to net
cash flows from operating activities:
Depreciation and amortization....................... 1,327 1,266 782 478 642
Loss (income) recorded on sales-type leases......... (3,705) (4,062) (1,738) (2,205) 455
Collections from sales-type leases.................. 18,403 12,372 6,075 990 1,853
(Increase) decrease in accounts and notes
receivable........................................ (16,584) 6,712 (5,569) 6,274 15,535
Increase (decrease) in accounts payable and accrued
expenses.......................................... 22,398 (18,839) 2,180 (6,188) (8,126)
Net change in other assets and liabilities.......... (6,789) (2,013) (5,006) (3,717) (4,231)
---------- ---------- ---------- ---------- ----------
Net cash flows from operating activities............ 19,242 (2,767) 1,452 (4,463) 6,140
---------- ---------- ---------- ---------- ----------
Cash flows from investing activities:
Sale (purchase) of short-term investments........... 2,000 (51,762) 51,762 51,762 --
Acquisitions of businesses.......................... -- -- -- -- (58,125)
Proceeds from sale of equipment..................... -- 1,503 -- -- --
Proceeds from sale of division...................... -- 890 -- -- --
Purchase of equipment for sales-type leases......... (6,968) (2,786) (1,156) (1,155) --
Purchase of property and equipment.................. (2,590) (686) (903) (365) (1,088)
---------- ---------- ---------- ---------- ----------
Net cash flows from investing activities............ (7,558) (52,841) 49,703 50,242 (59,213)
---------- ---------- ---------- ---------- ----------
Cash flows from financing activities:
Proceeds from borrowings............................ 9,463 61,478 1,916 -- 55,400
Repayments of borrowings............................ (2,620) (13,451) (15,797) (12,150) (3,465)
Net borrowings (repayments) under line of credit.... -- -- 10,800 8,400 (15,487)
Payments to selling stockholders.................... -- -- (51,762) (51,762) --
Proceeds from sale of common stock.................. -- 16,100 -- -- 27,000
Recapitalization, stock issuance and debt
acquisition costs................................. -- (5,294) -- -- (3,320)
Redemption of common stock.......................... (174) (1,817) -- -- --
Repayments of capital lease obligations............. (10,198) (6,689) (5,432) (497) (970)
---------- ---------- ---------- ---------- ----------
Net cash flows from financing activities............ (3,529) 50,327 (60,275) (56,009) 59,158
---------- ---------- ---------- ---------- ----------
Net change in cash and cash equivalents............... 8,155 (5,281) (9,120) (10,230) 6,085
Cash and cash equivalents, beginning of period........ 7,437 15,592 10,311 10,311 1,191
---------- ---------- ---------- ---------- ----------
Cash and cash equivalents, end of period.............. $ 15,592 $ 10,311 $ 1,191 $ 81 $ 7,276
---------- ---------- ---------- ---------- ----------
---------- ---------- ---------- ---------- ----------
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
F-6
<PAGE>
FEDERAL DATA CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(INFORMATION AS OF AND FOR THE SIX MONTHS ENDED JUNE 30, 1996 AND 1997 IS
UNAUDITED)
(IN THOUSANDS, EXCEPT SHARE DATA)
NOTE 1--NATURE OF BUSINESS
The accompanying consolidated financial statements include the accounts of
Federal Data Corporation and its wholly-owned subsidiaries (collectively, the
Company). The Company operates in one business segment and principally engages
in the design and marketing of commercially available data processing solutions
and consulting to the United States Government (the Government). The Government
accounted for approximately 95%, 95% and 97% of total revenues during 1994, 1995
and 1996, respectively. The Company pursues this business as a computer systems
integrator, reseller and professional services provider. The traditional
integration business focuses on configuring various types of computer hardware,
software and peripherals obtained from one or more manufacturers or suppliers,
combined with data networking components, to produce a single turnkey system
designed to accommodate the data processing requirements of the customer. This
business is generally oriented toward mission critical business applications
rather than research and development or tactical military systems. The Company
also focuses on image-based document management and automation technologies. The
Company generally provides ongoing maintenance and other consulting and support
services related to the solutions installed by the Company. The Company also
establishes relationships with providers of hardware and software components and
offers these products under a variety of contract offerings such as GSA
schedules and competitive contract vehicles.
The data processing solutions are sold or leased to the Government under
various types of agreements providing for, in certain cases, purchase options or
other lease to ownership arrangements. Most contracts with Government agencies
expire on September 30 of each year (the Government's fiscal year end) and are
renewable for additional fiscal years subject to the appropriation of funding.
While the Company's Government contracts provide for fiscal funding termination,
the Company has not experienced any early terminations of significant contracts
since its inception.
NOTE 2--MERGER
On December 1, 1995, FDC Holdings, Inc. (Holdings) merged with and into the
Company with the Company continuing as the surviving corporation (the Merger).
Holdings was a company organized by the Carlyle Group (Carlyle) to facilitate
the Merger and had no operating activity or history. Upon consummation of the
Merger, Holdings received 85.4% of the Company's common stock and 14.6% was
retained by members of Company management who were shareholders prior to the
Merger. Existing shareholders exchanged 259,667 shares of the Company's common
stock for 275,896 shares of common stock of the surviving corporation, 164,831
shares of common stock were purchased and retired and the remaining 5,313,814
shares of common stock were redeemed with the Merger consideration. The Merger
was accounted for as a recapitalization which resulted in a charge to
stockholders' equity of $58,795 to reflect the redemption of common stock.
The Company financed the Merger through proceeds from term loans of $35,000,
borrowings under a revolving line of credit of $6,500 and an equity purchase of
1,635,000 shares of common stock by Holdings for $16,100. These proceeds were
also utilized to pay fees and expenses related to the Merger and acquisition of
the debt, and to provide working capital for the Company. Of the total fees and
expenses, $1,500 was paid to an affiliate of Carlyle. At December 31, 1995, the
Merger consideration was invested in money market funds. On January 4, 1996, the
Company liquidated this investment and paid the selling
F-7
<PAGE>
FEDERAL DATA CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(INFORMATION AS OF AND FOR THE SIX MONTHS ENDED JUNE 30, 1996 AND 1997 IS
UNAUDITED)
(IN THOUSANDS, EXCEPT SHARE DATA)
NOTE 2--MERGER (CONTINUED)
shareholders $49,448 of the Merger consideration in cash and issued subordinated
notes amounting to $7,033. The remaining balance of the Merger consideration of
$2,315 was paid in cash on April 4, 1996.
The subordinated notes issued on January 4, 1996 accrue interest at 9% from
January 4, 1996 through January 3, 1999, 11% from January 4, 1999 through
December 31, 2002 and 13% thereafter. Interest on the subordinated notes is
payable semi-annually beginning July 4, 1996; provided however, that any amount
of cash interest which is not paid on the subordinated notes as a result of
payment restrictions under any senior debt will be made by the issuance of
payment in kind subordinated notes. The interest payment of $316 due July 4,
1996 was made through the issuance of payment in kind subordinated notes. The
principal and any accrued and unpaid interest will be payable on the latter of
six months after the payment of all amounts owed under the Company's credit
agreement (see Note 7) or July 4, 2003.
As part of the consideration for the purchase of the common stock of the
selling shareholders outlined in the Merger agreement, the Company prepaid
$1,610 of premiums during 1996 under a Split Dollar life insurance policy to
fund future additional distributions to the selling shareholders. The Company
has recorded a reduction of $1,610 in retained earnings based on the
distribution that will be made to the selling shareholders in 1999 when the
Split Dollar payments are received.
As a condition of the Merger, the Company was required to dispose of certain
nonessential assets and related liabilities. These assets and related
liabilities consisted of an airplane, land and building in South Carolina,
certain artwork, the Company's Financial Services Division and a 10% limited
partnership interest in a bankrupt partnership that previously held title to the
office building in which the Company is located. An entity controlled by the
former majority shareholder purchased the airplane, the Company's Financial
Services Division and the 10% limited partnership interest and assumed the
related liabilities for $2,393, the aggregate independent appraised value of the
airplane and the Financial Services Division. The Company attributed no value to
the partnership interest. The Company has placed the artwork and the land and
building in South Carolina into a liquidating trust. The liquidating trust is
required to sell these assets and distribute the net proceeds to the selling
shareholders. The disposition of these nonessential assets and liabilities did
not have a significant impact on the Company's consolidated financial
statements.
The Merger agreement generally required the Company to complete the
distribution of the assets held by the Federal Data Corporation Employee Stock
Ownership Plan (the ESOP). These assets consisted principally of shares of the
Company's common stock. The Company had previously terminated the ESOP in May
1994 and received approval from the Internal Revenue Service to distribute the
assets in October 1995. In October and November 1995, the Company distributed
the assets of the ESOP to the participants. The ESOP distribution had no effect
on the Company's consolidated financial statements.
Concurrent with the acquisition of a controlling interest in the Company by
Carlyle in 1995, the Company entered into a management agreement with an
affiliate of Carlyle for certain management and financial advisory services to
be provided to the Company and its subsidiaries. The agreement provides for the
payment of annual management fees in an amount equal to $300. In addition,
concurrent with the acquisition of Carlyle's controlling interest, the Company
entered into a three year consulting agreement with the former majority
shareholder and a three year agreement to lease a corporate aircraft with an
affiliate of the former majority shareholder. The consulting agreement provides
for annual payments of
F-8
<PAGE>
FEDERAL DATA CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(INFORMATION AS OF AND FOR THE SIX MONTHS ENDED JUNE 30, 1996 AND 1997 IS
UNAUDITED)
(IN THOUSANDS, EXCEPT SHARE DATA)
NOTE 2--MERGER (CONTINUED)
$200 and the lease of the aircraft provides for annual payments of $300 plus a
usage charge which amounted to $56 during the year ended December 31, 1996.
NOTE 3--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The accounting policies of the Company conform to generally accepted
accounting principles. All significant intercompany accounts and transactions
have been eliminated in consolidation. Those policies significantly affecting
the consolidated financial statements are summarized below.
UNAUDITED INFORMATION
Interim financial information for the six months ended June 30, 1996 and
1997 included herein is unaudited but has been prepared on the same basis as the
audited consolidated statements and, in the opinion of management, contain all
adjustments necessary, consisting only of normal recurring adjustments, for a
fair presentation of the financial position, results of operations, and cash
flows for such periods. The consolidated results of operations for the six
months ended June 30, 1997 are not necessarily indicative of the results to be
expected for the full year ending December 31, 1997.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenue and expenses during the reporting
period. Actual results could differ from those estimates.
REVENUE RECOGNITION
Revenue from sales and sales-type leases is generally recorded upon
installation at the customer's site. Maintenance and support services revenue is
recognized as services are provided.
DEPRECIATION AND AMORTIZATION
Leased and other property and equipment are stated at original cost, net of
accumulated depreciation and amortization, and are depreciated and amortized by
the Company using the straight-line method over their estimated useful lives.
The estimated useful lives of principal items of computer, furniture, office and
other equipment range from 3 to 10 years. Leasehold improvements are amortized
over the term of the lease. Debt acquisition fees are being amortized over the
terms of the related notes payable.
CASH, CASH EQUIVALENTS AND SHORT-TERM INVESTMENTS
Cash and cash equivalents consist primarily of short-term, highly liquid
investments with insignificant interest rate risk and original maturities of
three months or less at date of acquisition. Similar investments with original
maturities beyond three months are considered short-term investments and are
carried at cost, which approximates market value.
F-9
<PAGE>
FEDERAL DATA CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(INFORMATION AS OF AND FOR THE SIX MONTHS ENDED JUNE 30, 1996 AND 1997 IS
UNAUDITED)
(IN THOUSANDS, EXCEPT SHARE DATA)
NOTE 3--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
FAIR VALUE OF FINANCIAL INSTRUMENTS
Cash and cash equivalents, receivables, accounts payable, and accrued
expenses are reflected in the consolidated financial statements at fair value
because of their short-term nature. The carrying value of notes payable
approximates fair value as determined through discounted cash flow analysis
using rates currently available to the Company for debt with similar terms and
maturities.
INCOME TAXES
The Company recognizes deferred income taxes for the expected future tax
consequences of temporary differences by applying enacted statutory tax rates to
differences between the financial statement carrying amounts and the tax basis
of existing assets and liabilities.
CONCENTRATION OF CREDIT RISK
Financial instruments that potentially subject the Company to concentrations
of credit risk consist of cash and accounts receivable. The Company maintains
its cash principally in one United States bank. Accounts receivable result
primarily from contracts with the Government. Contracts with the Government do
not require collateral or other arrangements. The Company does not believe
significant credit risk exists at December 31, 1996.
NET INCOME (LOSS) PER SHARE
Net income (loss) per share is computed by dividing net income (loss) by the
sum of the weighted average number of common and, where applicable, dilutive
common equivalent shares outstanding. The Company's common equivalent shares,
consisting entirely of options to purchase common stock, are calculated using
the treasury stock method which assumes the exercise of all outstanding stock
options with the hypothetical proceeds being used to repurchase shares for
treasury. Net income per share has been omitted for 1994 and 1995 because of the
material change in outstanding common shares resulting from the recapitalization
described above.
NOTE 4--NET INVESTMENT IN SALES-TYPE LEASES
Net investment in sales-type leases consists of the following as of December
31:
<TABLE>
<CAPTION>
1995 1996
--------- ---------
<S> <C> <C>
Minimum lease payments receivable....................................... $ 31,260 $ 20,683
Less unearned income.................................................... (4,157) (2,823)
--------- ---------
Total net investment in sales-type leases............................... 27,103 17,860
Less current portion.................................................... 13,360 9,251
--------- ---------
Long-term net investment in sales-type leases........................... $ 13,743 $ 8,609
--------- ---------
--------- ---------
</TABLE>
F-10
<PAGE>
FEDERAL DATA CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(INFORMATION AS OF AND FOR THE SIX MONTHS ENDED JUNE 30, 1996 AND 1997 IS
UNAUDITED)
(IN THOUSANDS, EXCEPT SHARE DATA)
NOTE 4--NET INVESTMENT IN SALES-TYPE LEASES (CONTINUED)
Future minimum lease payments receivable as of December 31, 1996 are due as
follows:
<TABLE>
<CAPTION>
<S> <C>
1997............................................................................... $ 11,157
1998............................................................................... 7,668
1999............................................................................... 1,570
2000............................................................................... 288
</TABLE>
NOTE 5--OTHER ASSETS
Other assets consist of the following as of December 31:
<TABLE>
<CAPTION>
1995 1996
------------------------ ------------------------
CURRENT LONG-TERM CURRENT LONG-TERM
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Deferred financing costs.......................... $ -- $ 3,136 $ -- $ 2,319
Prepaid expenses.................................. 2,590 -- 1,895 --
Other............................................. 246 190 629 354
----------- ----------- ----------- -----------
Total other assets................................ $ 2,836 $ 3,326 $ 2,524 $ 2,673
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
</TABLE>
Amortization expense for deferred financing costs was $817 during 1996.
NOTE 6--LEASED AND OTHER PROPERTY AND EQUIPMENT
Leased and other property and equipment consist of the following as of
December 31:
<TABLE>
<CAPTION>
1995 1996
--------- ---------
<S> <C> <C>
Furniture, office and other equipment, net of accumulated depreciation of
$3,262 and $3,798........................................................ $ 1,051 $ 1,364
Leasehold improvements, net of accumulated amortization of $3,443 and
$3,678................................................................... 290 98
--------- ---------
Total leased and other property and equipment.............................. $ 1,341 $ 1,462
--------- ---------
--------- ---------
</TABLE>
Total depreciation and amortization expense during 1994, 1995 and 1996 was
$1,327, $1,266 and $782, respectively.
F-11
<PAGE>
FEDERAL DATA CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(INFORMATION AS OF AND FOR THE SIX MONTHS ENDED JUNE 30, 1996 AND 1997 IS
UNAUDITED)
(IN THOUSANDS, EXCEPT SHARE DATA)
NOTE 7--NOTES PAYABLE
Recourse notes payable consist of the following as of December 31:
<TABLE>
<CAPTION>
1995 1996
--------- ---------
<S> <C> <C>
Term A note payable in quarterly installments through December 2000..... $ 25,000 $ 17,647
Term B note payable in quarterly installments through December 2002..... 10,000 8,319
Revolving line of credit................................................ -- 10,800
Subordinated notes...................................................... -- 7,350
Notes payable in monthly installments through October 1997, with
interest from 7.34% to 10.73%......................................... 7,132 369
--------- ---------
Total recourse notes payable............................................ 42,132 44,485
Less current portion.................................................... 15,799 4,235
--------- ---------
Long-term recourse notes payable........................................ $ 26,333 $ 40,250
--------- ---------
--------- ---------
</TABLE>
The Company's Term A and Term B notes payable accrue interest at LIBOR plus
2.75% (8.3% at December 31, 1996) and LIBOR plus 3.25% (8.8% at December 31,
1996), respectively. In addition to the required quarterly principal and
interest payments on the Company's Term A and B notes, the Company is required
to make mandatory principal payments based on excess cash flow as defined in the
credit agreement. No mandatory principal payments based on excess cash flow were
required for 1996.
At December 31, 1996, the Company had a $25,000 revolving line of credit
facility which expires in December 2002. Interest accrues on borrowings under
the revolving line of credit at prime plus 1.25% (9.50% at December 31, 1996).
In addition, the Company pays a commitment fee of 0.5% of the unused line of
credit facility. The Company has the option to convert the interest rate on the
revolving line of credit to LIBOR plus 2.75%.
The Company's above credit agreement includes certain restrictions as to the
Company's ability, among other things, to acquire or dispose of assets or to pay
dividends. In addition, the Company is required to maintain a minimum net worth
and certain operating ratios, including among others, interest coverage and
fixed charges. All of the Company's assets not otherwise pledged are utilized as
collateral under the Company's credit agreements.
The Company finances certain equipment leases to Government customers with
borrowings or capital leases that are recourse only to the related payment
stream and property leased. In most circumstances, the Company's future
obligations under nonrecourse agreements, in event of default by the end user
lessee, would be limited to ensuring the return of the associated assets to the
lender.
F-12
<PAGE>
FEDERAL DATA CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(INFORMATION AS OF AND FOR THE SIX MONTHS ENDED JUNE 30, 1996 AND 1997 IS
UNAUDITED)
(IN THOUSANDS, EXCEPT SHARE DATA)
NOTE 7--NOTES PAYABLE (CONTINUED)
Nonrecourse notes payable consist of the following as of December 31:
<TABLE>
<CAPTION>
1995 1996
--------- -----------
<S> <C> <C>
Notes secured by equipment and minimum lease payments receivable from
customers, repayable through September 2000, with interest from
6.75% to 12.75%..................................................... $ 16,663 $ 10,209
Less current portion................................................. 9,045 5,177
--------- -----------
Long-term nonrecourse notes payable.................................. $ 7,618 $ 5,032
--------- -----------
--------- -----------
</TABLE>
Principal payments on the notes payable as of December 31, 1996 are due as
follows:
<TABLE>
<CAPTION>
RECOURSE NONRECOURSE
--------- -----------
<S> <C> <C>
1997................................................................. $ 4,235 $ 5,177
1998................................................................. 4,286 2,924
1999................................................................. 4,706 1,760
2000................................................................. 5,126 348
2001................................................................. 3,992 --
Thereafter........................................................... 22,140 --
</TABLE>
NOTE 8--OBLIGATIONS UNDER CAPITAL LEASES
Obligations under recourse capital leases consist of the following as of
December 31:
<TABLE>
<CAPTION>
1995 1996
--------- -----------
<S> <C> <C>
Minimum lease payments............................................... $ 7,177 $ 4,919
Less deferred interest............................................... (1,363) (719)
--------- -----------
Total obligations under recourse capital leases...................... 5,814 4,200
Less current portion................................................. 1,683 1,614
--------- -----------
Long-term obligations under recourse capital leases.................. $ 4,131 $ 2,586
--------- -----------
--------- -----------
</TABLE>
Obligations under nonrecourse capital leases consist of the following as of
December 31:
<TABLE>
<CAPTION>
1995 1996
--------- -----------
<S> <C> <C>
Minimum lease payments............................................... $ 10,791 $ 7,239
Less deferred interest............................................... (1,194) (682)
--------- -----------
Total obligations under nonrecourse capital leases................... 9,597 6,557
Less current portion................................................. 4,267 4,255
--------- -----------
Long-term obligations under nonrecourse capital leases............... $ 5,330 $ 2,302
--------- -----------
--------- -----------
</TABLE>
F-13
<PAGE>
FEDERAL DATA CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(INFORMATION AS OF AND FOR THE SIX MONTHS ENDED JUNE 30, 1996 AND 1997 IS
UNAUDITED)
(IN THOUSANDS, EXCEPT SHARE DATA)
NOTE 8--OBLIGATIONS UNDER CAPITAL LEASES (CONTINUED)
Future minimum lease payments under capital leases as of December 31, 1996
are due as follows:
<TABLE>
<CAPTION>
RECOURSE NONRECOURSE
----------- -------------
<S> <C> <C>
1997.................................................................. $ 2,064 $ 4,768
1998.................................................................. 1,986 2,409
1999.................................................................. 869 62
</TABLE>
NOTE 9--ACCOUNTS PAYABLE AND OTHER LIABILITIES
Accounts payable and other liabilities consist of the following as of
December 31:
<TABLE>
<CAPTION>
1995 1996
---------------------- ----------------------
CURRENT LONG-TERM CURRENT LONG-TERM
--------- ----------- --------- -----------
<S> <C> <C> <C> <C>
Accrued contract expenses....................... $ 14,677 $ -- $ 19,289 $ --
Other accrued expenses.......................... 2,896 -- 3,876 --
Accounts payable................................ 13,033 -- 8,042 --
Deferred income................................. 2,932 7,217 3,121 2,272
Income taxes payable............................ 754 -- 1,660 --
Other........................................... 1,019 535 1,932 469
--------- ----------- --------- -----------
Total accounts payable and other liabilities.... $ 35,311 $ 7,752 $ 37,920 $ 2,741
--------- ----------- --------- -----------
--------- ----------- --------- -----------
</TABLE>
NOTE 10--INCOME TAXES
The income tax provision (benefit) consists of the following for the years
ended December 31:
<TABLE>
<CAPTION>
1994 1995 1996
--------- --------- ---------
<S> <C> <C> <C>
Current income tax provision:
Federal....................................................... $ 916 $ 153 $ 1,370
State......................................................... 255 508 418
--------- --------- ---------
Total current income tax provision.............................. 1,171 661 1,788
--------- --------- ---------
Deferred income tax provision (benefit):
Federal....................................................... -- (4,365) 1,228
State......................................................... -- (246) 186
--------- --------- ---------
Total deferred income tax provision (benefit)................... -- (4,611) 1,414
--------- --------- ---------
Total income tax provision (benefit)............................ $ 1,171 $ (3,950) $ 3,202
--------- --------- ---------
--------- --------- ---------
</TABLE>
F-14
<PAGE>
FEDERAL DATA CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(INFORMATION AS OF AND FOR THE SIX MONTHS ENDED JUNE 30, 1996 AND 1997 IS
UNAUDITED)
(IN THOUSANDS, EXCEPT SHARE DATA)
NOTE 10--INCOME TAXES (CONTINUED)
Deferred income tax assets and liabilities consist of the following as of
December 31:
<TABLE>
<CAPTION>
1995 1996
--------- ---------
<S> <C> <C>
Deferred income tax assets:
Deferred income.......................................................... $ 3,857 $ 2,049
Compensation and employee benefits....................................... 284 904
Property and equipment................................................... 326 131
Accounts receivable reserves............................................. 20 128
Other.................................................................... 243 77
--------- ---------
Total deferred income tax assets......................................... 4,730 3,289
Deferred income tax liabilities............................................ 119 92
--------- ---------
Net deferred income tax assets............................................. $ 4,611 $ 3,197
--------- ---------
--------- ---------
</TABLE>
Net deferred income taxes as reflected on the consolidated balance sheet
consist of the following as of December 31:
<TABLE>
<CAPTION>
1995 1996
--------- ---------
<S> <C> <C>
Current deferred income tax assets......................................... $ 1,811 $ 2,105
Long-term deferred income tax assets....................................... 2,919 1,184
Less long-term deferred income tax liabilities............................. (119) (92)
--------- ---------
Net long-term deferred income tax assets................................... 2,800 1,092
--------- ---------
Net deferred income tax assets............................................. $ 4,611 $ 3,197
--------- ---------
--------- ---------
</TABLE>
A reconciliation between the provision (benefit) for income taxes computed
on income (loss) before income (loss) tax at the statutory federal tax rate and
the provision (benefit) for income taxes is as follows for the years ended
December 31:
<TABLE>
<CAPTION>
1994 1995 1996
--------- --------- ---------
<S> <C> <C> <C>
Statutory federal income tax rate.................................. 34.0% (34.0)% 34.0%
State income taxes, net of federal benefit......................... 1.0% (4.5)% 2.6%
Nondeductible expenses............................................. 1.0% 6.2% 0.2%
Reduction in valuation allowance................................... (16.1)% (154.0)% --
Other.............................................................. 2.0% 2.8% 3.5%
--------- --------- ---
Effective income tax rate.......................................... 21.9% (183.5)% 40.3%
--------- --------- ---
--------- --------- ---
</TABLE>
During 1994 and 1995, the Company reduced the tax valuation allowance by
$862 and $3,313, respectively, to reflect management's assessment that the
realization of these benefits was more likely than not. At December 31, 1995 and
1996, the Company has not recorded any tax valuation allowance.
F-15
<PAGE>
FEDERAL DATA CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(INFORMATION AS OF AND FOR THE SIX MONTHS ENDED JUNE 30, 1996 AND 1997 IS
UNAUDITED)
(IN THOUSANDS, EXCEPT SHARE DATA)
NOTE 11--STOCKHOLDERS' EQUITY AND TRANSACTIONS WITH STOCKHOLDERS
During 1984, the majority shareholder of the Company transferred shares of
the Company's common stock to certain key employees. The Company has accounted
for this transaction as if the Company, and not the majority shareholder, had
transferred the stock. At December 31, 1996, the unamortized compensation
expense related to this transaction was $242.
In June 1987, the Company adopted a Stock Incentive Plan (the Plan) under
which stock options were granted to officers and key employees at an exercise
price established at the discretion of the Plan Committee at the date of award.
Options granted under the Plan were nontransferable and were exercisable
immediately for a period of ten years following the date of grant. Prior to the
Merger, options to purchase 93,500 shares of the Company's common stock at
exercise prices ranging from $7.50 to $9.00 per share were outstanding under the
Plan. Subject to the provisions of the Merger agreement, these options are to be
replaced with new options to acquire shares of common stock of the surviving
corporation. The terms of the new options, including the number of shares and
exercise price will be equitably adjusted to reflect the consummation of the
Merger, provided that the new options will provide substantially the same
economic benefits to the option holders as the benefits provided prior to the
Merger. As of March 28, 1997, the new options have not been exchanged for the
old options.
In February 1996, the Company adopted a new Stock Option Plan for Executives
and Key Employees of Federal Data Corporation. Under the plan, options may be
granted at fair value to purchase up to 257,000 shares of common stock. Options
granted under the plan vest ratably over five years and expire ten years from
the date of grant or in accordance with other terms as specified by the
Company's Board of Directors. Of the options outstanding as of December 31,
1996, under the variable component of the plan 170,100 options for shares will
vest only if certain financial measures are met. As of December 31, 1996, none
of the financial measures had been met and accordingly, no compensation has been
recorded. As of December 31, 1996, options to purchase 14,580 shares at a price
of $10.00 per share were exercisable and options to purchase 14,000 shares were
available for granting. The Company has adopted the disclosure-only provision of
Statement of Financial Accounting Standards No. 123, "Accounting for Stock-based
Compensation" (SFAS 123). Accordingly, no compensation cost has been recognized
for the stock option plan. Had compensation cost for the Company's stock option
plan been determined based on the fair value at the grant date for awards in
1995 and 1996, there would not have been a material impact on the Company's
results of operations. To determine fair value under SFAS 123, the Company used
the Present Value Approach and the following weighted-average assumptions for
1995 and 1996: a risk-free interest rate of 6.35%, expected lives of 5 years and
expected dividends of zero.
F-16
<PAGE>
FEDERAL DATA CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(INFORMATION AS OF AND FOR THE SIX MONTHS ENDED JUNE 30, 1996 AND 1997 IS
UNAUDITED)
(IN THOUSANDS, EXCEPT SHARE DATA)
NOTE 11--STOCKHOLDERS' EQUITY AND TRANSACTIONS WITH STOCKHOLDERS (CONTINUED)
The following is a summary of stock option activity for outstanding options:
<TABLE>
<CAPTION>
OPTION PRICE NUMBER OF
PER SHARE SHARES
--------------- -----------
<S> <C> <C>
Balance at December 31, 1993.................................... $7.50-$9.00 90,000
Granted......................................................... -- --
Exercised....................................................... -- --
Forfeited....................................................... -- --
Canceled........................................................ -- --
Balance at December 31, 1994.................................... 7.50-9.00 90,000
Granted......................................................... 7.50 8,500
Exercised....................................................... .50 (5,000)
Forfeited....................................................... -- --
Canceled........................................................ -- --
Balance at December 31, 1995.................................... 7.50-9.00 93,500
Granted......................................................... 10.00 253,000
Exercised....................................................... -- --
Forfeited....................................................... 10.00 (10,000)
Canceled........................................................ -- --
Balance at December 31, 1996.................................... $7.50-$10.00 336,500
</TABLE>
NOTE 12--SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
During 1994, 1995 and 1996, the Company paid interest costs of $3,700,
$3,124 and $7,546, respectively. During the same years, the Company paid income
taxes of $40, $1,097 and $628, respectively.
During 1994, 1995 and 1996, the Company financed through capital leases the
acquisition of computer equipment, which was sold to customers, of $5,741,
$6,700 and $779, respectively.
NOTE 13--COMMITMENTS
The Company leases its primary office space under a ten year lease, expiring
in 2004. The lease payments are subject to escalations of approximately 2% per
year and also subject to yearly increases based on increases in operating
expenses and property taxes. The Company has two consecutive five year renewal
options.
F-17
<PAGE>
FEDERAL DATA CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(INFORMATION AS OF AND FOR THE SIX MONTHS ENDED JUNE 30, 1996 AND 1997 IS
UNAUDITED)
(IN THOUSANDS, EXCEPT SHARE DATA)
NOTE 13--COMMITMENTS (CONTINUED)
Future minimum payments at December 31, 1996, for all noncancellable
operating leases with initial terms of one year or more are as follows:
<TABLE>
<S> <C>
1997.............................................................. $ 1,690
1998.............................................................. 1,630
1999.............................................................. 1,614
2000.............................................................. 763
2001.............................................................. 778
Thereafter........................................................ 2,428
</TABLE>
The Company has the option to terminate the lease on approximately one-half
of its office space as of January 2000. Operating lease expense was $2,675,
$1,532 and $1,782 during 1994, 1995 and 1996, respectively. The Company received
$587, $368 and $146 from sublease rentals during 1994, 1995 and 1996,
respectively.
NOTE 14--SUBSEQUENT EVENTS (UNAUDITED)
ACQUISITIONS
In May 1997, the Company purchased all of the outstanding shares of common
stock of NYMA, Inc. (NYMA) for $29,499. The purchase price consists of $24,499
in cash and $5,000 in subordinated notes. The agreement also provides for
additional cash payments of up to $6,000 and additional subordinated notes of
$1,000 if certain operating objectives are met. Such payments, if any, will be
accounted for as adjustments to the purchase price. The Company financed the
acquisition of NYMA through additional borrowing of $28,000 and the sale of
555,556 shares of the Company's common stock for approximately $15,000. A
portion of the new borrowings was used to retire existing Company and NYMA
working capital debt. NYMA is a provider of high technology engineering and
information technology services under contracts with various U.S. Government
agencies and subcontracts with large government contractors. In June 1997, the
Company also purchased all of the outstanding shares of common stock of Sylvest
Management Systems Corporation (Sylvest) for $40,350. The purchase price
consists of $33,350 in cash and subordinated notes of $7,000. The purchase price
is subject to adjustment based on an audit of the closing balance sheet. The
agreement also provides for an additional subordinated note of $1,000 if certain
operating objectives are met. Such payments, if any, will be accounted for as
adjustments to the purchase price. The Company financed the acquisition of
Sylvest through additional borrowing of $27,400 and the sale of 444,444 shares
of the Company's common stock for approximately $12,000. A portion of the new
borrowings was used to retire existing Sylvest working capital debt. Sylvest is
a leading reseller and technical services vendor supporting open systems
architecture within the federal marketplace. Of the total fees and expenses
related to these transactions, $1,000 was paid to an affiliate of Carlyle.
Condensed pro forma operating data which gives effect to the acquisitions of
NYMA and Sylvest for the year ended December 31, 1996 and the six months ended
June 30, 1996 and 1997 is provided below. Such pro forma operating data has been
prepared as if the acquisitions occurred as of the beginning of the
F-18
<PAGE>
FEDERAL DATA CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(INFORMATION AS OF AND FOR THE SIX MONTHS ENDED JUNE 30, 1996 AND 1997 IS
UNAUDITED)
(IN THOUSANDS, EXCEPT SHARE DATA)
NOTE 14--SUBSEQUENT EVENTS (UNAUDITED) (CONTINUED)
reporting period. Goodwill associated with the acquisitions is being amortized
over an estimated useful life of 15 years.
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30,
YEAR ENDED ----------------------
DECEMBER 31, 1996 1996 1997
----------------- ---------- ----------
<S> <C> <C> <C>
Revenues.............................................................. $ 332,822 $ 118,516 $ 183,826
-------- ---------- ----------
-------- ---------- ----------
Income (loss) before income taxes..................................... $ 5,703 $ (3,785) $ (4,548)
-------- ---------- ----------
-------- ---------- ----------
Net income (loss)..................................................... $ 2,862 $ (2,271) $ (2,984)
-------- ---------- ----------
-------- ---------- ----------
Net income (loss) per common share.................................... $ 1.50 $ (1.19) $ (1.42)
-------- ---------- ----------
-------- ---------- ----------
</TABLE>
ISSUANCE OF SENIOR SUBORDINATED NOTES
In July 1997, the Company issued $105,000 of Senior Subordinated Notes and
utilized the proceeds to repay its indebtedness under its existing term loans as
well as the additional borrowings incurred to finance the NYMA and Sylvest
acquisitions.
F-19
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Board of Directors and Stockholders
NYMA, Inc.
Greenbelt, Maryland
We have audited the accompanying consolidated balance sheets of NYMA, Inc.
and subsidiary (the Company) as of December 31, 1996 and 1995, and the related
consolidated statements of operations, stockholders' equity, and cash flows for
each of the three years in the period ended December 31, 1996. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, such consolidated financial statements present fairly, in
all material respects, the financial position of the Company as of December 31,
1996 and 1995, and the results of their operations and their cash flows for each
of the three years in the period ended December 31, 1996.
DELOITTE & TOUCHE LLP
Washington, D.C.
March 21, 1997 (May 2, 1997 as to Note 9)
F-20
<PAGE>
NYMA, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
AS OF DECEMBER 31,
--------------------
1995 1996
--------- --------- AS OF MARCH 31,
1997
------------------
(UNAUDITED)
<S> <C> <C> <C>
ASSETS
CURRENT ASSETS:
Accounts receivable................................................... $ 27,287 $ 24,619 $ 22,289
Inventory............................................................. 1,097 1,632 1,729
Prepaid expenses...................................................... 450 431 451
Refundable income taxes............................................... 1,914 1,383 1,383
Total current assets................................................ 30,748 28,065 25,852
PROPERTY AND EQUIPMENT--NET............................................. 950 947 876
DEPOSITS AND OTHER ASSETS............................................... 465 687 686
--------- --------- -------
TOTAL................................................................... $ 32,163 $ 29,699 $ 27,414
--------- --------- -------
--------- --------- -------
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Note payable.......................................................... $ 12,463 $ 8,923 $ 5,189
Accounts payable and other accrued expenses........................... 2,749 2,559 4,205
Salaries and related payroll taxes.................................... 1,459 1,627 1,302
Accrued employee benefits............................................. 2,530 2,942 3,150
Income taxes payable.................................................. 344 50 --
Deferred income taxes................................................. 4,555 5,049 5,049
--------- --------- -------
Total current liabilities........................................... 24,100 21,150 18,895
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY:
Common stock, $.02 par value--authorized, 4,000,000 shares; shares
issued and outstanding, 3,706,700 in 1995, 3,611,000 in 1996, and
3,615,400 in 1997................................................... 74 72 72
Additional paid-in capital............................................ 41 128 135
Retained earnings..................................................... 7,948 8,349 8,312
--------- --------- -------
Total stockholders' equity.......................................... 8,063 8,549 8,519
--------- --------- -------
TOTAL................................................................... $ 32,163 $ 29,699 $ 27,414
--------- --------- -------
--------- --------- -------
</TABLE>
See notes to consolidated financial statements.
F-21
<PAGE>
NYMA, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
QUARTER ENDED
YEAR ENDED DECEMBER 31, MARCH 31,
------------------------------- --------------------
1994 1995 1996 1996 1997
--------- --------- --------- --------- ---------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
REVENUE:
Contracts................................................ $ 97,916 $ 93,482 $ 82,004 $ 20,071 $ 17,318
Interest................................................. 13 24 20 6 2
Other.................................................... 2 214 22 1 --
--------- --------- --------- --------- ---------
97,931 93,720 82,046 20,078 17,320
--------- --------- --------- --------- ---------
COSTS AND EXPENSES:
Cost of products and services............................ 74,138 72,013 57,824 13,657 12,102
General and administrative............................... 22,091 20,247 22,481 5,612 5,197
Interest................................................. 402 794 394 141 80
--------- --------- --------- --------- ---------
96,631 93,054 80,699 19,410 17,379
--------- --------- --------- --------- ---------
EARNINGS (LOSS) BEFORE INCOME TAXES........................ 1,300 666 1,347 668 (59)
PROVISION FOR INCOME TAXES (BENEFIT)....................... 739 294 547 267 (22)
--------- --------- --------- --------- ---------
NET EARNINGS (LOSS)........................................ $ 561 $ 372 $ 800 $ 401 $ (37)
--------- --------- --------- --------- ---------
--------- --------- --------- --------- ---------
</TABLE>
See notes to consolidated financial statements.
F-22
<PAGE>
NYMA, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
YEARS ENDED DECEMBER 31, 1994, 1995, AND 1996 AND
THE QUARTER ENDED MARCH 31, 1997 (UNAUDITED)
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
COMMON STOCK
----------------------- ADDITIONAL
NUMBER OF PAID-IN
SHARES AMOUNT CAPITAL RETAINED EARNINGS TOTAL
---------- ----------- ------------- ----------------- ---------
<S> <C> <C> <C> <C> <C>
BALANCE, JANUARY 1, 1994.......................... 3,689,150 $ 74 $ 27 $ 7,015 $ 7,116
Net earnings.................................... -- -- -- 561 561
Exercise of options............................. 17,550 -- 15 -- 15
---------- ----- ----- ------ ---------
BALANCE, DECEMBER 31, 1994........................ 3,706,700 74 42 7,576 7,692
Net earnings.................................... -- -- -- 372 372
Exercise of options............................. 250 -- -- -- --
Repurchase of stock............................. (250) -- (1) -- (1)
---------- ----- ----- ------ ---------
BALANCE, DECEMBER 31, 1995........................ 3,706,700 74 41 7,948 8,063
Net earnings.................................... -- -- -- 800 800
Exercise of options, including income tax
benefit....................................... 24,300 -- 88 -- 88
Repurchase of stock............................. (120,000) (2) (1) (399) (402)
---------- ----- ----- ------ ---------
BALANCE, DECEMBER 31, 1996........................ 3,611,000 72 128 8,349 8,549
Net loss (unaudited)............................ -- -- -- (37) (37)
Exercise of options (unaudited)................. 4,400 -- 7 -- 7
---------- ----- ----- ------ ---------
BALANCE, MARCH 31, 1997
(unaudited)..................................... 3,615,400 $ 72 $ 135 $ 8,312 $ 8,519
---------- ----- ----- ------ ---------
---------- ----- ----- ------ ---------
</TABLE>
See notes to consolidated financial statements.
F-23
<PAGE>
NYMA, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
QUARTER ENDED
YEAR ENDED DECEMBER 31, MARCH 31,
------------------------------- --------------------
1994 1995 1996 1996 1997
--------- --------- --------- --------- ---------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings (loss)......................................... $ 561 $ 372 $ 800 $ 401 $ (37)
Adjustments to reconcile net earnings (loss) to net cash
(used in) provided by operating activities:
Depreciation and amortization............................... 266 568 613 113 136
Loss on sale of property and equipment...................... 40 -- -- -- --
Deferred income taxes....................................... 1,971 (512) 494 -- --
Change in assets and liabilities:
(Increase) decrease in accounts receivable................ (9,151) 211 2,668 437 2,330
Decrease (increase) in inventory.......................... 3,682 (137) (535) (261) (97)
Decrease (increase) in prepaid expenses................... 100 (230) 19 20 (20)
(Increase) decrease in refundable income taxes............ (1,326) (588) 531 237 --
(Increase) decrease in deposits and other assets.......... (9) (253) (222) (8) 1
(Decrease) increase in accounts payable and other accrued
expenses................................................ (3,082) 415 (190) 1,539 1,645
Increase (decrease) in salaries and related payroll
taxes................................................... 534 (29) 168 (14) (324)
Increase (decrease) in accrued employee benefits.......... 779 270 412 (143) 208
(Decrease) increase in income taxes payable............... (1,129) 344 (239) 35 (50)
--------- --------- --------- --------- ---------
Net cash (used in) provided by operating activities..... (6,764) 431 4,519 2,356 3,792
--------- --------- --------- --------- ---------
CASH FLOWS USED IN INVESTING ACTIVITIES:
Purchases of property and equipment......................... (840) (378) (610) (79) (65)
Proceeds from sale of property and equipment................ 5 -- -- -- --
Decrease in notes receivable................................ 223 -- -- -- --
--------- --------- --------- --------- ---------
Net cash used in investing activities................... (612) (378) (610) (79) (65)
--------- --------- --------- --------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net borrowings (payments) on note payable................... 6,980 (52) (3,540) (2,277) (3,734)
Proceeds from sale of stock................................. 15 -- 33 -- 7
Cost of stock repurchase.................................... -- (1) (402) -- --
--------- --------- --------- --------- ---------
Net cash provided by (used in) financing activities..... 6,995 (53) (3,909) (2,277) (3,727)
--------- --------- --------- --------- ---------
CHANGE IN CASH AND CASH EQUIVALENTS........................... (381) -- -- -- --
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD................ 381 -- -- -- --
--------- --------- --------- --------- ---------
CASH AND CASH EQUIVALENTS, END OF PERIOD...................... $ -- $ -- $ -- $ -- $ --
--------- --------- --------- --------- ---------
--------- --------- --------- --------- ---------
SUPPLEMENTAL INFORMATION:
Cash payments for interest.................................. $ 392 $ 721 $ 394 $ 198 $ 121
--------- --------- --------- --------- ---------
--------- --------- --------- --------- ---------
Cash payments for taxes..................................... $ 1,308 $ 1,394 $ 775 $ -- $ 28
--------- --------- --------- --------- ---------
--------- --------- --------- --------- ---------
NON-CASH FINANCING ACTIVITY:
Income tax benefit from exercise of stock options........... $ -- $ -- $ 55 $ -- $ --
--------- --------- --------- --------- ---------
--------- --------- --------- --------- ---------
</TABLE>
See notes to consolidated financial statements.
F-24
<PAGE>
NYMA, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1994, 1995 AND 1996 AND
QUARTERS ENDED MARCH 31, 1996 AND 1997 (UNAUDITED)
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
DESCRIPTION OF THE BUSINESS--NYMA, Inc., headquarters in Greenbelt,
Maryland, was incorporated July 19, 1978, under the laws of the State of
Maryland. The Company provides diversified technical support and assembles
computer products under contracts with various U.S. Government agencies and
subcontracts with large private government contractors.
PRINCIPLES OF CONSOLIDATION--The consolidated financial statements include
the accounts of NYMA, Inc. and its eighty percent owned subsidiary, VAD
International, Inc., formed on July 1, 1996. All significant intercompany
accounts and transactions have been eliminated in consolidation.
CONCENTRATION OF RISK--On January 1, 1994, the Company commenced operations
under a contract with National Aeronautics and Space Administration which
accounted for approximately 33%, 34% and 41% of revenues for the years ended
December 31, 1994, 1995 and 1996, respectively. The contract base term expired
on December 31, 1995, with three separate one-year options, exercisable by the
government, to extend the term through December 31, 1998. The option to extend
the term of the contract through December 31, 1997, has been exercised.
During the years ended December 31, 1994, 1995 and 1996, revenues from a
contract with U.S. Department of Agriculture accounted for approximately 16%,
20% and 9%, respectively, of contract revenues. The contract term was completed
on September 30, 1996.
During the years ended December 31, 1994, 1995 and 1996, revenues from U.S.
Government contracts accounted for approximately 95%, 96% and 97% of revenues,
respectively.
USE OF ESTIMATES--The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
REVENUE RECOGNITION--On cost reimbursable contracts, revenues are recorded
as contract costs are incurred, plus a proportionate amount of the fee expected
to be realized on the contract. On fixed-price contracts, revenues are recorded
using the percentage of completion method. Generally, progress to completion is
measured using a cost output measure as units are delivered. Provision for
estimated losses on contracts are recorded when identifiable.
Contract performance incentives, which provide increased or decreased fees
based on actual performance compared to established targets, are recorded when
reasonably determinable.
CASH AND CASH EQUIVALENTS--The Company has a cash management system that
provides for the investment of excess cash balances in Short-Term securities.
The participating bank transfers the Company's excess cash daily to overnight
investments that are under the bank's control and redeposits the cash the
following day. Cash overdrafts are funded by draws against the revolving credit
facility (see Note 4). For purposes of the statement of cash flows, the Company
considers all highly liquid debt instruments purchased with an original maturity
date of three months or less to be cash equivalents.
F-25
<PAGE>
NYMA, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED DECEMBER 31, 1994, 1995 AND 1996 AND
QUARTERS ENDED MARCH 31, 1996 AND 1997 (UNAUDITED)
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
INVENTORY--Inventory of microcomputer equipment and software is carried at
the lower of actual cost or market, using the average cost method.
PROPERTY AND EQUIPMENT--Property and equipment are stated at cost. The cost
of maintenance and repairs is charged to expense as incurred; significant
renewals and betterments are capitalized. Depreciation and amortization are
provided over the expected useful lives of the assets, which range from five to
seven years, generally using accelerated methods. Leasehold improvements are
amortized over the lease term or expected useful life, whichever is shorter.
OTHER ASSETS--Other assets consist of cash surrender value on life insurance
policies for certain officers of the Company (see Note 8). No policy loans exist
at December 31, 1995 and 1996.
INCOME TAXES--The Company records its provision for income taxes in
accordance with Statement of Financial Accounting Standards No. 109 (SFAS 109).
SFAS 109 requires the Company to record a provision for deferred income taxes
for differences between the basis of certain assets and liabilities for income
tax and financial statement reporting purposes, and between reporting methods
for income tax return and financial statement reporting purposes, which will
create taxable income or deductions in future periods.
INTERIM FINANCIAL STATEMENTS (UNAUDITED)--In the opinion of management, the
accompanying unaudited financial statements contain all adjustments (consisting
only of various normal accruals) necessary to present fairly the Company's
financial position, results of operations, and cash flows. The results of
operations for the quarter ended March 31, 1997, are not necessarily indicative
of the results of operations to be expected for the full year.
NEW ACCOUNTING PRONOUNCEMENTS--Statement of Financial Accounting Standards
(SFAS) No. 123, Accounting for Stock-Based Compensation, was adopted by the
Company during 1996. However, the Company did not adopt the recognition and
measurement principles of SFAS No. 123 and therefore will provide only the
applicable disclosures.
2. ACCOUNTS RECEIVABLE
Accounts receivable consist of the following at December 31, 1995 and 1996:
<TABLE>
<CAPTION>
1995 1996
--------- ---------
<S> <C> <C>
Billed........................................................ $ 17,487 $ 13,819
Unbilled...................................................... 9,800 10,800
--------- ---------
$ 27,287 $ 24,619
--------- ---------
--------- ---------
</TABLE>
Unbilled receivables at December 31, 1995 and 1996, include approximately
$5,325 and $5,753, respectively, for amounts billed in January 1996 and 1997,
respectively. The remainder represents differences between actual and
provisional overhead rates for years open to government audit (see Note 8) and
contract retainages. Retainages are generally billable upon acceptance of work
by customers or completion of contract audits by the government.
F-26
<PAGE>
NYMA, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED DECEMBER 31, 1994, 1995 AND 1996 AND
QUARTERS ENDED MARCH 31, 1996 AND 1997 (UNAUDITED)
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
3. PROPERTY AND EQUIPMENT
Property and equipment consist of the following at December 31, 1995 and
1996:
<TABLE>
<CAPTION>
1995 1996
--------- ---------
<S> <C> <C>
Office furniture and equipment..................................................... $ 1,294 $ 1,353
Computer equipment................................................................. 1,633 2,187
Leasehold improvements............................................................. 19 19
--------- ---------
2,946 3,559
Accumulated depreciation and amortization.......................................... (1,996) (2,612)
--------- ---------
$ 950 $ 947
--------- ---------
--------- ---------
</TABLE>
4. NOTE PAYABLE
Under the terms of a revolving credit facility agreement, the Company can
borrow up to $13,000, limited by certain percentages of billed accounts
receivable. Borrowings under the line-of- credit agreement bear interest at the
one-month LIBOR (5.50% at December 31, 1996) plus 1.75% and are due on June 30,
1997. Borrowings are payable at maturity with interest payable monthly. At
December 31, 1996, $8,923 was outstanding under this agreement. Management is
currently negotiating with the same bank to extend the line-of-credit agreement.
The borrowings are predominately collateralized by accounts receivable,
certain contract rights, and certain other assets of the Company. The three
primary stockholders of the Company have provided unconditional and unlimited
personal guarantees, until the time when the Company meets certain specific
financial results.
The line-of-credit agreement contains certain covenants (as defined in such
agreement) requiring the Company to maintain, among other things, specified
ratios of total liabilities to tangible net worth and a fixed charge coverage
ratio as well as other financial and nonfinancial covenants.
The fair value of the Company's note payable is considered to be equivalent
to its carrying value based upon consideration of borrowings with similar credit
ratings, collateral, and maturity.
5. EMPLOYEE BENEFIT PLAN
The Company has a 401(k) plan covering substantially all of its employees.
Company contributions are equal to 50% of each employee's contribution, subject
to certain limitations. For the years ended December 31, 1994, 1995 and 1996,
the Company contributed approximately $962, $975 and $938, respectively, to this
plan.
F-27
<PAGE>
NYMA, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED DECEMBER 31, 1994, 1995 AND 1996 AND
QUARTERS ENDED MARCH 31, 1996 AND 1997 (UNAUDITED)
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
6. INCOME TAXES
INCOME TAX PROVISION--The provision (benefit) for income taxes consists of
the following:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-------------------------------
1994 1995 1996
--------- --------- ---------
(UNAUDITED)
<S> <C> <C> <C>
Current:
Federal..................................................................... $ (920) $ 696 $ 68
State....................................................................... (312) 110 (15)
Deferred.................................................................... 1,971 (512) 494
--------- --------- ---------
$ 739 $ 294 $ 547
--------- --------- ---------
--------- --------- ---------
</TABLE>
DEFERRED INCOME TAXES--The principal components of the deferred portion of
the provision for income taxes for the years ended December 31, 1994, 1995, and
1996 are as follows:
<TABLE>
<CAPTION>
1994 1995 1996
--------- --------- ---------
<S> <C> <C> <C>
Accrual to cash conversion................................................... $ 1,828 $ (378) $ 687
Contractually unbilled revenue............................................... 70 (45) --
Other........................................................................ 73 (89) (193)
--------- --------- ---------
$ 1,971 $ (512) $ 494
--------- --------- ---------
--------- --------- ---------
</TABLE>
The approximate tax effect of each type of temporary difference that gave
rise to the Company's deferred tax liability at December 31, 1995 and 1996, is
as follows:
<TABLE>
<CAPTION>
1995 1996
--------- ---------
<S> <C> <C>
Accrual to cash conversion......................................................... $ (4,510) $ (5,197)
Other.............................................................................. (45) 148
--------- ---------
Current deferred tax liability..................................................... $ (4,555) $ (5,049)
--------- ---------
--------- ---------
</TABLE>
Effective and Statutory Rate Reconciliation. The difference between the
effective rate in the provision for income taxes and the statutory rate for the
federal income taxes is summarized as follows:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-------------------------------
1994 1995 1996
--------- --------- ---------
(UNAUDITED)
<S> <C> <C> <C>
Statutory federal income tax rate............................................... 35% 35% 35%
Provision computed at federal statutory rate.................................... $ 455 $ 233 $ 469
State income taxes, net of federal benefit...................................... 78 73 67
Increase in deferred taxes due to higher expected rates......................... 150 -- --
Other........................................................................... 56 (12) 11
--------- --------- ---------
$ 739 $ 294 $ 547
--------- --------- ---------
--------- --------- ---------
</TABLE>
F-28
<PAGE>
NYMA, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED DECEMBER 31, 1994, 1995 AND 1996 AND
QUARTERS ENDED MARCH 31, 1996 AND 1997 (UNAUDITED)
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
7. STOCKHOLDERS' EQUITY
The Company has granted options to key employees to purchase shares of
common stock exercisable at prices ranging from $.50 to $3.35 per share, which
approximates the fair market value of the Company's stock at date of grant, as
determined by the Board of Directors. Under the provisions of APB Opinion No.
25, no compensation expense is recognized.
During the year ended December 31, 1996, option holders exercised options
for 24,300 shares. The difference between the exercise price and the fair market
value of the stock at date of exercise resulted in taxable income to the
optionee. The Company received a deduction for income tax purposes equal to the
optionees' taxable income, which resulted in a reduction in taxes payable and an
increase in additional paid-in capital equal to the tax effect of $55 for the
year ended December 31, 1996.
Options for 144,900 and 163,945 shares were exercisable at December 31, 1995
and 1996, respectively. The remaining options become exercisable over periods
ranging from five to ten years. The schedule of option activity for the years
ended December 31, 1994, 1995, and 1996, is as follows:
<TABLE>
<CAPTION>
1994 1995 1996
--------- --------- ---------
<S> <C> <C> <C>
Outstanding, beginning of year......................................... 144,450 167,850 184,800
Granted................................................................ 45,500 26,500 175,700
Canceled............................................................... (4,550) (9,300) (20,700)
Exercised.............................................................. (17,550) (250) (24,300)
--------- --------- ---------
Outstanding, end of year............................................... 167,850 184,800 315,500
--------- --------- ---------
--------- --------- ---------
</TABLE>
In 1996 the Company adopted the disclosure provisions of SFAS No. 123. The
Company accounts for its stock-based compensation plan under APB No. 25. For
SFAS No. 123 purposes, the fair value of each option has been estimated as of
the date of grant using the minimum value method with a risk-free interest rate
of 6.18% and an expected life of five years. Using these assumptions, the fair
value of the stock options is $175, which would be amortized over the expected
life of the options. Had compensation expense been determined consistent with
SFAS No. 123 utilizing the assumptions detailed above, the Company's net
earnings for the year ended December 31, 1996, would have been reduced to the
following pro forma amount:
<TABLE>
<S> <C>
Net earnings:
As reported................................................................ $ 800
Pro forma.................................................................. 765
</TABLE>
The resulting pro forma compensation expense may not be representative of
that expected in future years.
8. COMMITMENTS AND CONTINGENCIES
LEASES--The Company leases office facilities, automobiles, and certain
office equipment under long-term operating lease agreements with terms extending
to 2000. Certain of these leases contain provisions for renewal options and rent
escalations to provide for increases in operating costs. In addition, the
Company has executed a letter of credit in the amount of $45 in lieu of a lease
deposit on its corporate
F-29
<PAGE>
NYMA, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED DECEMBER 31, 1994, 1995 AND 1996 AND
QUARTERS ENDED MARCH 31, 1996 AND 1997 (UNAUDITED)
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
8. COMMITMENTS AND CONTINGENCIES (CONTINUED)
headquarters building. Certain officers of the Company are limited partners in a
partnership that owns the corporate headquarters.
The approximate aggregate future minimum lease payments as of December 31,
1996, for leases with remaining terms in excess of one year, are as follows:
<TABLE>
<CAPTION>
YEAR ENDING
DECEMBER 31,
- -----------------------------------------------------------------------------------------------
<S> <C>
1997........................................................................................... $ 3,687
1998........................................................................................... 3,562
1999........................................................................................... 162
2000........................................................................................... 37
---------
$ 7,448
---------
---------
</TABLE>
Rental expense for operating leases for the years ended December 31, 1994,
1995 and 1996, was approximately $3,247, $3,065 and $3,362, respectively.
AUDITS--The Company is subject to contract cost audits by government
agencies. Completed and future audits may result in various billed and unbilled
costs being disallowed. At December 31, 1996, audits have been completed through
1993. In the opinion of management, adequate reserves have been provided for the
results of remaining open audit periods.
LITIGATION--The Company is a defendant in various legal actions arising in
the normal course of business. Management believes that the ultimate liability,
if any, resulting from these actions will not have a material effect upon
results of operations or financial position.
STOCK RESTRICTION AND REPURCHASE AGREEMENT--The Company and three of its
stockholders, representing 3,543,825 shares of the 3,611,000 shares issued and
outstanding at December 31, 1996, are parties to an agreement restricting any
transfer of Company stock without prior written consent of all other parties to
this agreement. Upon the death of a stockholder, the Company shall pay to the
estate or surviving spouse an amount, as outlined below, equal to the value of
all the deceased party's shares of stock in the Company. The Company owns life
insurance policies on these stockholders in connection with this agreement (see
Note 1).
The purchase price per share is to be determined as the greater of net book
value per share (total stockholders' equity divided by the total number of
shares issued and outstanding) using the next available audited financial
statements or an independently appraised value per share determined by
appraisers, selected by the Company, based upon the next available audited
financial statements. Further, per the agreement, the purchase price for shares
of one of the stockholders, representing 2,040,000 shares at December 31, 1996,
shall be discounted by 60% of the value of the above determined purchase price
per share. The estate or surviving spouse shall surrender all shares of the
party's stock to the Company within three months of such party's death.
F-30
<PAGE>
NYMA, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED DECEMBER 31, 1994, 1995 AND 1996 AND
QUARTERS ENDED MARCH 31, 1996 AND 1997 (UNAUDITED)
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
8. COMMITMENTS AND CONTINGENCIES (CONTINUED)
Payment by the Company shall be made in five equal installments. The first
installment is to be made within eighteen months of the party's death and the
remaining payments are to be made in consecutive annual disbursements on the
anniversary of the first payment. Interest shall accrue at the imputed interest
rate applicable to similar extensions of credit in accordance with the U.S.
Internal Revenue Code. Prepayment by the Company in whole or in part of the
entire balance is permitted.
9. SUBSEQUENT EVENT-MERGER
On May 2, 1997, the Company's stockholders sold their shares of the
Company's stock, including shares under options outstanding which were exercised
prior to closing, to Federal Data Corporation for cash, a subordinated note, and
other incentives.
* * * * * *
F-31
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
Board of Directors
Sylvest Management Systems Corporation
We have audited the accompanying balance sheets of Sylvest Management
Systems Corporation ("the Company") as of December 31, 1995 and 1996, and the
related statements of operations, changes in shareholders' equity and cash flows
for each of the three years in the period ended December 31, 1996. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Sylvest Management Systems
Corporation as of December 31, 1995 and 1996 and the results of its operations
and its cash flows for each of the three years in the period ended December 31,
1996 in conformity with generally accepted accounting principles.
COOPERS & LYBRAND L.L.P.
Washington, D.C.
March 21, 1997, except for Notes 5 and 10,
as to which the date is June 30, 1997
F-32
<PAGE>
SYLVEST MANAGEMENT SYSTEMS CORPORATION
BALANCE SHEETS
(DOLLARS IN THOUSANDS, EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
DECEMBER 31,
--------------------
1995 1996
--------- ---------
<S> <C> <C>
ASSETS
Current assets:
Cash...................................................................................... $ 3,580 $ 1,603
Accounts receivable, net of allowance for doubtful accounts of $73, $168 and $168 as of
December 31, 1995 and 1996 and June 30, 1997, respectively.............................. 14,708 27,864
Unbilled costs............................................................................ 2,188 1,881
Prepaid expenses and other current assets................................................. 157 495
--------- ---------
Total current assets.................................................................... 20,633 31,843
Property and equipment, net................................................................. 1,154 1,281
Deposits and other assets................................................................... 27 21
--------- ---------
Total assets............................................................................ $ 21,814 $ 33,145
--------- ---------
--------- ---------
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Bank line of credit....................................................................... $ 6,915 $ 5,406
Accounts payable.......................................................................... 9,184 19,545
Accrued expenses.......................................................................... 780 2,272
Other current liabilities................................................................. 460 225
Payable to Federal Data Corporation....................................................... -- --
--------- ---------
Total current liabilities............................................................... 17,339 27,448
--------- ---------
Commitments
Shareholders' equity:
Common stock, $1.00 par value; 1,000 shares authorized, issued and outstanding............ 1 1
Additional paid-in capital................................................................ 45 45
Notes receivable from shareholders........................................................ (400) (400)
Retained earnings......................................................................... 4,829 6,051
--------- ---------
Total shareholders' equity.............................................................. 4,475 5,697
--------- ---------
Total liabilities and shareholders' equity.............................................. $ 21,814 $ 33,145
--------- ---------
--------- ---------
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-33
<PAGE>
SYLVEST MANAGEMENT SYSTEMS CORPORATION
STATEMENTS OF OPERATIONS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
--------------------------------
1994 1995 1996
--------- --------- ---------- SIX MONTHS ENDED JUNE
30,
------------------------
1996 1997
----------- -----------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C>
Revenue.............................................. $ 58,988 $ 84,013 $ 106,544 $ 29,515 $ 78,863
--------- --------- ---------- ----------- -----------
Costs and expenses:
Cost of sales and services......................... 50,909 71,483 92,736 25,054 70,312
Selling, general and administrative expenses....... 6,805 10,672 11,376 4,772 10,213
--------- --------- ---------- ----------- -----------
57,714 82,155 104,112 29,826 80,525
--------- --------- ---------- ----------- -----------
Operating income (loss).............................. 1,274 1,858 2,432 (311) (1,662)
Interest expense, net................................ (130) (349) (340) (161) (297)
Other income (expense), net.......................... 22 42 (2) -- --
--------- --------- ---------- ----------- -----------
Income (loss) before income taxes.................... 1,166 1,551 2,090 (472) (1,959)
Provision (benefit) for income taxes................. 14 19 47 -- --
--------- --------- ---------- ----------- -----------
Net income (loss)................................ $ 1,152 $ 1,532 $ 2,043 $ (472) $ (1,959)
--------- --------- ---------- ----------- -----------
--------- --------- ---------- ----------- -----------
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-34
<PAGE>
SYLVEST MANAGEMENT SYSTEMS CORPORATION
STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
(DOLLARS IN THOUSANDS, EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
COMMON STOCK ADDITIONAL
------------------------ PAID-IN NOTES RECEIVABLE RETAINED
SHARES AMOUNT CAPITAL FROM SHAREHOLDERS EARNINGS TOTAL
----------- ----------- ------------- ----------------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Balance at December 31, 1993.................... 1,000 $ 1 $ 45 $ (400) $ 3,283 $ 2,929
Distributions to shareholders................... -- -- -- -- (394) (394)
Net income...................................... -- -- -- -- 1,152 1,152
----- --- --- ----- --------- ---------
Balance at December 31, 1994.................... 1,000 1 45 (400) 4,041 3,687
Distributions to shareholders................... -- -- -- -- (744) (744)
Net income...................................... -- -- -- -- 1,532 1,532
----- --- --- ----- --------- ---------
Balance at December 31, 1995.................... 1,000 1 45 (400) 4,829 4,475
Distributions to shareholders................... -- -- -- -- (821) (821)
Net income...................................... -- -- -- -- 2,043 2,043
----- --- --- ----- --------- ---------
Balance at December 31, 1996.................... 1,000 1 45 (400) 6,051 5,697
Distributions to shareholders................... -- -- -- 400 (2,345) (1,945)
Net income...................................... -- -- -- -- (1,959) (1,959)
----- --- --- ----- --------- ---------
Balance at June 30, 1997 (unaudited)............ 1,000 $ 1 $ 45 $ -- $ 1,747 $ 1,793
----- --- --- ----- --------- ---------
----- --- --- ----- --------- ---------
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-35
<PAGE>
SYLVEST MANAGEMENT SYSTEMS CORPORATION
STATEMENTS OF CASH FLOWS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
-------------------------------
1994 1995 1996
--------- --------- --------- SIX MONTHS ENDED JUNE
30,
------------------------
1996 1997
----------- -----------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C>
Cash flows from operating activities:
Reconciliation of net income (loss) to net cash
provided by (used in) operating activities:
Net income (loss)...................................... $ 1,152 $ 1,532 $ 2,043 $ (472) $ (1,959)
Adjustments to reconcile net income to net cash
provided by (used in) operating activities:
Depreciation and amortization........................ 170 301 461 277 247
Loss on disposal of property and equipment........... -- -- 23 17 --
Deferred income taxes................................ 11 (7) (6) -- --
Changes in operating assets and liabilities:
Accounts receivable................................ (9,557) 5,938 (13,156) 2,889 (2,990)
Unbilled costs..................................... (104) (857) 307 219 (153)
Prepaid expenses and other current assets.......... (563) 1,064 (338) (52) 779
Deposits and other assets.......................... (202) 194 6 (34) (89)
Accounts payable................................... 4,772 (2,600) 10,361 (1,388) 253
Accrued expenses................................... 575 (189) 1,492 75 (133)
Other current liabilities.......................... 377 (719) (229) (438) (159)
--------- --------- --------- ----------- -----------
Net cash provided by (used in) operating activities.... (3,369) 4,657 964 1,093 (4,204)
--------- --------- --------- ----------- -----------
Cash flows from investing activities:
Purchases of property and equipment.................. (258) (832) (611) (301) (104)
--------- --------- --------- ----------- -----------
Net cash used in investing activities.................. (258) (832) (611) (301) (104)
--------- --------- --------- ----------- -----------
Cash flows from financing activities:
Net borrowings (repayments) on bank line of credit... 5,765 (1,330) (1,509) (2,378) (5,378)
Borrowings from Federal Data Corporation............. -- -- -- -- 13,353
Distributions to shareholders........................ (394) (744) (821) (379) (2,007)
--------- --------- --------- ----------- -----------
Net cash provided by (used in) financing activities.... 5,371 (2,074) (2,330) (2,757) 5,968
--------- --------- --------- ----------- -----------
Net increase (decrease) in cash........................ 1,744 1,751 (1,977) (1,965) 1,660
Cash at the beginning of the period.................... 85 1,829 3,580 3,580 1,603
--------- --------- --------- ----------- -----------
Cash at the end of the period.......................... $ 1,829 $ 3,580 $ 1,603 $ 1,615 $ 3,263
--------- --------- --------- ----------- -----------
--------- --------- --------- ----------- -----------
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-36
<PAGE>
SYLVEST MANAGEMENT SYSTEMS CORPORATION
NOTES TO FINANCIAL STATEMENTS
(INFORMATION AS OF AND FOR THE SIX MONTHS ENDED
JUNE 30, 1996 AND 1997 IS UNAUDITED)
(DOLLARS IN THOUSANDS)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
ORGANIZATION
Sylvest Management Systems Corporation ("the Company") was organized in
March 1987 and incorporated in May 1987 to design and implement open systems
solutions. The U.S. Government accounted for approximately 70%, 75% and 70% of
total revenue for the years ended December 31, 1994, 1995 and 1996,
respectively, and is the Company's primary customer. Most contracts with
government agencies expire on September 30 of each year (the Federal
government's fiscal year-end) and are renewable for additional fiscal years
subject to adequate funding. The Company generated 11% and 10% of its revenue
from one customer in 1995 and 1996, respectively. In 1994, the Company generated
approximately 13% of its revenue from one customer and 10% of its revenue from
another customer.
REVENUE RECOGNITION
The Company generally recognizes revenue from hardware and software sales at
the time of shipment. Service and maintenance revenue is recognized ratably over
the contractual period or as the services are performed.
UNBILLED COSTS
Unbilled costs represent amounts incurred for contractual obligations which
have not been invoiced or shipped to the customer pursuant to contractual terms.
PROPERTY AND EQUIPMENT
Property and equipment is carried at cost. Depreciation and amortization are
recorded over the estimated useful lives of the assets ranging from three to
five years, primarily by the straight-line method. When assets are sold or
otherwise disposed of, the cost and related accumulated depreciation or
amortization are removed from the accounts and resulting gains or losses are
included in operations. The cost of additions and betterments are capitalized.
Repair and maintenance costs are expensed as incurred.
Management periodically monitors the carrying value of property and
equipment and other long-lived assets for potential impairment on an on-going
basis. The impairment amount would be determined by comparing the carrying value
of these assets with their related, expected future net cash flows. Should the
sum of the related, expected future net cash flows be less than the carrying
value, management would determine whether an impairment loss should be
recognized. An impairment loss would be measured by the amount by which the
carrying value of these assets exceeds the future discounted cash flows. For the
years ended December 31, 1994, 1995 and 1996 there were no adjustments to the
carrying values of property and equipment.
INCOME TAXES
The Company has elected to be treated as an S Corporation for federal income
tax purposes. Accordingly, elements of income and expense will pass through
directly to shareholders. The Company remains a taxable entity for those states
which do not recognize the S Corporation status. Taxes for these
F-37
<PAGE>
SYLVEST MANAGEMENT SYSTEMS CORPORATION
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(INFORMATION AS OF AND FOR THE SIX MONTHS ENDED
JUNE 30, 1996 AND 1997 IS UNAUDITED)
(DOLLARS IN THOUSANDS)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
states are accounted for using the liability method whereby deferred tax assets
and liabilities are determined based upon differences between financial
reporting and tax bases of assets and liabilities and are measured using the
enacted tax rates and laws that will be in effect when the differences are
expected to reverse. Valuation allowances are established when necessary to
reduce deferred tax assets to amounts expected to be realized. Income tax
expense represents the tax payable for the period and the change during the
period in deferred tax assets and liabilities.
CONCENTRATION OF CREDIT RISK
Financial instruments that potentially subject the Company to concentrations
of credit risk consist of cash and accounts receivable. The Company maintains
its cash in one U.S. commercial bank. Accounts receivable result primarily from
shipments and contracts with the U.S. Government. Contracts with the U.S.
Government do not require collateral or other arrangements. The Company does not
believe significant credit risk exists at December 31, 1996.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities as of the
dates of the financial statements, and the reported amounts of revenue and
expenses during the reported periods. Actual results could differ from
management's estimates.
FINANCIAL INSTRUMENTS
The carrying value of cash, accounts receivable and accounts payable
approximates fair value, because of the relatively short maturities of these
instruments. The carrying value of the bank line of credit approximates fair
value since it carries a fluctuating market interest rate.
RECLASSIFICATIONS
Certain reclassifications have been made to the 1995 financial statement
amounts to conform to the current year presentation.
2. NOTES RECEIVABLE FROM SHAREHOLDERS
In December 1993, the Company made advances in the form of promissory notes
to its two principal shareholders in the amount of $200 each. In 1996 the
maturity dates of the promissory notes were extended from December 16, 1996 to
December 15, 1997. The outstanding principal is due in full on December 15,
1997. Interest is due and payable monthly at the prime rate (8.5%, 8.5% and
8.25% at December 31, 1994, 1995 and 1996 respectively) plus 1%. Total interest
income earned on these notes was approximately $38 during each of the three
years in the period ended December 31, 1996.
F-38
<PAGE>
SYLVEST MANAGEMENT SYSTEMS CORPORATION
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(INFORMATION AS OF AND FOR THE SIX MONTHS ENDED
JUNE 30, 1996 AND 1997 IS UNAUDITED)
(DOLLARS IN THOUSANDS)
3. PROPERTY AND EQUIPMENT
Property and equipment consists of the following as of:
<TABLE>
<CAPTION>
1995 1996
--------- ---------
<S> <C> <C>
Equipment..................................................................................... $ 966 $ 1,379
Furniture and fixtures........................................................................ 299 365
Automobiles................................................................................... 147 150
Computer software............................................................................. 428 485
Leasehold improvements........................................................................ 92 130
--------- ---------
1,932 2,509
Accumulated depreciation and amortization..................................................... (778) (1,228)
--------- ---------
Property and equipment, net................................................................... $ 1,154 $ 1,281
--------- ---------
--------- ---------
</TABLE>
Depreciation expense for the years ended December 31, 1994, 1995 and 1996
was $170, $301, and $461, respectively.
4. ACCOUNTS PAYABLE
As of December 31, 1996, accounts payable includes approximately $2,400 in
amounts payable to an international asset-based lender under an arrangement
established to facilitate the purchase of inventory under a major U.S.
Government contract. Under this arrangement, the lender directly pays the
vendors for purchases made by the Company. The arrangement provides the Company
with up to $7,000 in credit for inventory purchases. The terms of the
arrangement enable the Company to repay outstanding amounts paid by the lender,
interest free, within a stipulated time period from the initial purchase from
the vendors. After the stipulated time period, interest under this arrangement
accrues at the prime rate as determined by Chase Manhattan Bank (8.25% at
December 31, 1996). The Company generally pays its outstanding amounts within
the stipulated time period and therefore incurs minimal interest expense. This
arrangement requires the Company to maintain a minimum tangible net worth and
establishes a maximum debt to tangible net worth ratio. As of December 31, 1996,
the Company was in compliance with these covenants.
In connection with this arrangement, the Company entered into an
Intercreditor and Subordination Agreement (the "Intercreditor Agreement")
between a local bank that has extended the Company a line of credit (see Note 5)
and the international asset-based lender. Under the Intercreditor Agreement, all
advances made by the international asset-based lender are collateralized by the
Company's unbilled costs and accounts receivable resulting from the sale of
inventory purchased under the above arrangement.
5. BANK LINE OF CREDIT
The Company, pursuant to a revolving credit agreement with a local bank, may
borrow up to $15,000, subject to a borrowing base defined in the agreement,
which expired May 31, 1997. All loans made under the revolving credit agreement
are collateralized by all accounts receivable other than those collateralizing
advances under the Intercreditor Agreement (see Note 4). Upon the closing of the
acquisition of the
F-39
<PAGE>
SYLVEST MANAGEMENT SYSTEMS CORPORATION
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(INFORMATION AS OF AND FOR THE SIX MONTHS ENDED
JUNE 30, 1996 AND 1997 IS UNAUDITED)
(DOLLARS IN THOUSANDS)
5. BANK LINE OF CREDIT (CONTINUED)
Company by Federal Data Corporation (see Note 10), all outstanding balances
under the line of credit were repaid in full by Federal Data Corporation and the
line was canceled.
The revolving credit agreement requires the Company to comply with certain
restrictive covenants. The most restrictive of these covenants requires the
Company to maintain a minimum tangible net worth of $4,000. As of December 31,
1996, the Company was in compliance with this covenant. The repayment of the
credit agreement is personally guaranteed by the President of the Company. The
terms of the agreement require payment of interest at the bank's prime rate
(8.5%, 8.5% and 8.25% at December 31, 1994, 1995 and 1996, respectively) plus
one quarter of one percent. Interest expense incurred in connection with the
revolving credit agreement approximated $130, $430 and $430 for the years ended
December 31, 1994, 1995 and 1996, respectively.
6. INCOME TAXES
The provision for (benefit from) state income taxes consists of the
following:
<TABLE>
<CAPTION>
YEARS ENDED
DECEMBER 31,
-------------------------------------
1994 1995 1996
----- ----- -----
<S> <C> <C> <C>
Current...................................................................................... $ 3 $ 26 $ 53
Deferred..................................................................................... 11 (7) (6)
--- --- ---
$ 14 $ 19 $ 47
--- --- ---
--- --- ---
</TABLE>
Net deferred state income tax liabilities, included in other current
liabilities, were $9 and $15 as of December 31, 1996 and 1995, respectively.
Deferred taxes result principally from accelerated depreciation, timing of
certain liabilities and different revenue recognition methods for tax purposes
on the shipment of products.
7. COMMITMENTS
The Company leases office space under noncancelable operating leases
expiring through 1997. The Company is reviewing its options for its future
office space requirements. In addition, the Company leases certain equipment on
an annual basis. Aggregate rent expense for the years ended December 31, 1994,
1995 and 1996 was approximately $281, $571 and $702, respectively.
Future minimum annual rental commitments for noncancelable leases are as
follows as of December 31, 1996:
<TABLE>
<CAPTION>
OPERATING LEASES
-----------------
<S> <C>
1997......................................................................... $ 379
-----
$ 379
-----
-----
</TABLE>
F-40
<PAGE>
SYLVEST MANAGEMENT SYSTEMS CORPORATION
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(INFORMATION AS OF AND FOR THE SIX MONTHS ENDED
JUNE 30, 1996 AND 1997 IS UNAUDITED)
(DOLLARS IN THOUSANDS)
8. 401(K) PLAN
During 1993, the Company established the Sylvest Management Systems
Corporation 401(k) Profit Sharing Plan and Trust ("the Plan") which covers all
employees who have completed one year of service and are at least 21 years of
age or were employed on April 15, 1993, the effective date of the Plan.
Effective January 1, 1994, the Plan was amended to make all employees who are
least 18 years of age eligible to participate in the Plan on the date of hire.
Eligible employees may contribute up to 15% of their salary, subject to certain
annual limits. The Company at its discretion may make contributions to the Plan
for all employees who have completed 1,000 hours of service. The Company
recognized expense of $100, $50 and $100 for 1994, 1995 and 1996, respectively,
for contributions to the Plan.
9. SUPPLEMENTAL CASH FLOW INFORMATION
<TABLE>
<CAPTION>
YEARS ENDED
DECEMBER 31,
-------------------------------
1994 1995 1996
--------- --------- ---------
<S> <C> <C> <C>
Interest paid............................................................................. $ 116 $ 386 $ 435
--------- --------- ---------
--------- --------- ---------
Income taxes paid......................................................................... $ 13 $ 12 $ 35
--------- --------- ---------
--------- --------- ---------
</TABLE>
10. SUBSEQUENT EVENT-MERGER
On June 30, 1997, the Company's shareholders sold their shares of the
Company's stock to Federal Data Corporation for cash, a subordinated note, and
other incentives.
11. INTERIM INFORMATION (UNAUDITED)
The interim financial information for the six months ended June 30, 1996 and
1997 is unaudited. The unaudited interim financial statements reflect, in the
opinion of management, all adjustments (which include only normal recurring
adjustments) necessary to fairly present the results of operations, changes in
cash flows and financial position as of and for the periods presented. The
unaudited interim financial information should be read in conjunction with the
audited financial statements and related notes thereto. The results for the
interim periods presented are not necessarily indicative of results to be
expected for the full year.
The interim balance sheet as of June 30, 1997 has been excluded from the
financial statements based on the fact that, effective June 30, 1997, the
Company was acquired by Federal Data Corporation (see Note 10). In connection
with the acquisition, the Company incurred a note payable to Federal Data
Corporation for approximately $13.3 million in connection with the repayment of
the existing line of credit balance and the payment of certain operating
liabilities outstanding as of June 30, 1997. Further, in connection with the
acquisition, the notes receivable from shareholders existing as of December 31,
1996 was forgiven and reflected as a distribution in the statement of changes in
shareholders' equity.
F-41
<PAGE>
- ------------------------------------------------
------------------------------------------------
- ------------------------------------------------
------------------------------------------------
NO DEALER, SALESPERSON OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS IN CONNECTION WITH THE OFFER
CONTAINED HEREIN OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS, AND, IF GIVEN OR
MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED BY THE COMPANY. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL,
OR THE SOLICITATION OF AN OFFER TO BY, TO ANY PERSON IN ANY JURISDICTION IN
WHICH SUCH OFFER OR SOLICITATION IS NOT AUTHORIZED, OR IN WHICH THE PERSON
MAKING SUCH OFFER OR SOLICITATION IS NOT QUALIFIED TO DO SO, OR TO ANY PERSON TO
WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION. NEITHER THE DELIVERY OF
THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES,
CREATE ANY IMPLICATION THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY
SINCE THE DATE HEREOF OR THAT THE INFORMATION CONTAINED HEREIN IS CORRECT AS OF
ANY TIME SUBSEQUENT TO THE DATE HEREOF.
--------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
---------
<S> <C>
Prospectus Summary............................. 4
Summary Unaudited Pro Forma Consolidated
Financial Data............................... 14
Risk Factors................................... 16
The Exchange Offer............................. 23
The Recapitalization and the Transactions...... 34
Use of Proceeds................................ 34
Capitalization................................. 35
Selected Unaudited Pro Forma Consolidated
Financial Data............................... 36
Selected Consolidated Historical Financial Data
of Federal Data Corporation.................. 43
Management's Discussion and Analysis of
Financial Condition and Results of
Operations................................... 45
Business....................................... 52
Management..................................... 63
Executive Compensation......................... 65
Principal Stockholders......................... 67
Certain Transactions........................... 68
Description of Certain Indebtedness............ 69
Description of Notes........................... 71
Certain Federal Income Tax Considerations...... 102
Plan of Distribution........................... 103
Legal Matters.................................. 103
Experts........................................ 103
Available Information.......................... 104
Index to Financial Statements.................. F-1
Annex.......................................... A-1
</TABLE>
FEDERAL DATA CORPORATION
OFFER TO EXCHANGE
10 1/8% SENIOR SUBORDINATED
NOTES DUE 2005
FOR ALL OUTSTANDING
10 1/8% SENIOR SUBORDINATED
NOTES DUE 2005
---------------------
PROSPECTUS
---------------------
, 1997
- ------------------------------------------------
------------------------------------------------
- ------------------------------------------------
------------------------------------------------
<PAGE>
PART II:
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF OFFICERS AND DIRECTORS.
Each of FDC, FDCT Corp., FDC Technologies, Inc. and Dox Sys, Inc. are
Delaware corporations and their respective Bylaws and Certificates of
Incorporation provide for indemnification of their respective directors,
officers, employees and agents to the fullest extent permitted by the Delaware
General Corporation Law (the "DGCL"), as the same exists or may hereafter be
amended. Section 145 of the DGCL provides in relevant part that a corporation
may indemnify any person who was or is a party or is threatened to be made a
party to any threatened, pending or completed action, suit or proceeding,
whether civil, criminal, administrative or investigative (other than an action
by or in the right of the corporation) by reason of the fact that such person is
or was a director, officer, employee, or agent of the corporation, or is or was
serving at the request of the corporation as a director, officer, employee or
agent of another corporation, partnership, joint venture, trust or other
enterprise, against expenses (including attorneys' fees), judgments, fines and
amounts paid in settlement actually and reasonably incurred by such person in
connection with such action, suit or proceeding if such person acted in good
faith and in a manner such person reasonably believed to be in or not opposed to
the best interests of the corporation, and, with respect to any criminal action
or proceeding, had no reasonable cause to believe such person's conduct was
unlawful.
In addition, Section 145 of the DGCL provides that a corporation may
indemnify any person who was or is a party or is threatened to be made a party
to any threatened, pending or completed action or suit by or in the right of the
corporation to procure a judgment in its favor by reason of the fact that such
person is or was a director, officer, employee or agent of the corporation, or
is or was serving at the request of the corporation as a director, officer,
employee or agent of the corporation, or is or was serving at the request of the
corporation as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise against expenses
(including attorneys' fees) actually and reasonably incurred by such person in
connection with the defense or settlement of such action or suit if such person
acted in good faith and in a manner such person reasonably believed to be in or
not opposed to the best interests of the corporation and except that no
indemnification shall be made in respect of any claim, issue or matter as to
which such person shall have been adjudged to be liable to the corporation
unless and only to the extent that the Delaware Court of Chancery or the court
in which such action or suit was brought shall determine upon application that,
despite the adjudication of liability but in view of all the circumstances of
the case, such person is fairly and reasonably entitled to indemnity for such
expenses which the Delaware Court of Chancery or such other court shall deem
proper. Delaware law further provides that nothing in the above-described
provisions shall be deemed exclusive of any other rights to indemnification or
advancement of expenses to which any person may be entitled under any bylaw,
agreement, vote of stockholders or disinterested directors or otherwise.
Section 102(b)(7) of the DGCL eliminates the liability of a corporation's
directors to a corporation or its stockholders, except for liabilities related
to a breach of duty of loyalty, actions not in good faith, and certain other
liabilities.
NYMA, Inc., Sylvest Management Systems Corporation and VAD International,
Inc. are Maryland corporations and their respective Bylaws provide for
indemnification of their respective directors, officers, employees and agents to
the fullest extent permitted by the Maryland General Corporation Law (the
"MGCL"), as the same exists or may hereafter be amended. Subsection (c) of
Section 2-418 of the MGCL provides that no director may be indemnified under
subsection (b) of Section 2-418 of the MGCL in respect of any proceeding
charging improper personal benefit to the director, whether or not involving
action in the director's official capacity, in which the director was adjudged
to be liable on the basis that personal benefit was improperly received.
II-1
<PAGE>
Subsection (d)(1) of Section 2-418 of the MGCL requires that a director who
has been successful, on the merits or otherwise, in the defense of any
proceeding referred to in subsection (b) or Section 2-418 of the MGCL be
indemnified against reasonable expenses incurred by the director in connection
with the proceeding.
Subsection (d)(2) of Section 2-418 of the MGCL permits a court of
appropriate jurisdiction, upon application of a director or such notice as the
court shall require, to order indemnification in the following circumstances:
(i) If it determines a director is entitled to reimbursement under
paragraph (1) of subsection (d) of Section 2-418 of the MGCL, the court
shall order indemnification, in which case the director shall be entitled to
recover the expenses of securing such reimbursement; or
(ii) If it determines that the director is fairly and reasonably
entitled to indemnification in view of all the relevant circumstances,
whether or not the director has met the standards of conduct set forth in
subsection (b) of Section 2-418 of the MGCL or has been adjudged liable
under the circumstances described in subsection (c) of Section 2-418 of the
MGCL, the court may order such indemnification as the court shall deem
proper. However, indemnification with respect to any proceeding by or in the
right of the corporation or in which liability shall have been adjudged in
the circumstances described in subsection (c) of Section 2-418 of the MGCL
shall be limited to expenses.
A court of appropriate jurisdiction may be the same court in which the
proceeding involving the director's liability took place.
Subsection (e) of Section 2-418 of the MGCL provides that indemnification
under subsection (b) of Section 2-418 of the MGCL may not be made by the
corporation unless authorized for a specific proceeding after a determination
has been made that indemnification of the director is permissible in the
circumstances because the director has met the standard of conduct set forth in
that subsection. This determination must be made by the board of directors,
special legal counsel selected by the board of directors or the stockholders.
Subsection (f)(1) of Section 2-418 of the MGCL permits payment of reasonable
expenses incurred by a director who is a party to a proceeding to be paid or
reimbursed in advance of the final disposition of the proceeding upon receipt by
the corporation of:
(i) A written affirmation by the director of the director's good faith
belief that the standard of conduct necessary for indemnification by the
corporation as authorized in this section has been met; and
(ii) A written undertaking by or on behalf of the director to repay the
amount if it ultimately is determined that the standard of conduct has not
been met.
The undertaking required by subparagraph (ii) of subsection (f)(1) must be an
unlimited general obligation of the director but need not be secured and may be
accepted without reference to financial ability to make the repayment.
Subsection (i) of Section 2-418 of the MGCL requires a corporation to
indemnify an officer of the corporation as and to the extent provided in
subsection (d) of Section 2-418 of the MGCL. Such officer is also entitled, to
the same extent as a director, to seek indemnification pursuant to subsection
(d) of Section 2-418 of the MGCL.
II-2
<PAGE>
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a) Exhibits
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- --------- -------------------------------------------------------------------------------------------------------
<C> <S>
*2.1 Agreement and Plan of Merger dated as of April 9, 1997 by and among Azmat Ali, Peter Belford, Arthur
Verbin, Peter Belford, as Holder Representative, NYMA and NYMA Acquisition, Inc.
*2.2 First Amendment, dated as of May 2, 1997, to the Agreement and Plan of Merger dated as of April 9, 1997
by and among Azmat Ali, Peter Belford, Arthur Verbin, Peter Belford, as Holder Representative, NYMA
and NYMA Acquisition, Inc.
*2.3 Post-Closing Amendment, dated as of May 2, 1997, to the Agreement and Plan of Merger dated as of April
9, 1997 by and among Azmat Ali, Peter Belford, Arthur Verbin, Peter Belford, as Holder
Representative, NYMA and NYMA Acquisition, Inc.
*2.4 Stock Purchase Agreement dated June 18, 1997 among Federal Data Corporation and Gary S. and Areather T.
Murray, William S. Strang, Holton B. Shipman, Jr., James K. White, Peter A. Perucci, Myron P.
Erkiletian and Sylvest
3.1 Certificate of Incorporation of Federal Data Corporation
3.2 By-laws of Federal Data Corporation
3.3 Certificate of Incorporation of FDCT Corp.
3.4 By-laws of FDCT Corp.
3.5 Articles of Incorporation of NYMA, Inc.
3.6 By-laws of NYMA, Inc.
3.7 Articles of Incorporation of Sylvest Management Systems Corporation
3.8 By-laws of Sylvest Management Systems Corporation
3.9 Certificate of Incorporation of FDC Technologies, Inc.
3.10 By-laws of FDC Technologies, Inc.
3.11 Certificate of Incorporation of DoxSys, Inc.
3.12 By-laws of DoxSys, Inc.
3.13 Articles of Incorporation of VAD International, Inc.
3.14 By-laws of VAD International, Inc.
4.1 Indenture dated as of July 15, 1997 among Federal Data Corporation, FDCT Corp., NYMA, Inc., Sylvest
Management Systems Corporation, FDC Technologies, Inc., DoxSys, Inc., VAD International, Inc. and
Norwest Bank Minnesota, National Association
4.2 Specimen Certificate of 10 1/8% Senior Subordinated Notes due 2005 (included in Exhibit 4.1 hereto)
4.3 Purchase Agreement dated as of July 18, 1997 among Federal Data Corporation, BT Securities Corporation
and Lehman Brothers
4.4 Registration Rights Agreement dated as of July 25, 1997 among Federal Data Corporation, BT Securities
Corporation and Lehman Brothers
*4.5 Credit Agreement dated as of July 25, 1997 among Federal Data Corporation, various lending institutions
signatories thereto and Bankers Trust Company as Agent
4.6 Agreement for Wholesale Financing dated as of September 17, 1996 by and between Deutsche Financial
Services and Sylvest Management Systems Corporation
4.7 Amendment to Agreement for Wholesale Financing dated as of September 17, 1996 by and between Deutsche
Financial Services and Sylvest Management Systems Corporation
4.8 STAR Agreement dated as of September 17, 1996 by and between Deutsche Financial Services and Sylvest
Management Systems Corporation
4.9 STAR Assignment Agreement dated September 19, 1996 by Sylvest Management Systems Corporation in favor
of Deutsche Financial Services
</TABLE>
II-3
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- --------- -------------------------------------------------------------------------------------------------------
<C> <S>
*4.10 Intercreditor and Subordination Agreement dated July 25, 1997 by and between Bankers Trust Company, as
Agent, and Deutsche Financial Services Corporation
4.11 Form of 9% Increasing Rate Subordinated Note due 2004 dated May 21, 1997
4.12 Form of 9% Increasing Rate Subordinated Note due 2004 dated June 30, 1997
4.13 FDC is a party to several non-recourse financing agreements evidenced by promissory notes, none of
which exceed 10 percent of the total assets of FDC and its subsidiaries on a consolidated basis. FDC
hereby agrees to furnish a copy of such agreements to the Commission upon request.
*5.1 Form of Opinion of L&W regarding the validity of the Exchange Notes
10.1+ Employment Agreement dated April 30, 1997 between NYMA, Inc. and Peter C. Belford
*10.2+ Stock Option Plan dated February 16, 1996 for Executives and Other Key Employees
*10.3+ Form of Executive Management Incentive Stock Option Agreement
10.4 Agreement of Lease dated December 5, 1984 between Federal Data Corporation and Community Motor Property
Associates Limited Partnership
10.5 Lease Agreement dated January 6, 1989 between TechPark Limited Partnership and NYMA, Inc., as modified
by First Modification to Lease dated as of December 21, 1990, that certain Second Modification to
Lease dated as of December 20, 1990, that certain Third Modification to Lease dated as of January 31,
1994 and that Landlord Consent and Estoppel Certificate dated as of May 2, 1997
10.6 Lease Agreement dated February 2, 1988 between Second Trade Center Office Associates Limited
Partnership and NYMA, Inc., as modified by Lease Modification Agreement dated December 22, 1988
between Second Trade Center Office Associates Limited Partnership and NYMA, Inc.
10.7 Sublease dated as of October 31, 1995 between Digital Equipment Corporation and Sylvest Management
Systems Corporation
*10.8+ Consulting Agreement between Federal Data Corporation and C. Robert Handley
10.9 Trust Agreement dated December 27, 1994 among Federal Data Corporation, Charles R. Hanley, II, Daniel
Young, Harry Marren, Marvin Haber and Paul Taltavull
11.1 Statement Regarding Computation of Per Share Earnings
12.1 Statement Regarding Computation of Ratio of Earnings to Fixed Charges
12.2 Statement Regarding Computation of Pro Forma Ratio of Earnings to Fixed Charges
21.1 Subsidiaries of Federal Data Corporation
*23.1 Consent of Latham & Watkins (included in their opinion filed as Exhibit 5.1)
23.2 Consent of Price Waterhouse LLP
23.3 Consent of Deloitte & Touche LLP
23.4 Consent of Coopers & Lybrand L.L.P.
24.1 Powers of Attorney of Registrants (included on signature page to this Registration Statement on Form
S-4)
*25.1 Statement of Eligibility and Qualification (Form T-1) under the Trust Indenture Act of 1939 of Norwest
Bank Minnesota, National Association
99.1 Letter of Transmittal and related materials
99.2 Notice of Guaranteed Delivery
99.3 Guidelines for Certification of Taxpayer Identification Number on Substitute Form W-9
</TABLE>
- ------------------------
* To be filed by amendment
+ Executive Compensation Plan or Arrangement
II-4
<PAGE>
(b) Financial Statement Schedules:
Schedules are omitted because of the absence of the conditions under which
they are required or because the information required by such omitted schedules
is set forth in the financial statements or the notes thereto.
ITEM 22. UNDERTAKINGS
(a) (1) The undersigned registrant hereby undertakes as follows: that prior
to any public reoffering of the securities hereunder through use of a prospectus
which is part of this registration statement, by any person or party who is
deemed to be an underwriter within the meaning of Rule 145(c), the issuer
undertakes that such reoffering prospectus will contain the information called
for by the applicable registration form with respect to reofferings by persons
who may be deemed underwriters, in addition to the information called for by the
other items of the applicable form.
(2) The registrant undertakes that every prospectus: (i) that is filed
pursuant to paragraph (1) immediately preceding, or (ii) that purports to meet
the requirements of Section 10(a)(3) of the Act and is used in connection with
an offering of securities subject to Rule 415, will be filed as apart of an
amendment to the registration statement and will not be used until such
amendment is effective, and that, for purposes of determining any liability
under the Securities Act of 1933, each such post-effective amendment shall be
deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at the time shall be deemed to be
the initial bona fide offering thereof.
(b) The undersigned registrant hereby undertakes to respond to requests for
information that is incorporated by reference into the prospectus pursuant to
Item 4, 10(b), 11, or 13 of this form, within one business day of receipt of
such request, and to send the incorporated documents by first class mail or
other equally prompt means. This includes information contained in documents
filed subsequent to the effective date of the registration statement through the
date of responding to the request.
(c) The undersigned registrant hereby undertakes to supply by means of a
post-effective amendment all information concerning a transaction, and the
company being acquired involved therein, that was not the subject of and
included in the registration statement when it became effective.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions, or otherwise, the registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the registrant of expenses incurred
or paid by a director, officer or controlling person of the registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
II-5
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-4 and has duly caused this registration
statement to be signed on its behalf by the undersigned, there unto duly
authorized, in the District of Columbia on September 25, 1997.
<TABLE>
<S> <C> <C>
FEDERAL DATA CORPORATION ("FDC")
and the Guarantors listed on Annex A
(the "Guarantors")
By /s/ JAMES M. DEAN
------------------------------------------
James M. Dean
VICE PRESIDENT, CHIEF FINANCIAL OFFICER
AND
TREASURER OF FDC AND VICE PRESIDENT OF
EACH
OF THE GUARANTORS
</TABLE>
POWER OF ATTORNEY
Each person whose signature appears below constitutes and appoints James M.
Dean and Daniel R. Young, and each of them, such person's true and lawful
attorney-in-fact and agent, with full power of substitution and resubstitution,
for him and in his name, place and stead, in any and all capacities, to sign
this Registration Statement, and any and all amendments thereto (including pre-
and post-effective amendments) or any registration statement for the same
offering that is to be effective upon filing pursuant to Rule 462(b) under the
Securities Act of 1933, as amended, and to file the same, with exhibits and
schedules thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorney-in-fact and
agent, full power and authority to do and perform each and every act and thing
necessary or desirable to be done in and about the premises, as fully to all
intents and purposes as he might or could do in person, hereby ratifying and
confirming all that said attorney-in-fact and agent, or their or his substitute
or substitutes, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities and on the date indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------ ------------------------------ -------------------
<C> <S> <C>
/s/ WILLIAM E. CONWAY, JR.
- ------------------------------ Chairman of the Board
William E. Conway, Jr.
/s/ DANIEL R. YOUNG
- ------------------------------ President, Chief Executive
Daniel R. Young Officer and Director
Vice President, Chief
/s/ JAMES M. DEAN Financial Officer and
- ------------------------------ Treasurer (Principal
James M. Dean Financial and Accounting
Officer)
/s/ ALLAN M. HOLT
- ------------------------------ Director September 25, 1997
Allan M. Holt
/s/ PETER J. CLARE
- ------------------------------ Director
Peter J. Clare
/s/ HARRY T. MARREN
- ------------------------------ Director
Harry T. Marren
/s/ C. ROBERT HANLEY
- ------------------------------ Director
C. Robert Hanley
</TABLE>
S-1
<PAGE>
ANNEX A
FDCT CORP.
FDC TECHNOLOGIES, INC.
DOXSYS, INC.
NYMA, INC.
VAD INTERNATIONAL, INC.
SYLVEST MANAGEMENT SYSTEMS CORPORATION
S-2
<PAGE>
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- --------- -------------------------------------------------------------------------------------------------------
<C> <S>
*2.1 Agreement and Plan of Merger dated as of April 9, 1997 by and among Azmat Ali, Peter Belford, Arthur
Verbin, Peter Belford, as Holder Representative, NYMA and NYMA Acquisition, Inc.
*2.2 First Amendment, dated as of May 2, 1997, to the Agreement and Plan of Merger dated as of April 9, 1997
by and among Azmat Ali, Peter Belford, Arthur Verbin, Peter Belford, as Holder Representative, NYMA
and NYMA Acquisition, Inc.
*2.3 Post-Closing Amendment, dated as of May 2, 1997, to the Agreement and Plan of Merger dated as of April
9, 1997 by and among Azmat Ali, Peter Belford, Arthur Verbin, Peter Belford, as Holder
Representative, NYMA and NYMA Acquisition, Inc.
*2.4 Stock Purchase Agreement dated June 18, 1997 among Federal Data Corporation and Gary S. and Areather T.
Murray, William S. Strang, Holton B. Shipman, Jr., James K. White, Peter A. Perucci, Myron P.
Erkiletian and Sylvest
3.1 Certificate of Incorporation of Federal Data Corporation
3.2 By-laws of Federal Data Corporation
3.3 Certificate of Incorporation of FDCT Corp.
3.4 By-laws of FDCT Corp.
3.5 Articles of Incorporation of NYMA, Inc.
3.6 By-laws of NYMA, Inc.
3.7 Articles of Incorporation of Sylvest Management Systems Corporation
3.8 By-laws of Sylvest Management Systems Corporation
3.9 Certificate of Incorporation of FDC Technologies, Inc.
3.10 By-laws of FDC Technologies, Inc.
3.11 Certificate of Incorporation of DoxSys, Inc.
3.12 By-laws of DoxSys, Inc.
3.13 Articles of Incorporation of VAD International, Inc.
3.14 By-laws of VAD International, Inc.
4.1 Indenture dated as of July 15, 1997 among Federal Data Corporation, FDCT Corp., NYMA, Inc., Sylvest
Management Systems Corporation, FDC Technologies, Inc., DoxSys, Inc., VAD International, Inc. and
Norwest Bank Minnesota, National Association
4.2 Specimen Certificate of 10 1/8% Senior Subordinated Notes due 2005 (included in Exhibit 4.1 hereto)
4.3 Purchase Agreement dated as of July 18, 1997 among Federal Data Corporation, BT Securities Corporation
and Lehman Brothers
4.4 Registration Rights Agreement dated as of July 25, 1997 among Federal Data Corporation, BT Securities
Corporation and Lehman Brothers
*4.5 Credit Agreement dated as of July 25, 1997 among Federal Data Corporation, various lending institutions
signatories thereto and Bankers Trust Company as Agent
4.6 Agreement for Wholesale Financing dated as of September 17, 1996 by and between Deutsche Financial
Services and Sylvest Management Systems Corporation
4.7 Amendment to Agreement for Wholesale Financing dated as of September 17, 1996 by and between Deutsche
Financial Services and Sylvest Management Systems Corporation
4.8 STAR Agreement dated as of September 17, 1996 by and between Deutsche Financial Services and Sylvest
Management Systems Corporation
4.9 STAR Assignment Agreement dated September 19, 1996 by Sylvest Management Systems Corporation in favor
of Deutsche Financial Services
*4.10 Intercreditor and Subordination Agreement dated July 25, 1997 by and between Bankers Trust Company, as
Agent, and Deutsche Financial Services Corporation
4.11 Form of 9% Increasing Rate Subordinated Note due 2004 dated May 21, 1997
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- --------- -------------------------------------------------------------------------------------------------------
<C> <S>
4.12 Form of 9% Increasing Rate Subordinated Note due 2004 dated June 30, 1997
4.13 FDC is a party to several non-recourse financing agreements evidenced by promissory notes, none of
which exceed 10 percent of the total assets of FDC and its subsidiaries on a consolidated basis. FDC
hereby agrees to furnish a copy of such agreements to the Commission upon request.
*5.1 Form of Opinion of L&W regarding the validity of the Exchange Notes
10.1+ Employment Agreement dated April 30, 1997 between NYMA, Inc. and Peter C. Belford
*10.2+ Stock Option Plan dated February 16, 1996 for Executives and Other Key Employees
*10.3+ Form of Executive Management Incentive Stock Option Agreement
10.4 Agreement of Lease dated December 5, 1984 between Federal Data Corporation and Community Motor Property
Associates Limited Partnership
10.5 Lease Agreement dated January 6, 1989 between TechPark Limited Partnership and NYMA, Inc., as modified
by First Modification to Lease dated as of December 21, 1990, that certain Second Modification to
Lease dated as of December 20, 1990, that certain Third Modification to Lease dated as of January 31,
1994 and that Landlord Consent and Estoppel Certificate dated as of May 2, 1997
10.6 Lease Agreement dated February 2, 1988 between Second Trade Center Office Associates Limited
Partnership and NYMA, Inc., as modified by Lease Modification Agreement dated December 22, 1988
between Second Trade Center Office Associates Limited Partnership and NYMA, Inc.
10.7 Sublease dated as of October 31, 1995 between Digital Equipment Corporation and Sylvest Management
Systems Corporation
*10.8+ Consulting Agreement between Federal Data Corporation and C. Robert Handley
10.9 Trust Agreement dated December 27, 1994 among Federal Data Corporation, Charles R. Hanley, II, Daniel
Young, Harry Marren, Marvin Haber and Paul Taltavull
11.1 Statement Regarding Computation of Per Share Earnings
12.1 Statement Regarding Computation of Ratio of Earnings to Fixed Charges
12.2 Statement Regarding Computation of Pro Forma Ratio of Earnings to Fixed Charges
21.1 Subsidiaries of Federal Data Corporation
*23.1 Consent of Latham & Watkins (included in their opinion filed as Exhibit 5.1)
23.2 Consent of Price Waterhouse LLP
23.3 Consent of Deloitte & Touche LLP
23.4 Consent of Coopers & Lybrand L.L.P.
24.1 Powers of Attorney of Registrants (included on signature page to this Registration Statement on Form
S-4)
*25.1 Statement of Eligibility and Qualification (Form T-1) under the Trust Indenture Act of 1939 of Norwest
Bank Minnesota, National Association
99.1 Letter of Transmittal and related materials
99.2 Notice of Guaranteed Delivery
99.3 Guidelines for Certification of Taxpayer Identification Number on Substitute Form W-9
</TABLE>
- ------------------------
* To be filed by amendment
+ Executive Compensation Plan or Arrangement
<PAGE>
EXHIBIT 3.1
RESTATED
CERTIFICATE OF INCORPORATION
OF
FEDERAL DATA CORPORATION
(Pursuant to Sections 245 & 242 of the General Corporation Law)
FEDERAL DATA CORPORATION, a corporation organized and existing under the
laws of the State of Delaware (the "Corporation"), DOES HEREBY CERTIFY:
1. The date of filing of its original Certificate of Incorporation was
October 5, 1983, and amendments to such original Certificate of Incorporation
were filed on April 30, 1985, and May 30, 1986.
2. The Restated Certificate of Incorporation restates, integrates and
further amends the Certificate of Incorporation by amending Article 4 to
increase the number of authorized shares of Common Stock, par value $.01, to
8,000,000 and by adding a new Article 7 concerning the liability of directors.
3. The text of the Certificate of Incorporation, as amended and
restated, shall be as herein set forth in full:
FIRST: The name of the corporation is Federal Data Corporation (the
"Corporation").
SECOND: The address of the registered office of the
<PAGE>
- 2 -
Corporation in the State of Delaware is 229 South State Street, City of
Dover, County of Kent. The name of its registered agent at such address is
the United States Corporation Company.
THIRD: The nature of the business and purposes to be conducted or
promoted by the Corporation are to engage in, carry on and conduct any lawful
act or activity for which corporations may be organized under the Delaware
General Corporation Law.
FOURTH: The Corporation is authorized to issue an aggregate of
8,000,000 shares of Common Stock, par value $.01 per share.
FIFTH: The Bylaws of the Corporation may be made, altered, amended,
changed, added to or repealed by the Board of Directors, without the assent
or vote of the stockholders (except insofar as any Bylaw adopted by the
stockholders otherwise provides).
SIXTH: The Corporation shall, to the fullest extent permitted by the
General Corporation Law of the State of Delaware (including, without
limitation, Section 145 thereof), as amended from time to time, or otherwise,
indemnify all persons whom it may indemnify pursuant thereto or otherwise.
SEVENTH: To the fullest extent permitted by the General Corporation Law
of the State of Delaware, as amended from time to time, a director of the
Corporation shall not be liable to the Corporation or its stockholders for
monetary damages for breach of fiduciary duty as a director.
<PAGE>
- 3 -
4. This Restated Certificate of Incorporation was duly adopted and
approved at the delayed annual meeting of stockholders, held September 27,
1986, by the affirmative vote of a majority of the outstanding Common Shares
of the Corporation.
IN WITNESS WHEREOF, said FEDERAL DATA CORPORATION has caused this
certificate to be signed by Daniel R. Young, its President, and attested by
Marvin S. Haber, its Vice President and Secretary, as of the 27th day of
September, 1986.
FEDERAL DATA CORPORATION
By /s/ Daniel R. Young
---------------------------------
President
By /s/ Marvin S. Haber
------------------------------
Vice President and Secretary
<PAGE>
STATE OF DELAWARE
SECRETARY OF STATE
DIVISION OF CORPORATIONS
FILED 03:45 PM 12/01/1995
950279509 - 2018567
CERTIFICATE OF MERGER
OF
FDC HOLDINGS, INC.
INTO
FEDERAL DATA CORPORATION
The undersigned corporation DOES HEREBY CERTIFY:
FIRST: That the names and states of incorporation of each of the
constituent corporations of the merger is as follows:
NAME STATE OF INCORPORATION
FDC Holdings, Inc. Delaware
Federal Data Corporation Delaware
SECOND: That an agreement of merger between the parties to the
merger has been approved, adopted, certified, executed and acknowledged by
each of the constituent corporations in accordance with the requirements of
subsection (c) of Section 251 of the General Corporation Law of the State of
Delaware.
THIRD: The name of the surviving corporation of the merger is Federal
Data Corporation, a Delaware corporation.
FOURTH: That the certificate of incorporation of Federal Data
Corporation, Inc., a Delaware corporation, shall be the certificate of
incorporation of the surviving corporation following the merger.
FIFTH: That the executed agreement and plan of merger is on file at
the principal place of business of the surviving corporation. The address of
said principal place is 4800 Hampden Lane, Bethesda, Maryland 20814.
SIXTH: That a copy of the agreement of merger will be furnished on
request and without cost to any stockholder of either constituent corporation.
Dated: November 30, 1995
FEDERAL DATA CORPORATION
By: /s/ Robert Hanley
-------------------------------
Name: Robert Hanley
Title: Chairman & CEO
<PAGE>
EXHIBIT 3.2
BY-LAWS
OF
FEDERAL DATA CORPORATION
OFFICES
1. The registered office of Federal Data Corporation (the
"Corporation") in the State of Delaware shall be in the City of Dover, County of
Kent.
2. The principal office shall be located at 4601 North Park Avenue,
Chevy Chase, Maryland.
3. The corporation may have offices at such other places as the
Board of Directors may, from time to time, determine or the business of the
corporation require.
STOCKHOLDERS' MEETING
4. All meetings oL the stockholders shall be held at such place and
time as shall be stated in the notice of the meeting, or in a duly executed
waiver of notice thereof.
5. An annual meeting of stockholders, commencing with the year 1984,
shall be held on the third Thursday of September, in each year, if not a legal
holiday, and if a legal holiday, then on the next secular day following at 4:00
o'clock p.m. or at such
<PAGE>
other date and time as shall be designated by the Board of Directors and
stated in the notice of the meeting or as shall be stated in a duly executed
waiver of notice of the meeting. At each annual meeting, the stockholders
entitled to vote shall elect by plurality vote, by ballot, a Board of
Directors and transact such other business as may properly be brought before
the meeting.
6. Written notice of the annual meetings shall be served upon or
mailed to each stockholder entitled to vote thereat at such address as appears
on the books of the corporation, not less than ten nor more than sixty days
prior to the meeting.
7. At least ten but not more than sixty days before every election
of Directors, a complete list of the stockholders entitled to vote at said
election, arranged in alphabetical order, with the residence of each and the
number of voting shares held by each, shall be prepared by the Secretary. Such
list shall be opened at the place where the election is to be held for ten (10)
days, to the examination of any stockholder, and shall be produced and kept at
the time and place of election during the whole time thereof, and subject to the
inspection of any stockholder who may be present.
8. Special meetings of the stockholders, for any purpose or
purposes, unless otherwise prescribed by statute or by the Certificate of
Incorporation, may be called by the President and shall be called by the
President or Secretary at the request, in writing, of a majority of the Board of
Directors, or at the request, in writing, of a stockholder owning a majority in
amount
2
<PAGE>
of the entire capital stock of the corporation issued and outstanding and
entitled to vote or of a stockholder owning a majority in amount of the
issued and outstanding shares of any class of capital stock entitled to vote.
Such request shall state the purpose or purposes of the proposed meeting.
9. Written notice of a special meeting of stockholders, stating the
time and place and object thereof, shall be served upon or mailed to each
stockholder entitled to vote thereat at such address as appears on the books of
the corporation, at least ten but not more than sixty days before such meeting.
10. Business transacted at all special meetings shall be confined to
the objects stated in the call.
11. The holders of a majority of the stock issued and outstanding and
entitled to vote thereat, present in person or represented by proxy, shall be
requisite and shall constitute a quorum at all meetings of the stockholders for
the transaction of business except as otherwise provided by statute, by the
Certificate of Incorporation or by these bylaws. If, however, such quorum shall
not be present or represented at any meeting of the stockholders, the
stockholders entitled to vote thereat, present in person or represented by
proxy, shall have the power to adjourn the meeting from time to time, without
notice other than announcement at the meeting, until a quorum shall be present
or represented. Any business may be transacted which might have been transacted
at the meeting as originally notified.
12. When a quorum is present at any meeting, the vote of
3
<PAGE>
the holders of a majority of the stock having voting power present, in person
or represented by proxy, shall decide any question brought before such
meeting, unless the question is one upon which by express provision of the
statute or of the Certificate of Incorporation or of these bylaws a different
vote is required, in which case such express provision shall govern and
control the decision of such question.
13. At any meeting of the stockholders, every stockholder having the
right to vote shall be entitled to vote in person, or by proxy appointed by an
instrument in writing subscribed by such stockholder and bearing a date not more
than three months prior to said meeting, unless said instrument provides for a
longer period. Each stockholder shall have one (1) vote for each share of stock
having voting power, registered in his name on the books of the corporation, and
except where the transfer books of the corporation shall have been closed, or a
date shall have been fixed as a record date for the determination of its
stockholders entitled to vote, no share of stock shall be voted on at any
election of Directors which shall have been transferred on the books of the
corporation within twenty days next preceding such election of Directors.
14. Unless otherwise provided in the Corporation's Certificate of
Incorporation, any action required to be taken at any annual or special meeting
of stockholders of the Corporation or any action which may be taken at any
annual or special meeting of stockholders, may be taken without a meeting,
without prior notice
4
<PAGE>
and without a vote, if a consent in writing, setting forth the action so
taken, shall be signed by the holders of outstanding stock having in the
aggregate not less than the minimum number of votes that would be necessary
to authorize or take such action at a meeting at which all shares entitled to
vote thereon were present and voted. Prompt notice of the taking of
corporate action without a meeting by less than unanimous written consent
shall be given to those stockholders who have not consented in writing.
DIRECTORS
15. The business and affairs of the Corporation shall be managed by
or under the direction of the Board of Directors. The number of Directors which
shall constitute the whole Board shall be three (3). The Directors shall be
elected at the Annual Meeting or at any special meeting of the stockholders
called for such purpose, and each Director shall be elected to serve until his
successor shall be elected and shall qualify. Directors need not be
stockholders. The stockholders may, at any special meeting called for such
purpose, remove any Director or Directors, with or without specific cause, each
such vacancy to be filled by the person receiving the greatest number of votes
cast by the stockholders present and entitled to vote thereat. Any vacancy
caused by such removal and not filled by the stockholders at the meeting at
which such removal shall have been voted, may be filled by a majority vote of
the Directors remaining in office.
16. Bylaw 15 fixes three (3) as being the number of Directors that
shall constitute the whole Board, and the first
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Board shall so consist of three (3) Directors. After the organizational or
first meeting of the Board, the number of Directors which shall constitute
the whole Board shall not be less than three (3) and may be increased to
seven (7) as shall be determined by the stockholders at the annual meeting or
any special meeting.
17. All meetings of the Board of Directors shall be held at such
place, within or without the State of Delaware, as the Board may decide from
time to time.
18. Any vacancy in the office of any Director created by reason of an
increase in the number of Directors shall be filled by election at an annual
meeting or at a special meeting of stockholders entitled to vote called for that
purpose. If the office of any Director or Directors becomes vacant for any
other reason, a majority of the remaining Directors, though less than a quorum,
shall choose a successor or successors unless the vacancy or vacancies shall
have been filled by the Stockholders in the manner provided in paragraph 15
hereof. Such Directors selected shall hold office for the unexpired term in
respect to which such vacancy occurred or until the next election of Directors.
COMMITTEES OF DIRECTORS
19. The Board of Directors may, by resolution or resolutions passed
by a majority of the whole Board, designate one or more committees, each
committee to consist of two (2) or more of the Directors of the corporation,
which, to the extent provided in said resolution or resolutions, shall have and
may exercise the
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powers of the Board of Directors in the management of the business and
affairs of the corporation, and may have power to authorize the seal of the
corporation to be affixed to all papers which may require it but no such
committee shall have the power or authority to amend the Corporation's
Certificate of Incorporation, to adopt an agreement of merger or
consolidation, to recommend to the stockholders the sale, lease or exchange
of all or substantially all of the Corporation's property and assets or to
recommend to the stockholders a dissolution of the Corporation or a
revocation of a dissolution or to amend the By-Laws of the Corporation; and
unless a resolution of the Board of Directors or the Corporation's
Certificate of Incorporation expressly so provides, no such committee shall
have the power or authority to declare a dividend or to authorize the
issuance of common or preferred stock. Such committee or committees shall
have such name or names as may be determined from time to time by resolution
adopted by the Board of Directors.
20. The committees shall keep regular minutes oL their proceedings
and report the same to the Board when required.
COMPENSATION OF DIRECTORS
21. Directors, as such, shall not receive any stated salary for their
services, but, by resolution of the Board, a fixed sum and expenses of
attendance, if any, may be Allowed for attendance at each regular or special
meeting of the Board; provided, that nothing herein contained shall be construed
to preclude any Director from serving the corporation in any other
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<PAGE>
capacity and receiving compensation therefor.
22. Members of special or standing committees may be allowed like
compensation for attending committee meetings.
MEETINGS OF THE BOARD
23. The first meeting of each newly elected Board shall be held at
such time and place either within or without the State of incorporation, as
shall be fixed by the vote of the stockholders at the annual meeting, and no
notice of such meeting shall be necessary to the newly elected Directors in
order legally to constitute the meeting, provided a quorum shall be present; or
they may meet at such place and time as shall be fixed by the consent, in
writing, of all the Directors.
24. Regular meetings of the Board may be held without notice at such
time and place, either within or without the State of Delaware, as shall, from
time to time, be determined by the Board.
25. Special meetings of the Board may be called by the President on
one (1) day's notice to each Director, either personally or by mail, or by
telegram; special meetings shall be called by the President or Secretary in like
manner and on like notice on the written request of two (2) Directors.
26. At all meetings of the Board, a majority of the entire Board of
Directors shall constitute a quorum for the transaction of business and the
action of a majority of the Directors present at any meeting at which a quorum
is present shall be the action of the Board of Directors unless the concurrence
of
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a greater proportion is required for such action by the statute, the charter
or by these bylaws. If a quorum shall not be present at any meeting of
Directors, the Directors present thereat may, by a majority vote, adjourn the
meeting from time to time, without notice other than announcement at the
meeting, until a quorum shall be present.
27. Any action required or permitted to be taken at a meeting of the
Board of Directors, or of any committee thereof, may be taken without a meeting
if all members of the Board or committee, as the case may be, consent thereto in
writing, and the writing or writings are filed with the minutes of proceedings
of the Board or committee. Members of the Board of Directors may participate in
a meeting by means of a conference telephone or similar communications equipment
if all persons participating in the meeting can hear and speak to each other at
the same time. Participation in a meeting by these means constitutes presence
in person at a meeting.
NOTICES
28. Whenever under the provisions of the statutes or of the
Certificate of Incorporation or of these bylaws, notice is required to be given
to any Director or stockholder, it shall not be construed to mean personal
notice, but such notice may be given in writing, by mail, by depositing the same
in a post office or letter box, in a post-paid sealed wrapper, addressed to such
Director or stockholder at such address as appears on the books of the
corporation; and such notice shall be deemed to be given at
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the time when the same shall be thus mailed.
29. Whenever any notice is required to be given under the provisions
of the statutes or of the Certificate of Incorporation, or of these bylaws, a
waiver thereof, in writing, signed by the person or persons entitled to said
notice, whether before or after the time stated therein, shall be deemed
equivalent thereto.
OFFICERS
30. The officers of the corporation shall be chosen by the Directors
and shall be a president, a vice president, a secretary and a treasurer. The
Board of Directors may also choose additional vice presidents, and one (1) or
more assistant secretaries and assistant treasurers. Two (2) or more offices
may be held by the same person, except that the offices of president and
secretary may not be held by the same person.
31. The Board of Directors at its first meeting after each annual
meeting of stockholders shall choose a president from its members, and one or
more vice presidents, a secretary and a treasurer, none of whom need be a member
of the Board.
32. The Board may appoint such other officers and agents as it shall
deem necessary, who shall hold their offices for such terms and shall exercise
such powers and perform such duties as shall be determined from time to time by
the Board.
33. The officers of the corporation shall hold office until their
successors are chosen and qualify in their stead. Any officer elected or
appointed by the Board of Directors may be
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<PAGE>
removed at any time by the affirmative vote of a majority of the whole Board
of Directors. If the office of any officer becomes vacant for any reason,
the vacancy shall be filled by the Board of Directors.
THE PRESIDENT
34. The President shall be the chief executive officer of the
corporation; he shall preside at all meetings of the stockholders and directors,
shall be an ex officio member of all standing committees, shall have general and
active management of the business of the corporation, and shall see that all
orders and resolutions of the Board are carried into effect.
35. He shall execute bonds, mortgages and other contracts requiring a
seal, under the seal of the corporation, except where required or permitted by
law to be otherwise signed and executed and except where the signing and
execution thereof shall be expressly delegated by the Board of Directors to some
other officer or agent of the corporation.
VICE PRESIDENTS
36. The Vice Presidents, in the order of their seniority shall, in
the absence or disability of the President, perform such other duties as the
Board of Directors shall prescribe. The Board may prescribe certain Vice
Presidents to be designated as Senior Vice Presidents and may also designate one
Vice President to be known as an Executive Vice President. The Executive Vice
President shall, in the absence or disability of the President, perform the
duties and exercise the powers of the President and then the
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remaining Vice Presidents in order of their seniority, shall in the absence
or disability of the President and Executive Vice President perform the
duties and exercise the powers of the President and each Vice President shall
perform such other duties as the Board of Directors shall prescribe.
THE SECRETARY AND ASSISTANT SECRETARIES
37. The Secretary shall attend all sessions of the Board and all
meetings of the stockholders and record all votes and the minutes of all
proceedings in a book to be kept for that purpose and shall perform like duties
Lor the standing committees when required. He shall give, or cause to be given,
notice of all meetings of the stockholders and special meetings of the Board of
Directors. He shall keep in safe custody the seal of the corporation and, when
authorized by the Board, affix the same to any instrument requiring it and, when
so affixed, it shall be attested by his signature or by the signature of the
Treasurer or an Assistant Secretary.
38. The Assistant Secretaries, in order of their seniority, shall, in
the absence or disability of the Secretary, perform the duties and exercise the
powers of the Secretary and shall perform such other duties as the Board of
Directors shall prescribe.
THE TREASURER AND ASSISTANT TREASURER
39. The Treasurer shall have the custody of the corporate funds and
securities and shall keep full and accurate accounts of receipts and
disbursements in books belonging to the
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corporation and shall deposit all moneys and other valuable effects in the
name and to the credit of the corporation in such depositories as may be
designated by the Board of Directors.
40. He shall disburse the funds of the corporation as may be ordered
by the Board, taking proper vouchers for such disbursements, and shall render to
the President and Directors, at the regular meetings of the Board, or whenever
they may require it, an account of all his transactions as Treasurer and of the
financial condition of the corporation.
41. If required by the Board of Directors, he shall give the
corporation a bond (which shall be renewed every six (6) years) in such sum and
with such surety or sureties as shall be satisfactory to the Board for the
faithful performance of the duties of his office and for the resignation,
retirement or removal from office, of all books, papers, vouchers, money and
other property of whatever kind in his possession or under his control belonging
to the corporation.
42. The Assistant Treasurers in the order of their seniority shall,
in the absence or disability of the Treasurer, perform the duties and exercise
the powers of the Treasurer, and shall perform such other duties as the Board of
Directors shall prescribe.
CERTIFICATES OF STOCK
43. The certificates of stock of the corporation shall be numbered
and shall be entered in the books of the corporation as they are issued. They
shall exhibit the holder's name and number
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of shares and shall be signed by the President or a Vice President and the
Treasurer or an Assistant Treasurer or the Secretary or an Assistant
Secretary. If any stock certificate is signed (1) by a transfer agent or an
assistant transfer agent, or (2) by a transfer clerk acting on behalf of the
corporation and a registrar, the signature of any such officer may be a
facsimile. The corporation shall not issue fractional shares of stock or
script evidencing same.
TRANSFERS OF STOCK
44. Upon surrender to the corporation or the transfer agent of the
corporation of a certificate for shares fully endorsed or accompanied by proper
evidence of succession, assignment or authority to transfer, it shall be the
duty of the corporation to issue a new certificate to the person entitled
thereto, cancel the old certificate and record the transaction upon its books.
CLOSING OF TRANSFER BOOKS
45. The Board of Directors shall have power to close the stock
transfer books of the corporation for a period not exceeding sixty nor less than
ten days preceding the date of any meeting of stockholders or the date for
payment of any dividend or the date for the allotment of rights or the date when
any change or conversion or exchange of capital stock shall go into effect or
for a period of not exceeding 60 days in connection with obtaining the consent
of stockholders for any other purpose; provided, however, that in lieu of
closing the stock transfer books as aforesaid, the Board of Directors may fix in
advance a date, not more than sixty
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<PAGE>
nor less than ten days preceding the date of any meeting of stockholders, or
the date for the payment of any dividend, or the date for the allotment of
rights, or the date when any change or conversion or exchange of capital
stock shall go into effect, or a date in connection with obtaining such
consent, as a record date for the determination of the stockholders entitled
to notice of, and to vote at, any such meeting, and any adjournment thereof,
or entitled to receive payment of any such dividend, or to any such allotment
of rights, or to exercise the rights in respect of any such change,
conversion or exchange of capital stock, or to give such consent, and in such
case such stockholders and only such stockholders as shall be entitled to
such notice of, and to vote at, such meeting and any adjournment thereof, or
to receive payment of such dividend, or to receive such allotment of rights,
or to exercise such rights, or to give such consent, as the case may be,
notwithstanding any transfer of any stock on the books of the corporation
after any such record date fixed as aforesaid.
REGISTERED STOCKHOLDERS
46. The corporation shall be entitled to treat the holder of record
of any share or shares of stock as the holder in fact thereof; and, accordingly,
shall not be bound to recognize any equitable or other claim to or interest in
such share or shares on the part of any other person, whether or not it shall
have express or other notice thereof, except as otherwise provided by the laws
of the District of Columbia.
LOST CERTIFICATE
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47. The Board of Directors may direct a new certificate or
certificates to be issued in place of any certificate or certificates
theretofore issued by the corporation alleged to have been lost or destroyed,
upon the making of an affidavit of that fact by the person claiming the
certificate of stock to be lost or destroyed. When authorizing such issue of a
new certificate or certificates, the Board of Directors may, in its discretion
and as a condition precedent to the issuance thereof, require the owner of such
lost or destroyed certificate or certificates, or his legal representative, to
advertise the same in such manner as it shall require and/or give the
corporation a bond in such sum as it may direct as indemnity against any claim
that may be made against the corporation with respect to the certificate alleged
to have been lost or destroyed.
DIVIDENDS
48. Dividends upon the capital stock of the corporation, subject to
the provisions of the Certificate of Incorporation, if any, may be declared by
the Board of Directors at any regular or special meeting, pursuant to law.
Dividends may be paid in cash, in property, or in shares of the capital stock,
subject to the provisions of the Certificate of Incorporation.
49. Before payment of any dividend, there may be set aside out of any
funds of the corporation available for dividends such sum or sums as the
Directors, from time to time, in their absolute discretion, think proper as a
reserve fund to meet contingencies, or for equalizing dividends, or for
repairing or
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<PAGE>
maintaining any property of the corporation, or for such other purpose as the
Directors shall think conducive to the interest of the corporation, and the
Directors may modify or abolish any such reserve in the manner in which it
was created.
CHECKS
50. All checks or demands for money and notes of the corporation
shall be signed by such officer or officers or such other person or persons as
the Board of Directors may, from time to time, designate.
INDEMNIFICATION OF OFFICERS AND DIRECTORS
51. The corporation shall indemnify from all liabilities, civil or
criminal, incurred in relation to his duties, including the reasonable cost of
defense, its officers or directors or former officers or directors or any person
who may have served at its request as a director or officer of another
corporation in which it owns shares of capital stock or of which it is a
creditor, such indemnification to be the full extent permitted by the Delaware
General Corporation Law (including, without limitation, Section 145 thereof).
52. Any payments, made to an officer of the corporation such as a
salary, commission, bonus, interest, or rent, or entertainment expense incurred
by him which shall be disallowed in whole or in part as a deductible expense by
the Internal Revenue Service, shall be reimbursed by such officer to the
corporation to the full extent of such disallowance. It shall be the duty of
the directors, as a Board, to enforce payment of each such amount
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<PAGE>
disallowed. In lieu of payment by the officer, subject to the determination
of the directors, proportionate amounts may be withheld from his future
compensation payments until the amount owed to the corporation has been
removed.
AMENDMENTS
53. The By-Laws of the Corporation may be altered, amended, changed,
added to or repealed by the Board of Directors without the assent or vote of the
stockholders.
Certified True Copy
/s/ Marvin S. Haber
------------------------------------
Marvin S. Haber, Secretary
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EXHIBIT 3.3
CERTIFICATE OF INCORPORATION
OF
FDCT CORP.
FIRST: The name of the corporation (hereinafter sometimes referred
to as the "Corporation") is:
FDCT Corp.
SECOND: The address of the registered office of the Corporation in
the State of Delaware is 1013 Centre Road, New Castle County, Wilmington,
Delaware 19805-1297. The name of its registered agent at such address is The
Prentice-Hall Corporation System, Inc.
THIRD: The purpose of the Corporation is to engage in any lawful
act or activity for which corporations may be organized under the General
Corporation Law of the State of Delaware.
FOURTH: The aggregate number of all classes of shares which the
Corporation shall have authority to issue is one thousand (1,000) shares of
common stock with a par value of $.01 per share.
No holder of shares of the Corporation of any class, now or
hereafter authorized, shall have any preferential or preemptive right to
subscribe for, purchase or receive any share of the Corporation of any class,
now or hereafter authorized, or any options of warrants for such shares, or
any rights to subscribe to or purchase such shares, or any securities
convertible into or exchangeable for such shares, which may at any time or
from time to time be issued, sold or offered for sale by the Corporation;
provided, however, that in connection with the issuance or sale of any such
shares or securities, the Board of Directors of the Corporation may, in its
sole discretion, offer such shares or securities, or any part thereof, for
purchase or subscription by the holders of shares of the Corporation, except
as may otherwise be provided by this Certificate of Incorporation as from
time to time amended.
<PAGE>
At all times, each holder of common stock of the Corporation shall be
entitled to one vote for each share of common stock held by such stockholder
standing in the name of such stockholder on the books of the Corporation.
FIFTH: The name and address of the Incorporator is as follows:
Sylvia L. Adams
LATHAM & WATKINS
1001 Pennsylvania Avenue, Suite 1300
Washington, D.C. 20004
SIXTH: In furtherance and not in limitation of the power conferred
by statute, the Board of Directors is expressly authorized to make, alter or
repeal the Bylaws of the Corporation.
SEVENTH: No director of the Corporation shall be liable to the
Corporation or its stockholders for monetary damages for the breach of
fiduciary duty as a director, except for liability (i) for any breach of the
director's duty of loyalty to the Corporation or its stockholders; (ii) for
acts or omissions not in good faith or which involved intentional misconduct
or a knowing violation of law, (iii) under Section 174 of the Delaware
General Corporation Law, or (iv) for any transaction from which the director
derived an improper personal benefit.
EIGHTH: Election of directors need not be by written ballot unless
the Bylaws of the Corporation shall so provide.
NINTH: The Corporation reserves the right to amend, alter, change
or repeal any provisions contained in this Certificate of Incorporation, in
the manner now or hereafter prescribed by the law of the State of Delaware.
All rights conferred upon stockholders herein are granted subject to this
reservation.
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I, THE UNDERSIGNED, being the sole incorporator hereinbefore named,
for the purpose of forming a corporation pursuant to the General Corporation
Law of the State of Delaware, do make this certificate, herein declaring and
certifying that this is my act and deed and the facts herein stated are true,
and accordingly have hereunto set my hand this 29th day of November, 1995.
/s/ Sylvia L. Adams
---------------------------------------
Sylvia L. Adams
Incorporator
3
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EXHIBIT 3.4
BY-LAWS
OF
FDCT CORP.
<PAGE>
TABLE OF CONTENTS
PAGE
ARTICLE I OFFICES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 1. Registered Office. . . . . . . . . . . . . . . . . . . . . 1
Section 2. Other Offices. . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE II MEETINGS OF STOCKHOLDERS. . . . . . . . . . . . . . . . . . . . . . 1
Section 1. Place of Meetings. . . . . . . . . . . . . . . . . . . . . 1
Section 2. Annual Meeting of Stockholders . . . . . . . . . . . . . . 1
Section 3. Quorum; Adjourned Meetings
and Notice Thereof. . . . . . . . . . . . . . . . . . . 1
Section 4. Voting . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Section 5. Proxies. . . . . . . . . . . . . . . . . . . . . . . . . . 2
Section 6. Special Meetings . . . . . . . . . . . . . . . . . . . . . 2
Section 7. Notice of Stockholder's Meetings . . . . . . . . . . . . . 3
Section 8. Maintenance and Inspection of
Stockholder List. . . . . . . . . . . . . . . . . . . . 3
Section 9. Stockholder Action by Written
Consent Without a Meeting . . . . . . . . . . . . . . . 4
ARTICLE III DIRECTORS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Section 1. The Number of Directors. . . . . . . . . . . . . . . . . . 4
Section 2. Vacancies. . . . . . . . . . . . . . . . . . . . . . . . . 4
Section 3. Powers . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Section 4. Place of Directors' Meetings . . . . . . . . . . . . . . . 5
Section 5. Regular Meetings . . . . . . . . . . . . . . . . . . . . . 5
Section 6. Special Meetings . . . . . . . . . . . . . . . . . . . . . 5
Section 7. Quorum . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Section 8. Action Without Meeting . . . . . . . . . . . . . . . . . . 6
Section 9. Telephonic Meetings. . . . . . . . . . . . . . . . . . . . 6
Section 10. Committees of Directors. . . . . . . . . . . . . . . . . . 7
Section 11. Minutes of Committee Meetings. . . . . . . . . . . . . . . 7
Section 12. Compensation of Directors. . . . . . . . . . . . . . . . . 7
Section 13. Indemnification. . . . . . . . . . . . . . . . . . . . . . 8
ARTICLE IV OFFICERS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Section 1. Officers . . . . . . . . . . . . . . . . . . . . . . . . . 8
Section 2. Election of Officers . . . . . . . . . . . . . . . . . . . 9
Section 3. Subordinate Officers . . . . . . . . . . . . . . . . . . . 9
Section 4. Compensation of Officers . . . . . . . . . . . . . . . . . 9
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Section 5. Term of Office; Removal and Vacancies. . . . . . . . . . . 9
Section 6. Chairman of the Board. . . . . . . . . . . . . . . . . . . 9
Section 7. President. . . . . . . . . . . . . . . . . . . . . . . . .10
Section 8. Vice Presidents. . . . . . . . . . . . . . . . . . . . . .10
Section 9. Secretary. . . . . . . . . . . . . . . . . . . . . . . . .10
Section 10. Assistant Secretaries. . . . . . . . . . . . . . . . . . .11
Section 11. Treasurer. . . . . . . . . . . . . . . . . . . . . . . . .11
Section 12. Assistant Treasurer. . . . . . . . . . . . . . . . . . . .11
ARTICLE V CERTIFICATES OF STOCK. . . . . . . . . . . . . . . . . . . . . . . .12
Section 1. Certificates . . . . . . . . . . . . . . . . . . . . . . .12
Section 2. Signatures on Certificates . . . . . . . . . . . . . . . .12
Section 3. Statement of Stock Rights, Preferences, Privileges . . . .12
Section 4. Lost Certificates. . . . . . . . . . . . . . . . . . . . .13
Section 5. Transfers of Stock . . . . . . . . . . . . . . . . . . . .13
Section 6. Fixing Record Date . . . . . . . . . . . . . . . . . . . .13
Section 7. Registered Stockholders. . . . . . . . . . . . . . . . . .14
ARTICLE VI GENERAL PROVISIONS. . . . . . . . . . . . . . . . . . . . . . . . .14
Section 1. Dividends. . . . . . . . . . . . . . . . . . . . . . . . .14
Section 2. Payment of Dividends' Directors Duties . . . . . . . . . .14
Section 3. Checks . . . . . . . . . . . . . . . . . . . . . . . . . .14
Section 4. Fiscal Year. . . . . . . . . . . . . . . . . . . . . . . .15
Section 5. Corporate Seal . . . . . . . . . . . . . . . . . . . . . .15
Section 6. Manner of Giving Notice. . . . . . . . . . . . . . . . . .16
Section 7. Waiver of Notice . . . . . . . . . . . . . . . . . . . . .16
Section 8. Annual Statement . . . . . . . . . . . . . . . . . . . . .16
ARTICLE VII AMENDMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . .16
Section 1. Amendment by Directors or Stockholders . . . . . . . . . .16
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ARTICLE I
OFFICES
Section 1. The registered office shall be in the City of Wilmington,
County of New Castle, State of Delaware.
Section 2. The Corporation may also have offices at such other places
both within and without the State of Delaware as the Board of Directors may
from time to time determine or the business of the Corporation may require.
ARTICLE II
MEETINGS OF STOCKHOLDERS
Section 1. Meetings of stockholders shall be held at any place within or
outside the State of Delaware designated by the Board of Directors. In the
absence of any such designation, stockholders' meetings shall be held at the
principal executive office of the Corporation.
Section 2. The annual meeting of stockholders shall be held each year on
a date and a time designated by the Board of Directors. At each annual
meeting directors shall be elected and any other proper business may be
transacted.
Section 3. A majority of the stock issued and outstanding and entitled
to vote at any meeting of stockholders, the holders of which are present in
person or represented by proxy, shall constitute a quorum for the transaction
of business except as otherwise provided by law, by the Certificate of
Incorporation, or by these By-Laws. A quorum, once established, shall not be
broken by the withdrawal of enough votes to leave less than a quorum and the
votes present may continue to transact business until adjournment. If,
however, such quorum shall not be
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present or represented at any meeting of the stockholders, a majority of the
voting stock represented in person or by proxy may adjourn the meeting from
time to time, without notice other than announcement at the meeting, until a
quorum shall be present or represented. At such adjourned meeting at which a
quorum shall be present or represented, any business may be transacted which
might have been transacted at the meeting as originally notified. If the
adjournment is for more than thirty days, or if after the adjournment a new
record date is fixed for the adjourned meeting, a notice of the adjourned
meeting shall be given to each stockholder of record entitled to vote thereat.
Section 4. When a quorum is present at any meeting, the vote of the
holders of a majority of the stock having voting power present in person or
represented by proxy shall decide any question brought before such meeting,
unless the question is one upon which by express provision of the statutes,
or the Certificate of Incorporation, or these By-Laws, a different vote is
required in which case such express provision shall govern and control the
decision of such question.
Section 5. At each meeting of the stockholders, each stockholder having
the-right to vote may vote in person or may authorize another person or
persons to act for him by proxy appointed by an instrument in writing
subscribed by such stockholder and bearing a date not more than three years
prior to said meeting, unless said instrument provides for a longer period.
All proxies must be filed with the Secretary of the Corporation at the
beginning of each meeting in order to be counted in any vote at the meeting.
Each stockholder shall have one vote for each share of stock having voting
power, registered in his name on the books of the Corporation on the record
date set by the Board of Directors as provided in Article V, Section
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6 hereof. All elections shall be had and all questions decided by a plurality
vote.
Section 6. Special meetings of the stockholders, for any purpose, or
purposes, unless otherwise prescribed by statute or by the Certificate of
Incorporation, may be called by the Chairman (or the President, if no Chairman
has been designated) and shall be called by the Chairman (or the President, if
no Chairman has been designated) or the Secretary at the request in writing of a
majority of the Board of Directors, or at the request in writing of stockholders
owning a majority in amount of the entire capital stock of the Corporation,
issued and outstanding, and entitled to vote. Such request shall state the
purpose or purposes of the proposed meeting. Business transacted at any special
meeting of stockholders shall be limited to the purposes stated in the notice.
Section 7. Whenever stockholders are required or permitted to take any
action at a meeting, a written notice of the meeting shall be given which notice
shall state the place, date and hour of the meeting, and, in the case of a
special meeting, the purpose or purposes for which the meeting is called. The
written notice of any meeting shall be given to each stockholder entitled to
vote at such meeting not less than ten nor more than sixty days before the date
of the meeting. If mailed, notice is given when deposited in the United States
mail, postage prepaid, directed to the stockholder at his address as it appears
on the records of the Corporation.
Section 8. The officer who has charge of the stock ledger of the
Corporation shall prepare and make, at least ten days before every meeting of
stockholders, a complete list of the stockholders entitled to vote at the
meeting, arranged in alphabetical order, and showing the address of each
stockholder and the number of shares registered in the name of each
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stockholder. Such list shall be open to the examination of any stockholder,
for any purpose germane to the meeting, during ordinary business hours, for a
period of at least ten days prior to the meeting, either at a place within
the city where the meeting is to be held, which place shall be specified in
the notice of the meeting, or, if not so specified, at the place where the
meeting is to be held. The list shall also be produced and kept at the time
and place of the meeting during the whole time thereof, and may be inspected
by any stockholder who is present.
Section 9. Unless otherwise provided in the Certificate of Incorporation,
any action required to be taken at any annual or special meeting of stockholders
of the Corporation, or any action which may be taken at any annual or special
meeting of such stockholders, may be taken without a meeting, without prior
notice and without a vote, if a consent in writing, setting forth the action so
taken, shall be signed by the holders of outstanding stock having not less than
the minimum number of votes that would be necessary to authorize or take such
action at a meeting at which all shares entitled to vote thereon were present
and voted. Prompt notice of the taking of the corporate action without a meeting
by less than unanimous written consent shall be given to those stockholders who
have not consented in writing.
ARTICLE III
DIRECTORS
Section 1. The number of directors which shall constitute the whole Board
shall be not less than three (3) and not more than nine (9). The exact number of
directors shall be determined by resolution of the Board, and the initial number
of directors shall be five (5). The directors need not be stockholders. The
directors shall be elected at the annual meeting of the
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stockholders, except as provided in Section 2 of this Article, and each
director elected shall hold office until his successor is elected and
qualified; provided, however, that unless otherwise restricted by the
Certificate of Incorporation or by law, any director or the entire Board of
Directors may be removed, either with or without cause, from the Board of
Directors at any meeting of stockholders by a majority of the stock
represented and entitled to vote thereat.
Section 2. Vacancies on the Board of Directors by reason of death,
resignation, retirement, disqualification, removal from office, or otherwise,
and newly created directorships resulting from any increase in the authorized
number of directors may be filled by a majority of the directors then in office,
although less than a quorum, or by a sole remaining director. The directors so
chosen shall hold office until the next annual election of directors and until
their successors are duly elected and shall qualify, unless sooner replaced by a
vote of the shareholders. If there are no directors in office, then an election
of directors may be held in the manner provided by statute. If, at the time of
filling any vacancy or any newly created directorship, the directors then in
office shall constitute less than a majority of the whole Board (as constituted
immediately prior to any such increase), the Court of Chancery may, upon
application of any stockholder or stockholders holding at least ten percent of
the total number of the shares at the time outstanding having the right to vote
for such directors, summarily order an election to be held to fill any such
vacancies or newly created directorships, or to replace the directors chosen by
the directors then in office.
Section 3. The property and business of the Corporation shall be managed by
or under the direction of its Board of Directors. In addition to the powers and
authorities by these By-Laws expressly conferred upon them, the Board may
exercise all such powers of the
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Corporation and do all such lawful acts and things as are not by statute or
by the Certificate of Incorporation or by these By-Laws directed or required
to be exercised or done by the stockholders.
Section 4. The directors may hold their meetings and have one or more
offices, and keep the books of the Corporation outside of the State of Delaware.
Section 5. Regular meetings of the Board of Directors may be held without
notice at such time and place as shall from time to time be determined by the
Board.
Section 6. Special meetings of the Board of Directors may be called by the
Chairman (or the President, if no Chairman has been designated) on forty-eight
hours' notice to each director, either personally or by mail or by telegram;
special meetings shall be called by the Chairman (or the President, if no
Chairman has been designated) or the Secretary in like manner and on like notice
on the written request of three directors.
Section 7. At all meetings of the Board of Directors a majority of the
authorized number of directors shall be necessary and sufficient to constitute a
quorum for the transaction of business, and the vote of a majority of the
directors present at any meeting at which there is a quorum shall be the act of
the Board of Directors, except as may be otherwise specifically provided by
statute, by the Certificate of Incorporation or by these By-Laws. If a quorum
shall not be present at any meeting of the Board of Directors, the directors
present thereat may adjourn the meeting from time to time, without notice other
than announcement at the meeting, until a quorum shall be present. If only one
director is authorized, such sole director shall constitute a quorum. At any
meeting, a director shall have the right to be accompanied by counsel provided
that such counsel shall agree to any confidentiality restrictions reasonably
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imposed by the Corporation.
Section 8. Unless otherwise restricted by the Certificate of Incorporation
or these By-Laws, any action required or permitted to be taken at any meeting of
the Board of Directors or of any committee thereof may be taken without a
meeting, if all members of the Board or committee, as the case may be, consent
thereto in writing, and the writing or writings are filed with the minutes of
proceedings of the Board or committee.
Section 9. Unless otherwise restricted by the Certificate of Incorporation
or these By-Laws, members of the Board of Directors, or any committee designated
by the Board of Directors, may participate in a meeting of the Board of
Directors, or any committee, by means of conference telephone or similar
communications equipment by means of which all persons participating in the
meeting can hear each other, and such participation in a meeting shall
constitute presence in person at such meeting.
Section 10. The Board of Directors may, by resolution passed by a majority
of the whole Board, designate one or more committees, each such committee to
consist of one or more of the directors of the Corporation. The Board may
designate one or more directors as alternate members of any committee, who may
replace any absent or disqualified member at any meeting of the committee. In
the absence or disqualification of a member of a committee, the member or
members thereof present at any meeting and not disqualified from voting, whether
or not he or they constitute a quorum, may unanimously appoint another member of
the Board of Directors to act at the meeting in the place of any such absent or
disqualified member. Any such committee, to the extent provided in the
resolution of the Board of Directors, shall have and may exercise all the powers
and authority of the Board of Directors
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in the management of the business and affairs of the Corporation, and may
authorize the seal of the Corporation to be affixed to all papers which may
require it; but no such committee shall have the power or authority in
reference to amending the Certificate of Incorporation, adopting an agreement
of merger or consolidation, recommending to the stockholders the sale, lease
or exchange of all or substantially all of the Corporation's property and
assets, recommending to the stockholders a dissolution of the Corporation or
a revocation of a dissolution, or amending the By-Laws of the Corporation;
and, unless the resolution or the Certificate of Incorporation expressly so
provide, no such committee shall have the power or authority to declare a
dividend or to authorize the issuance of stock.
Section 11. Each committee shall keep regular minutes of its meetings and
report the same to the Board of Directors when required.
Section 12. Unless otherwise restricted by the Certificate of Incorporation
or these By-Laws, the Board of Directors shall have the authority to fix the
compensation of directors. The directors may be paid their expenses, if any, of
attendance at each meeting of the Board of Directors and may be paid a fixed sum
for attendance at each meeting of the Board of Directors or a stated salary as
director. No such payment shall preclude any director from serving the
Corporation in any other capacity and receiving compensation therefor. Members
of special or standing committees may be allowed like compensation for attending
committee meetings.
Section 13. The Corporation shall indemnify every person who is or was a
party or is or was threatened to be made a party to any action, suit, or
proceeding, whether civil, criminal, administrative or investigative, by reason
of the fact that he is or was a director or officer of
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the Corporation or, while a director or officer or employee of the
Corporation, is or was serving at the request of the Corporation as a
director, officer, employee, agent or trustee of another corporation,
partnership, joint venture, trust, employee benefit plan or other enterprise,
against expenses (including counsel fees), judgments, fines and amounts paid
in settlement actually and reasonably incurred by him in connection with such
action, suit or proceeding, to the full extent permitted by applicable law.
ARTICLE IV
OFFICERS
Section 1. The officers of this corporation shall be chosen by the Board of
Directors and shall include a President, a Secretary, and a Treasurer. The
Corporation may also have, at the discretion of the Board of Directors, such
other officers as are desired, including a Chairman, one or more Vice Chairmen,
one or more Vice Presidents, one or more Assistant Secretaries and one or more
Assistant Treasurers, and such other officers as may be appointed in accordance
with the provisions of Section 3 hereof. In the event there are two or more Vice
Presidents, then one or more may be designated as Executive Vice President,
Senior Vice President, or other similar or dissimilar title. At the time of the
election of officers, the directors may by resolution determine the order of
their rank. Any number of offices may be held by the same person unless the
Certificate of Incorporation or these By-Laws otherwise provide.
Section 2. The Board of Directors, at its first meeting after each annual
meeting of stockholders, shall choose the officers of the Corporation.
Section 3. The Board of Directors may appoint such other officers and
agents as it shall
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deem necessary who shall hold their offices for such terms and shall exercise
such powers and perform such duties as shall be determined from time to time
by the Board.
Section 4. The salaries of all officers and agents of the Corporation shall
be fixed by the Board of Directors.
Section 5. The officers of the Corporation shall hold office until their
successors are chosen and qualify in their stead. Any officer elected or
appointed by the Board of Directors may be removed at any time by the
affirmative vote of a majority of the Board of Directors. If the office of any
officer or officers becomes vacant for any reason, the vacancy shall be filled
by the Board of Directors.
Section 6. CHAIRMAN. The Chairman, if such an officer be elected, shall, if
present, preside at all meetings of the Board of Directors and exercise and
perform such other powers and duties as may be from time to time assigned to him
by the Board of Directors or prescribed by these By-Laws. If there is a
Chairman, he shall, in addition, be the Chief Executive Officer of the
Corporation and shall have the powers and duties thereof. He shall be an
ex-officio member of all committees and shall have the general powers and duties
of management usually vested in the office of Chief Executive Officer of
corporations, and shall have such other powers and duties as may be prescribed
by the Board of Directors or these By-Laws.
Section 7. PRESIDENT. Subject to such supervisory powers, if any, as may be
given by the Board of Directors to the Chairman, if there be such an officer,
the President shall, subject to the control of the Board of Directors, have
general supervision, direction and control of the business and officers of the
Corporation. In the absence of the Chairman, or if there be none
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he shall preside at all meetings of the stockholders and at all meetings of
the Board of Directors.
Section 8. VICE PRESIDENTS. In the absence or disability of the President,
the Vice Presidents in order of their rank as fixed by the Board of Directors,
or if not ranked, the Vice President designated by the Board of Directors, shall
perform all the duties of the President, and when so acting shall have all the
powers of and be subject to all the restrictions upon the President. The Vice
Presidents shall have such other duties as from time to time may be prescribed
for them, respectively, by the Board of Directors.
Section 9. SECRETARY. The Secretary shall attend all sessions of the Board
of Directors and all meetings of the stockholders and record all votes and the
minutes of all proceedings in a book to be kept for that purpose; and shall
perform like duties for the standing committees when required by the Board of
Directors. He shall give, or cause to be given, notice of all meetings of the
stockholders and of the Board of Directors, and shall perform such other duties
as may be prescribed by the Board of Directors or these By-Laws.
He shall keep in safe custody the seal of the Corporation, and when
authorized by the Board, affix the same to any instrument requiring it, and when
so affixed it shall be attested by his signature or by the signature of an
Assistant Secretary. The Board of Directors may give general authority to any
other officer to affix the seal of the Corporation and to attest the affixing by
his signature.
Section 10. ASSISTANT SECRETARY. The Assistant Secretary, or if there be
more than one, the Assistant Secretaries in the order determined by the Board of
Directors, or if there be no such determination, the Assistant Secretary
designated by the Board of Directors, shall, in the
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absence or disability of the Secretary, perform the duties and exercise the
powers of the Secretary and shall perform such other duties and have such
other powers as the Board of Directors may from time to time prescribe.
Section 11. TREASURER. The Treasurer shall have the custody of the
corporate funds and securities and shall keep full and accurate accounts of
receipts and disbursements in books belonging to the Corporation and shall
deposit all moneys, and other valuable effects in the name and to the credit of
the Corporation, in such depositories as may be designated by the Board of
Directors. He shall disburse the funds of the Corporation as may be ordered by
the Board of Directors, taking proper vouchers for such disbursements, and shall
render to the Board of Directors, at its regular meetings, or when the Board of
Directors so requires, an account of all his transactions as Treasurer and of
the financial condition of the Corporation. If required by the Board of
Directors, he shall give the Corporation a bond, in such sum and with such
surety or sureties as shall be satisfactory to the Board of Directors, for the
faithful performance of the duties of his office and for the restoration to the
Corporation, in case of his death, resignation, retirement or removal from
office, of all books, papers, vouchers, money and other property of whatever
kind in his possession or under his control belonging to the Corporation.
Section 12. ASSISTANT TREASURER. The Assistant Treasurer, or if there shall
be more than one, the Assistant Treasurers in the order determined by the Board
of Directors, or if there be no such determination, the Assistant Treasurer
designated by the Board of Directors, shall, in the absence or disability of the
Treasurer, perform the duties and exercise the powers of the Treasurer and shall
perform such other duties and have such other powers as the Board of
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Directors may from time to time prescribe.
ARTICLE V
CERTIFICATES OF STOCK
Section 1. Every holder of stock of the Corporation shall be entitled to
have a certificate signed by, or in the name of the Corporation by, the
Chairman or a Vice Chairman, or the President or a Vice President, and by the
Secretary or an Assistant Secretary or the Treasurer or an Assistant
Treasurer of the Corporation, certifying the number of shares represented by
the certificate owned by such stockholder in the Corporation.
Section 2. Any or all of the signatures on the certificate may be a
facsimile. In case any officer, transfer agent, or registrar who has signed or
whose facsimile signature has been placed upon a certificate shall have ceased
to be such officer, transfer agent, or registrar before such certificate is
issued, it may be issued by the Corporation with the same effect as if he were
such officer, transfer agent, or registrar at the date of issue.
Section 3. If the Corporation shall be authorized to issue more than one
class of stock or more than one series of any class, the powers, designations,
preferences and relative, participating, optional or other special rights of
each class of stock or series thereof and the qualification, limitations or
restrictions of such preferences and/or rights shall be set forth in full or
summarized on the face or back of the certificate which the Corporation shall
issue to represent such class or series of stock, provided that, except as
otherwise provided in Section 202 of the General Corporation Law of Delaware, in
lieu of the foregoing requirements, there may be set forth on the face or back
of the certificate which the Corporation shall issue to represent such class or
series of stock, a statement that the Corporation will furnish without
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charge to each stockholder who so requests the powers, designations,
preferences and relative, participating, optional or other special rights of
each class of stock or series thereof and the qualifications, limitations or
restrictions of such preferences and/or rights.
Section 4. The Board of Directors may direct a new certificate or
certificates to be issued in place of any certificate or certificates
theretofore issued by the Corporation alleged to have been lost, stolen or
destroyed, upon the making of an affidavit of that fact by the person claiming
the certificate of stock to be lost, stolen or destroyed. When authorizing such
issue of a new certificate or certificates, the Board of Directors may, in its
discretion and as a condition precedent to the issuance thereof, require the
owner of such lost, stolen or destroyed certificate or certificates, or his
legal representative, to advertise the same in such manner as it shall require
and/or to give the Corporation a bond in such sum as it may direct as indemnity
against any claim that may be made against the Corporation with respect to the
certificate alleged to have been lost, stolen or destroyed.
Section 5. Upon surrender to the Corporation, or the transfer agent of the
Corporation, of a certificate for shares duly endorsed or accompanied by proper
evidence of succession, assignation or authority to transfer, the Corporation
shall issue a new certificate to the person entitled thereto, cancel the old
certificate and record the transaction upon its book.
Section 6. In order that the Corporation may determine the stockholders
entitled to notice of or to vote at any meeting of the stockholders, or any
adjournment thereof, or to express consent to corporate action in writing
without a meeting, or entitled to receive payment of any dividend or other
distribution or allotment of any rights, or entitled to exercise any rights in
respect of any change, conversion or exchange of stock or for the purpose of any
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other lawful action, the Board of Directors may fix a record date which shall
not be more than sixty nor less than ten days before the date of such
meeting, nor more than sixty days prior to any other action. A determination
of stockholders of record entitled to notice of or to vote at a meeting of
stockholders shall apply to any adjournment of the meeting; provided,
however, that the Board of Directors may fix a new record date for the
adjourned meeting.
Section 7. The Corporation shall be entitled to treat the holder of record
of any share or shares of stock as the holder in fact thereof and accordingly
shall not be bound to recognize any equitable or other claim or interest in such
share on the part of any other person, whether or not it shall have express or
other notice thereof, save as expressly provided by the laws of the State of
Delaware.
ARTICLE VI
GENERAL PROVISIONS
Section 1. Dividends upon the capital stock of the Corporation, subject to
the provisions of the Certificate of Incorporation, if any, may be declared by
the Board of Directors at any regular or special meeting, pursuant to law.
Dividends may be paid in cash, in property, or in shares of the capital stock,
subject to the provisions of the Certificate of Incorporation.
Section 2. Before payment of any dividend there may be set aside out of any
funds of the Corporation available for dividends such sum or sums as the
directors from time to time, in their absolute discretion, think proper as a
reserve fund to meet contingencies, or for equalizing dividends, or for
repairing or maintaining any property of the Corporation, or for such other
purpose as the directors shall think conducive to the interests of the
Corporation, and the directors may abolish any such reserve.
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Section 3. All checks or demands for money and notes of the Corporation
shall be signed by such officer or officers as the Board of Directors may from
time to time designate.
Section 4. The fiscal year of the Corporation shall end on December 31 and
shall commence on January 1.
Section 5. The corporate seal shall have inscribed thereon the name of the
Corporation, the year of its organization and the words "Corporate Seal,
Delaware". Said seal may be used by causing it or a facsimile thereof to be
impressed or affixed or reproduced or otherwise.
Section 6. Whenever, under the provisions of the statutes or of the
Certificate of Incorporation or of these By-Laws, notice is required to be given
to any director or stockholder, it shall not be construed to mean personal
notice, but such notice may be given in writing, by mail, addressed to such
director or stockholder, at his address as it appears on the records of the
Corporation, with postage thereon prepaid, and such notice shall be deemed to be
given at the time when the same shall be deposited in the United States mail.
Notice to directors may also be given by telegram.
Section 7. Whenever any notice is required to be given under the provisions
of the statutes or of the Certificate of Incorporation or of these By-Laws, a
waiver thereof in writing, signed by the person or persons entitled to said
notice, whether before or after the time stated therein, shall be deemed
equivalent thereto.
Section 8. The Board of Directors shall present at each annual meeting, and
at any special meeting of the stockholders when called for by vote of the
stockholders, a full and clear statement of the business and condition of the
Corporation.
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ARTICLE VII
AMENDMENTS
Section 1. These By-Laws may be altered, amended or repealed or new
By-Laws may be adopted by the stockholders or by the Board of Directors at
any regular meeting of the stockholders or of the Board of Directors or at
any special meeting of the stockholders or of the Board of Directors if
notice of such alteration, amendment, repeal or adoption of new By-Laws be
contained in the notice of such special meeting. If the power to adopt, amend
or repeal By-Laws is conferred upon the Board of Directors by the Certificate
of Incorporation it shall not divest or limit the power of the stockholders
to adopt, amend or repeal By-Laws.
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EXHIBIT 3.5
NYMA, INC.
A Close Corporation Under Title 4
AMENDMENT AND RESTATEMENT OF
AMENDED ARTICLES OF INCORPORATION
I. ARTICLES OF INCORPORATION AS AMENDED AND RESTATED.
The Articles of Incorporation of the CORPORATION as Amended and Restated
are as follows:
ARTICLE I
The undersigned Mr. Azmat Ali and Mrs. Jahamara Ali, both of 8500
Tuckerman Lane, Potomac, Maryland 20854, being at least eighteen years of
age, do hereby form a corporation under the general laws of the State of
Maryland.
ARTICLE II
The name of the corporation (hereinafter the "Corporation") is NYMA, Inc.
ARTICLE III
The CORPORATION shall be a close CORPORATION as authorized by Title 4.
ARTICLE IV
Section 4.01. The purposes for which the CORPORATION is formed are as
follows:
(a) To provide services in data processing and key punch operations;
(b) To provide services in designing, developing, implementing,
and maintaining various kinds of systems, including but not limited to
accounting, management, financial, marketing, information, technical,
and scientific systems.
(c) To provide economic analysis and economic feasibility studies.
(d) To provide services in statistical analysis and statistical
forecasting.
(e) To provide services in equipment analysis.
(f) To provide services in technical and scientific support.
(g) To do everything necessary, proper, advisable, or convenient
for the accomplishment of the purposes hereinabove set forth, and to do
all other things incidental to them or connected with them that are not
forbidden by the general laws of the State of Maryland, by other law, or
by these Articles of Incorporation.
(h) To carry out these purposes hereinabove set forth in any
state, territory, district, or possession of the United States, or in
any foreign country, to the
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extent that these purposes are not forbidden by the law of the state,
territory, district, or possession of the United States, or by the foreign
country.
Section 4.02. Statutory Powers: The CORPORATION, subject to any
specific written limitations or restrictions imposed by the general laws of
the State of Maryland or by those Articles of Incorporation, and solely in
furtherance of, but not in addition to, the limited purposes set forth in
Section 4.01 of this Article, shall have and exercise all the powers
specified in the general laws of the State of Maryland.
ARTICLE V
Section 5.01. The aggregate number of shares that the CORPORATION shall
have authority to issue is four million (4,000,000) shares of Capital Stock
with the par value of Two Cents ($0.02) per share.
Section 5.02. The sum of the par value of all shares of Capital Stock
of the CORPORATION that have been issued shall be the stated capital of the
CORPORATION at any particular time.
Section 5.03. The holders of the outstanding Capital Stock shall be
entitled to receive, when and as declared by the Board of Directors, solely
out of the unreserved and unrestricted earned surplus of the CORPORATION,
dividends payable either in cash, in property, or in shares of the Capital
Stock of the CORPORATION.
ARTICLE VI
The shares of the CORPORATION shall be a single class of voting shares,
consisting of four million (4,000,000) shares of Class A common voting stock,
par value of Two Cents ($0.02) each.
ARTICLE VII
The CORPORATION is authorized to issue shares in series.
ARTICLE VIII
The number of Directors may from time to time be increased or decreased
pursuant to the By-Laws of the CORPORATION, and the names of the Directors
presently in office are as set forth in Section 7 of the attached
Certifications as to Restatement.
ARTICLE IX
The following provisions are hereby adopted for the purpose of defining,
limiting and regulating the powers of the CORPORATION and of the Directors,
and stockholders:
(a) No shares of Capital Stock of the CORPORATION shall be sold,
transferred, assigned, mortgaged, or otherwise alienated or encumbered
to any person or CORPORATION, partnership, association, joint venture or
other entity without the express written approval of a
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majority of the Board of Directors and a majority of all shareholders of
the CORPORATION.
(b) The holders of record from time to time of the shares of
Capital Stock shall have only the preemptive rights as set forth in this
Article to purchase, at such respective equitable prices, terms and
conditions as shall be fixed by the Board of Directors, such of the
shares of Capital Stock of the CORPORATION or securities convertible
into, or carrying options or warrants to purchase, such shares of
Capital Stock, as may be issued for money, from time to time, after the
first issues of Capital Stock. No shares shall be issued for money to
officers or employees of the CORPORATION or to officers or employees of
any subsidiary CORPORATION, as such, unless first offered to the holders
of the Capital Stock in accordance with their preemptive rights.
(c) The initial By-Laws of the CORPORATION shall be adopted by its
Board of Directors. The power to alter, amend, or repeal the By-Laws,
or to adopt a new set of By-Laws, shall be reserved to the shareholders.
The By-laws may contain any provisions for the regulation and management
of the affairs of the CORPORATION not inconsistent with the general laws
of the State of Maryland, or these Articles of Incorporation.
(d) The authority to manage the affairs and policy of the
CORPORATION shall vest in its Board of Directors; provided, however,
that any decision of the Board may be initiated and guided by a majority
of the Shareholders, so long as such initiation and guidance do not
impinge upon the discretion of the Board of Directors or injure
creditors of the CORPORATION.
(e) The Board of Directors is authorized to make provision for
reasonable compensation to its members for their services as Directors
and to fix the basis and conditions upon which this compensation shall
be paid. Any Director may also serve the CORPORATION in any other
capacity and receive compensation therefor in any form.
(f) The CORPORATION reserves the right from time to time to amend,
alter, or repeal any provision in its Articles of Incorporation in any
manner now or hereafter permitted by the general laws of the State of
Maryland or any other applicable laws.
ARTICLE X
The duration of the CORPORATION shall be PERPETUAL.
ARTICLE XI
The post office address of the principal office of the CORPORATION in
Maryland is set forth in Section 5 of the attached Certifications as to
Restatement. The name and post office address of the resident agent of the
CORPORATION are as set forth in Section 6 of the attached Certification as to
Restatement. Said resident agent is a citizen of Maryland and actually
reside therein.
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<PAGE>
II. CERTIFICATIONS AS TO AMENDMENTS
1. The amendments to Section 5.01 and Article VI were advised by the
board of directors and approved by the stockholders of the CORPORATION.
2. The shares of the CORPORATION's stock are a single class. The
description, as amended, of this class, and the voting power, restrictions,
and limitations thereon, are as set forth in Articles V and VI of the
Articles of Incorporation, as amended and restated above.
III. CERTIFICATIONS AS TO RESTATEMENT.
1. The CORPORATION desires to restate its charter as currently in
effect.
2. The provisions set forth in the articles of restatement are all of
the provisions of the charter currently in effect.
3. The restatement of the charter has been approved by a majority of
the entire board of directors.
4. The charter is not amended by the articles of restatement except
Section 5.01 and Articles VI, amended pursuant to Section 2-609(b), Maryland
Code, CORPORATIONS AND ASSOCIATIONS.
5. The current address of the principal office of the CORPORATION is
7474 Greenway Center Drive, Suite 1030, Greenbelt, Maryland 20770.
6. The name and address of the CORPORATION's current resident agent are
Azmat Ali, 8500 Tuckerman Lane, Potomac, Maryland 20854.
7. The number of directors of the CORPORATION pursuant to the by-laws
as amended is five (5), and the names of those directors currently in office
are:
Azmat Ali
Jahamara Ali
Sunny Ali
Peter C. Belford
Arthur P. Verbin
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<PAGE>
/s/ Azmat Ali
-----------------------------------
Azmat Ali, President
NYMA, Inc.
ATTEST:
(SEAL)
/s/ Arthur F. Verbin
- ----------------------------------
Arthur F. Verbin, Secretary
NYMA, Inc.
Dated: April 16, 1997
CERTIFICATION
The undersigned individuals, subscribers to the foregoing Restated and
Amended Articles of Incorporation of NYMA, Inc., a close corporation under
Title 4, hereby acknowledge the foregoing document to be their act and the
act of NYMA, Inc., and certify that to the best of their knowledge,
information, and belief, the document, and all matters and facts set forth
therein, are true in all material respects, and that this Certification is
made under the penalties for perjury, pursuant to Section 1-302 of Maryland
Code, CORPORATIONS AND ASSOCIATIONS.
/s/ Azmat Ali
-------------------------------
Azmat Ali
/s/ Jahamara Ali
-------------------------------
Jahamara Ali
IN WITNESS WHEREOF, we have signed these Amended Articles of
Incorporation on April 16, 1997.
Witness: /s/ Azmat Ali
------------------------------
Azmat Ali
/s/ Pamela Thompson /s/ Jahamara Ali
- ---------------------------- ------------------------------
Jahamara Ali
- 5 -
<PAGE>
CERTIFICATE AND ARTICLES OF MERGER
MERGING
NYMA ACQUISITION, INC.
(A CORPORATION OF THE STATE OF DELAWARE)
INTO
NYMA, INC.
(A CORPORATION OF THE STATE OF MARYLAND)
The undersigned corporations, organized and existing under and by
virtue of the General Corporation Law of the State of Delaware and the
General Corporation Law of the State of Maryland, as applicable, DO HEREBY
CERTIFY THAT:
FIRST: NYMA, Inc., a corporation organized and existing under the
laws of the State of Maryland ("NYMA" or the "Surviving Corporation"), and
NYMA Acquisition, Inc., a corporation organized and existing under the laws
of the State of Delaware ("Acquisition"), agree that Acquisition shall be
merged with and into NYMA. The terms and conditions of the merger and the
mode of carrying the same into effect are as herein set forth in this
Certificate and Articles of Merger.
SECOND: The parties to the Certificate and Articles of Merger are
NYMA, a corporation organized under the General Corporation Law of the State
of Maryland, and Acquisition, a corporation organized and existing under the
General Corporation Law of the State of Delaware on April 1, 1997.
THIRD: That a Plan and Agreement of Merger among the parties to
the merger has been approved, adopted, certified, executed and acknowledged
by each of the constituent parties in accordance
<PAGE>
with the requirements of Section 251 of the General Corporation Law of the
State of Delaware and Section 3-108 of the General Corporation Law of the
State of Maryland.
FOURTH: NYMA, a corporation organized and existing under the laws
of the State of Maryland, shall survive the merger and shall continue under
the name of "NYMA, INC."
FIFTH: The certificate of incorporation of NYMA on the effective
date of the merger shall be the certificate of incorporation of the Surviving
Corporation, to remain unchanged until amended in accordance with the
provisions thereof and of applicable law.
SIXTH: The by-laws of NYMA on the effective date of the merger
shall be the by-laws of the Surviving Corporation.
SEVENTH: The officers and directors of Acquisition on the
effective date of the merger will continue in their capacities for the
Surviving Corporation in accordance with the By-laws of the Surviving
Corporation. Such directors are Allan M. Holt, Raymond A Whiteman and
James M. Dean.
EIGHTH: The purpose of the Surviving Corporation is to engage in
any lawful act or activity for which corporations may be organized under the
General Corporation Law of the State of Maryland.
NINTH: The total number of shares of stock of all classes which
Acquisition has authority to issue is One Thousand (1,000) shares of common
stock, par value $0.01 per share ("Acquisition Common Stock"), of the
aggregate par value of Ten Dollars ($10).
The total number of shares of stock of all classes which NYMA has
authority to issue is Four Million (4,000,000) shares of common stock, par
value $0.02 per share ("NYMA Premerger Common Stock"), of the aggregate par
value of Eighty Thousand Dollars ($80,000).
2
<PAGE>
The total number of shares of stock of all classes which the
Surviving Corporation has authority to issue is 4,000,000 Million (4,000,000)
shares of common stock, par value $0.02 per share ("NYMA Common Stock"), of
the aggregate par value of Eighty Thousand Dollars ($80,000).
TENTH: Upon the effective date, Acquisition will be merged with
and into NYMA; and thereupon, the Surviving Corporation shall possess any
and all purposes and powers of Acquisition and NYMA; and all leases,
licenses, property, rights, privileges, and powers of whatever nature and
description of Acquisition and NYMA shall be transferred to, vested in, and
devolved upon the Surviving Corporation, without further act or deed, subject
to all the debts and obligations of Acquisition and NYMA. Each share of
Acquisition Common Stock shall be converted into one share of NYMA Common
Stock on the effective date, without the necessity of any action on part of
the holder thereof
Each outstanding share of NYMA Premerger Common Stock shall be
canceled and each holder of a certificate(s) which prior thereto represented
such canceled shares shall, upon the surrender of the same, be entitled to
receive in exchange therefor cash, promissory notes and the right to receive
contingent payments pursuant to the Plan and Agreement of Merger.
ELEVENTH: The principal office of Acquisition, organized under the
laws of the State of Delaware, is located in the County of Montgomery, State
of Maryland.
The principal office of NYMA, organized under the laws of the State
of Maryland, is located in the County of Prince George's, State of Maryland.
The principal office of the Surviving Corporation, organized under
the laws of the State of Maryland, is located in the County of Prince
George's, State of Maryland.
3
<PAGE>
NYMA owns no property in the State of Maryland the title to which
could be affected by the recording of an instrument among the Land Records.
TWELFTH: The location of the registered office of the Surviving
Corporation in the State of Maryland, the state of its incorporation, is 7501
Greenway Center Drive, Suite 1200, Greenbelt, Maryland 20770, and name and
post office address of a registered agent of the Surviving Corporation in
Maryland is The Corporation Trust Incorporated, 32 South Street, Baltimore,
Maryland 21202. The Surviving Corporation irrevocably appoints the Secretary
of State of the State of Delaware as its agent to accept service of process
for any proceeding for enforcement of any obligation of Acquisition, as well
as for enforcement of any obligation of the Surviving Corporation arising
from the merger. The Secretary of State of the State of Delaware shall
forward a copy of any such process to the Surviving Corporation at the
address specified in SEVENTEENTH paragraph hereof.
THIRTEENTH: The terms and conditions of the merger transaction as
set forth in this Certificate and Articles of Merger were advised, authorized
and approved by NYMA in the manner and by the vote required by its charter
and the laws of the State of Maryland. The manner in which the merger was
approved as follows:
The merger was (a) duly approved by the board of directors of NYMA,
by the adoption on April 9, 1997, of a resolution declaring that the merger
herein proposed was advisable substantially upon the terms and conditions set
forth in this Certificate and Articles of Merger, and directing that the
proposed merger be submitted for action thereon at a special meeting of the
stockholders of NYMA, and (b) duly approved by the stockholders of said
corporation in the manner and by the vote required by law at a special
meeting of the stockholders on April 29, 1997.
4
<PAGE>
FOURTEENTH: The terms and conditions of the transaction as set
forth in this Certificate and Articles of Merger were advised, authorized and
approved by Acquisition in the manner and by the vote required by the laws of
the State of Delaware and by its charter. The manner in which the merger was
approved as follows:
The merger was (a) duly approved by the board of directors of
Acquisition, by the adoption on April 8, 1997, of a resolution declaring that
the merger herein proposed was advisable substantially upon the terms and
conditions set forth in this Certificate and Articles of Merger, and (b) duly
approved by the sole stockholder of said corporation in the manner required
by law on April 8, 1997.
FIFTEENTH: The merger shall become effective upon filing this
Certificate and Articles of Merger with the Secretary of State of the State
of Delaware, herein sometimes referred to as the "effective date of the
merger."
SIXTEENTH: At any time prior to filing this Certificate and
Articles of Merger with the Secretary of State of the State of Delaware and
with the State Department of Assessments and Taxation of the State of
Maryland, this Certificate may be amended, terminated or abandoned by the
Board of Directors of Acquisition, to the extent permitted by the General
Corporation Law of the State of Delaware notwithstanding favorable action on
the merger by the stockholders of Acquisition.
SEVENTEENTH: A copy of the Plan and Agreement of Merger is on file
at the principal place of business of the Surviving Corporation and will be
furnished by the Surviving Corporation on request and without cost to any
stockholder of any constituent corporation. The address of the Surviving
Corporation is 7501 Greenway Center Drive, Suite 1200, Greenbelt, Maryland
20770.
5
<PAGE>
IN WITNESS WHEREOF, NYMA and Acquisition, the corporations parties
to the merger, have cause this Certificate and Articles of Merger to be
signed in their respective corporate names and on their behalf by their
respective presidents or vice-presidents and witnessed or attested by their
respective secretaries, assistant secretaries or treasurers, as of the 2nd
day of May, 1997.
Attest: (Witness) NYMA, Inc.
a Maryland Corporation
By /s/ Larry Forseth By /s/ Peter Belford
______________________ _______________________
Larry Forseth Peter Belford
Treasurer President
Attest: (Witness) NYMA Acquisition, Inc.
a Delaware Corporation
By /s/ Sterling Phillips By /s/ James M. Dean
______________________ _______________________
Sterling Phillips James M. Dean
Treasurer Vice President
6
<PAGE>
THE UNDERSIGNED, President of NYMA, Inc., a Maryland corporation,
who executed on behalf of said corporation the foregoing Certificate and
Articles of Merger, of which this certificate is made apart, hereby
acknowledges, in the name and on behalf of said corporation, the foregoing
Certificate and Articles of Merger to be the corporate act of said
corporation and further certifies that, to the best of his knowledge,
information and belief, the matters and facts set forth therein with respect
to the approval thereof are true in all material respects, under the
penalties of perjury.
/s/ Peter Belford
___________________________________
Peter Belford
President
THE UNDERSIGNED, Vice President of NYMA Acquisition, Inc., a
Delaware corporation, who executed on behalf of said corporation the
foregoing Certificate and Articles of Merger, of which this certificate is
made apart, hereby acknowledges, in the name and on behalf of said
corporation, the foregoing Certificate and Articles of Merger to be the
corporate act of said corporation and further certifies that, to the best of
his knowledge, information and belief, the matters and facts set forth
therein with respect to the approval thereof are true in all material
respects, under the penalties of perjury.
/s/ James M. Dean
___________________________________
James M. Dean
Vice President
7
<PAGE>
BYLAWS
OF
NYMA, INCORPORATED
ARTICLE I - OFFICES
Section 1. The principal office of the Corporation in the State of
Maryland shall be located at Maryland Trade Center III, 7501 Greenway Center
Drive, Suite 1200, Greenbelt, Maryland 20770. The Corporation may have such
other offices, within or without State of Maryland as the Directors may
designate or as the business of the Corporation may require from time to time.
ARTICLE II - STOCKHOLDERS
Section 1. ANNUAL MEETING. Effective for 1995, the annual meeting of
the stockholders shall be held during the month of May of each year for the
purpose of electing Directors and for the transaction of such other business
as may come before the meeting, provided, that if the annual financial
statements of the Corporation have not been prepared by the Corporation's
independent auditors, the annual meeting of shareholders shall be adjourned
to a later date, of which notice shall be given pursuant to Section 4 of
this Article. If the day fixed for the annual meeting shall be a legal holiday
in the state in which the meeting is to be held, such meeting shall be held
on the next succeeding business day.
Section 2. SPECIAL MEETINGS. Special meetings of stockholders, for any
purpose or purposes, unless otherwise prescribed by statute, may be called by
the Chairman of the Board, the President, the Board of Directors or holders
of not less than one-fifth of all the outstanding shares of the Corporation
entitled to vote at the meeting.
Section 3. PLACE OF MEETING. The Board of Directors may designate any
place either within or without the State of Maryland as the place of meeting
for any annual or special meeting. In the absence of any designation, all
meetings shall be held at the principal office of the Corporation.
Section 4. NOTICE OF MEETING. Written or printed notice, unless
waived, stating the place, day and hour of the meeting and, in case of a
special meeting, or of a meeting which is required by statute to be held for
any special purpose, or of an annual meeting at which special action is to be
taken, the purpose or purposes for which the meeting is called, or the
special action which is proposed to be taken, shall be delivered not less than
ten, nor more than fifty days before the date of the meeting, except that
notice of a shareholders' meeting to act on a plan of merger or consolidation
shall be given not less than twenty days before the meeting date and shall
include a copy or summary of the plan of merger or consolidation. The notice
shall be given either personally or
<PAGE>
by mail, by or at the direction of the Board of Directors, the President, the
Secretary, or the persons calling the meeting, to each stockholder of record
entitled to vote at the meeting. If mailed, such notice shall be deemed to be
delivered when deposited in the United States mail, addressed to the
stockholder at his address as it appears on the stock transfer books of the
Corporation, with postage thereon prepaid. If given personally, such notice
shall be deemed to have been delivered when handed to the stockholder or left
at his place of business or his residence.
Section 5. CLOSING OF TRANSFER BOOKS OR FIXING OF RECORD DATE. For the
purpose of determining stockholders entitled to notice of or to vote at any
meeting of stockholders or any adjournment thereof, or stockholders entitled
to receive payment of any dividend, or in order to make a determination of
stockholders for any other proper purpose, the Board of Directors of the
Corporation may provide that the stock transfer books shall be closed for a
stated period but not to exceed, in any case, fifty days. If the stock
transfer books shall be closed for the purpose of determining stockholders
entitled to notice of or to vote at a meeting of stockholders, such books
shall be closed for at least ten days immediately preceding such meeting. In
lieu of closing the stock transfer books, the Board of Directors may fix in
advance a date as the record date for any such determination of stockholders,
such date in any case to be not more than fifty days and, in case of a
meeting of stockholders, not less than ten days prior to the date on which
the particular action requiring such determination of stockholders is to be
taken. If the stock transfer books are not closed and no record date is fixed
for the determination of stockholders entitled to notice of or to vote at a
meeting of stockholders, or stockholders entitled to receive payment of a
dividend, the date on which notice of the meeting is mailed or the date on
which the resolution of the Board of Directors declaring such dividend is
adopted, as the case may be, shall be the record date for such determination
of stockholders. When a determination of stockholders entitled to vote at any
meeting of stockholders has been made as provided in this Section 5, such
determination shall apply to any adjournment thereof unless the Board of
Directors fixes a new record date, which it shall do if the meeting is
adjourned to a date more than one hundred twenty days after the date fixed
for the original meeting.
Section 6. VOTING LIST. The officer or agent having charge of the
stock transfer books for shares of the Corporation shall make, at least ten
days before each meeting of stockholders, a complete list of the stockholders
entitled to vote at such meeting or any adjournment thereof, arranged by
voting group and within each voting group by class or series of shares, with
the address of and the number of shares held by each, which list, for a period
of ten days prior to such meeting shall be kept on file at the principal
office of the Corporation and
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<PAGE>
shall be subject to inspection by any stockholder making written request
therefor at any time during usual business hours. Such list shall also be
produced and kept open at the time and place of the meeting and shall be
subject to the inspection of any stockholder during the whole time of the
meeting. The original stock transfer book shall be prima facie evidence as to
who are the stockholders entitled to examine such list or transfer books or
to vote at any meeting of stockholders.
Section 7. QUORUM. A majority of the outstanding shares of
the Corporation entitled to vote, represented in person or by proxy, shall
constitute a quorum at a meeting of stockholders; provided, however, that in
no event shall a quorum consist of less than one-third of the outstanding
shares having voting power. Less than a quorum may adjourn the meeting to a
fixed time and place, without further notice. At such adjourned meeting at
which a quorum shall be present or represented, any business may be
transacted which might have been transacted at the meeting as originally
notified. The stockholders present at a duly organized meeting may continue to
transact business until adjournment, notwithstanding the withdrawal of enough
stockholders to leave less than a quorum.
Section 8. PROXIES. At all meetings of stockholders, a stockholder may
vote in person or by proxy executed in writing by the stockholder or by his
duly authorized attorney-in-fact. Such proxy shall be filed with the
Secretary of the Corporation before or at the time of the meeting. No proxy
shall be valid after eleven months from the date of its execution, unless
otherwise provided in the proxy.
Section 9. VOTING OF SHARES. Each outstanding share, regardless of
class, shall be entitled to one vote on each matter submitted to a vote at a
meeting of stockholders, except to the extent that the voting rights of the
shares of any class or classes are limited or denied by statute or by the
Articles of Incorporation.
Section 10. VOTING OF SHARES BY CERTAIN HOLDERS. Except as provided in
this Section 10, shares outstanding in the name of another corporation may be
voted by such officer, agent or proxy as the bylaws of such Corporation may
prescribe, or, in the absence of such provision, as the Board of Directors of
such corporation may determine.
Neither shares of its own stock belonging to the Corporation or held by
it in a fiduciary capacity, nor those held by another corporation if a
majority of the shares entitled to vote for the election of directors of such
other corporation are held by the Corporation, shall be voted at any meeting or
counted in determining the total number of outstanding shares at any given
time for the purpose of any meeting.
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<PAGE>
Shares held by an administrator, executor, guardian, committee, or
curator may be voted by him, either in person or by proxy, without a transfer
of such shares into his name.
Shares standing in the name of a trustee may be voted by him, but no
trustee is entitled to vote shares held by him without a transfer of such
shares into his name.
Shares standing in the name of a receiver or trustee in Bankruptcy
proceedings may be voted by him, and shares held by or under the control of
such a receiver or trustee may be voted by such receiver or trustee without
the transfer thereof into his name if authority so to do be contained in an
appropriate order of the court by which such receiver or trustee was
appointed.
A stockholder whose shares are pledged shall be entitled to vote such
shares until the shares have been transferred into the name of the pledgee,
and thereafter the pledgee shall be entitled to vote the shares so
transferred.
Section 11. INFORMAL ACTION BY STOCKHOLDERS. Any action required to be
taken at a meeting of the stockholders, or any other action which may be
taken at a meeting of the stockholders, may be taken without a meeting if
a consent in writing, setting forth the action so taken, shall be signed by
all of the stockholders entitled to vote with respect to the subject matter
thereof. Such consent shall have the same force and effect as a unanimous
vote of the stockholders.
Section 12. PARTICIPATION IN MEETINGS BY CONFERENCE TELEPHONE.
Stockholders may participate in a meeting of the stockholders by means of
conference telephone or similar communications equipment that enables all
persons participating in the meeting to hear each other. Such participation
shall constitute presence in person at such meeting.
ARTICLE III - BOARD OF DIRECTORS
Section 1. GENERAL POWERS. The business and affairs of the Corporation
shall be managed by its Board of Directors.
Section 2. NUMBER, TENURE AND QUALIFICATIONS. The number of Directors
of the Corporation shall be five. Each Director shall hold office until the
next annual meeting of stockholders and until his successor shall have been
elected and qualified, subject to the provisions of the Certificate of
Incorporation. Directors need not be residents of the State of Maryland or
stockholders of the Corporation.
Section 3. REGULAR MEETINGS. The regular annual meeting of the Board
of Directors shall be held without other notice than this Bylaw immediately
after, and at the same place as, the annual meeting of stockholders,
provided, however, any such regular meeting may be held at any other time or
place which
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<PAGE>
shall be specified in a notice given as hereinafter provided for special
meetings, or in a consent and waiver of notice thereof, signed by all
Directors. The Board of Directors may provide, by resolution, the time and
place, either within or without the State of Maryland, for the holding of
additional regular meetings without other notice than such resolution.
Section 4. SPECIAL MEETINGS. Special meetings of the Board of
Directors may be called by or at the request of the Chairman of the Board,
the President or any Vice President or any two Directors. The person or
persons authorized to call special meetings of the Board of Directors may fix
any place, either within or without the State of Maryland, as the place for
holding any special meeting of the Board of Directors called by them.
Section 5. NOTICE. Notice of any special meeting shall be given either
by (a) written notice at least four (4) days in advance of such meeting,
delivered in person or by leaving such notice at the place of business
or residence of each Director, or by depositing such notice in the United
States mail, postage prepaid, addressed to the Director at his address as it
appears on the records of the Corporation, (b) verbally in person or by
telephone at least two (2) days in advance of such meeting by communication
with the Director in person or by telephone, or (c) by telegram delivered to
the telegraph company at least two (2) days in advance of such meeting. The
business to be transacted at, and the purpose of, any regular meeting need
not be specified in the notice or waiver of notice (if any) of a regular
meeting. The business to be transacted at, and the purpose of, any special
meeting of the Board of Directors shall be specified in the notice of such
special meeting.
Section 6. QUORUM. A majority of the number of Directors fixed by
Section 2 of this Article III shall constitute a quorum for the transaction
of business at any meeting of the Board of Directors, but if less than such
majority is present at a meeting, a majority of the Directors present may
adjourn the meeting from time to time without further notice.
Section 7. MANNER OF ACTING. The act of the majority of the Directors
present at a meeting at which a quorum is present shall be the act of the
Board of Directors unless the act of a greater number is required by statute,
the Articles of Incorporation or the Bylaws.
Section 8. ACTION WITHOUT A MEETING. Any action that may be taken by
the Board of Directors at a meeting may be taken without a meeting if a
consent in writing, setting forth the action so taken, shall be signed before
or after such action by all of the Directors and such written consent is
filed with the minutes or proceedings of the Board of Directors. Any action
taken without a meeting is effective when the last director signs the consent
unless the consent specifies a different effective date.
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<PAGE>
Section 9. VACANCIES. Any vacancy occurring in the Board of Directors
may be filled by the affirmative vote of a majority of the remaining
Directors though less than a quorum of the Board of Directors, subject to the
provisions of the Articles of Incorporation. A Director elected to fill a
vacancy shall be elected until the next annual meeting of stockholders. Any
directorship to be filled by reason of an increase in the number of Directors
shall be filled by election at an annual meeting or at a special meeting of
stockholders called for that purpose.
Section 10. COMPENSATION. By resolution of the Board of Directors, the
Directors may be paid their expenses, if any, of attendance at each meeting
of the Board of Directors, and may be paid a fixed sum for attendance at each
meeting of the Board of Directors or a stated salary as a Director or both.
No such payment shall preclude any Director from serving the Corporation in
any other capacity and receiving compensation therefor.
Section 11. COMMITTEES. The Board of Directors may, by resolution or
resolutions passed by a majority of the whole Board, designate one or more
committees, each committee to consist of two or more of the Directors of the
Corporation, which, to the extent provided in such resolution or resolutions,
shall have and may during intervals between the meetings of the Board
exercise the powers of the Board of Directors in the management of the
business and affairs of the Corporation and may have power to authorize the
seal of the Corporation to be affixed to all papers which may require it.
Such committee or committees shall have such name or names as may be
determined from time to time by resolution or resolutions adopted by the
Board of Directors. The designation of any such committee or committees and
the delegation thereto of authority shall not operate to relieve the Board of
Directors, or any member thereof, of any responsibility imposed upon it or
him by law.
Section 12. RESIGNATIONS. Any Director of the Corporation may resign at
any time by delivering written notice to the Board of Directors, its
Chairman, the President or the Secretary. Such resignation shall take effect
when the notice is delivered unless the notice specifies a later effective
date; and unless otherwise specified with respect thereto, the acceptance of
such resignation shall not be necessary to make it effective.
Section 13. REMOVAL OF DIRECTORS. Any Director may be removed, either
with or without cause, at any time, by the affirmative vote of the holders of
record of a majority of all the shares of the class of stock which elected
such Director entitled to vote at any special meeting of the stockholders
called for that purpose, and the vacancy in the Board caused by any such
removal may be filled by such stockholders at such
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<PAGE>
meeting or at any subsequent meeting.
Section 14. PARTICIPATION IN MEETINGS BY CONFERENCE TELEPHONE. Members
of the Board of Directors, or of any committee thereof, may participate in a
meeting of such board or committee by means of conference telephone or
similar communications equipment that enables all persons participating in
the meeting to hear each other. Such participation shall constitute presence
in person at such meeting.
ARTICLE IV - OFFICERS
Section 1. PRINCIPAL OFFICERS. The principal officers of the
Corporation shall be elected by the Board of Directors and shall include a
President, one or more Vice Presidents, a Secretary and a Treasurer. Except
as otherwise provided in the Articles of Incorporation or these Bylaws, one
person may hold the offices and perform the duties of any two or more of said
principal offices except the offices and duties of President and Secretary.
None of the principal officers need be Directors of the Corporation.
Section 2. ELECTION OF PRINCIPAL OFFICERS; TERM OF OFFICE. The
principal officers of the Corporation shall be elected annually by the Board
of Directors at each annual meeting of the Board of Directors. Failure to
elect any principal officer annually shall not dissolve the Corporation.
If the Board of Directors shall fail to fill any principal office at an
annual meeting, or if any vacancy in any principal office shall occur, or if
any principal office shall be newly created, such principal office may be
filled at any regular or special meeting of the Board of Directors.
Each principal officer shall hold office until his successor is duly
elected and qualified, or until his earlier death, resignation or removal,
provided that the terms of office of all Vice Presidents shall terminate at
any annual meeting of the Board of Directors at which the President or any
Vice President is elected.
Section 3. SUBORDINATE OFFICERS, AGENTS AND EMPLOYEES. In addition to
the Principal Officers, the Corporation may have one or more Assistant
Treasurers, Assistant Secretaries and such other subordinate officers, agents
and employees as the Board of Directors may deem advisable, each of whom
shall hold office for such period and have such authority and perform such
duties as the Board of Directors, the Chairman of the Board, the President, or
any officer designated by the Board of Directors, may from time to time
determine. Subordinate officers may serve as accommodation officers without
authority over funds or personnel. The Board of Directors at any time may
appoint and remove, or may delegate to any principal officer the power to
appoint and to remove, any subordinate officer, agent or employee of the
Corporation.
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<PAGE>
Section 4. DELEGATION OF DUTIES OF OFFICERS. The Board of Directors may
delegate the duties and powers of any officer of the Corporation to any other
officer or to any Director for a specified period of time for any reason that
the Board of Directors may deem sufficient.
Section 5. REMOVAL OF OFFICERS. Any officer or agent of the Corporation
may be removed by the Board of Directors whenever in its judgment the best
interests of the corporation will be served thereby. Removal shall be by
resolution adopted by a majority of the Directors then in office at any
regular or special meeting of the Board of Directors or by a written consent
signed by all of the Directors then in office. Election or appointment of an
officer or agent shall not of itself create any contract right in favor of
such officer or agent. Any officer or assistant officer, if appointed by
another officer, may be removed by such officer with or without cause.
Section 6. RESIGNATIONS. Any officer may resign at any time by giving
written notice of resignation to the Board of Directors, to the Chairman of
the Board, to the President or to the Secretary. Any such resignation shall
take effect upon receipt of such notice or at any later time specified
therein. Unless otherwise specified in the notice, the acceptance of a
resignation shall not be necessary to make the resignation effective.
Section 7. VACANCIES. A vacancy in any office elected or appointed by
the Board of Directors because of death, resignation, removal,
disqualification or otherwise, may be filled by the Board of Directors for
the unexpired portion of the term. A vacancy in any other office for any
reason shall be filled by the Board of Directors, or any committee, or
superior officer to whom authority in the premises may have been delegated by
these Bylaws or by resolution of the Board of Directors.
Section 8. CHAIRMAN OF THE BOARD. The Chairman of the Board shall
preside at all meetings of stockholders and the Board of Directors at which
he is present. The Chairman of the Board shall have such other powers and
perform such other duties as may be assigned to him from time to time by the
Board of Directors.
Section 9. PRESIDENT. The President shall, in the absence of the
Chairman of the Board, preside at all meetings of the stockholders and of the
Board of Directors at which he is present. The President shall be the chief
executive officer of the Corporation and, subject to the control of the Board
of Directors, shall have general supervision over the business and affairs of
the Corporation. The President shall have all powers and duties usually
incident to the office of the President except as specifically limited by a
resolution of the
- 8 -
<PAGE>
Board of Directors. The President shall have such other powers and perform
such other duties as may be assigned to him from time to time by the Board of
Directors.
Section 10. VICE PRESIDENT. In the absence or disability of the
President or if the Office of President be vacant, the Vice Presidents in the
order determined by the Board of Directors, or if no such determination has
been made in the order of their seniority, shall perform the duties and
exercise the powers of the President, subject to the right of the Board of
Directors at any time to extend or confine such powers and duties or to
assign them to others. Any Vice President may have such additional
designation in his title as the Board of Directors may determine. The Vice
President shall generally assist the President in such manner as the
President shall direct. Each Vice President shall have such other powers and
perform such other duties as may be assigned to him from time to time by the
Board of Directors or the President.
Section 11. SECRETARY. The Secretary shall act as Secretary of all
meetings of stockholders and of the Board of Directors at which he is
present, shall record all the proceedings of all such meetings in a book to
be kept for that purpose, shall have supervision over the giving and service
of notices of the Corporation, and shall have supervision over the care and
custody of the records and seal of the Corporation. The Secretary shall be
empowered to affix the corporate seal to documents, the execution of which
on behalf of the Corporation under its seal is duly authorized, and when so
affixed may attest the same. The secretary shall have all powers and duties
usually incident to the office of Secretary, except as specifically limited
by a resolution of the Board of Directors. The Secretary shall have such
other powers and perform such other duties as may be assigned to him from
time to time by the Board of Directors or the President.
Section 12. TREASURER. The Treasurer shall be the chief accounting
officer of the Corporation and shall have supervision over the maintenance
and custody of the accounting operations of the Corporation, including the
keeping of accurate accounts of all receipts and disbursements and all other
financial transactions. The Treasurer shall have all powers and duties
usually incident to the office of Treasurer except as specifically limited by
a resolution of the Board of Directors. The Treasurer shall have such other
powers and perform such other duties as may be assigned to him from time to
time by the Board of Directors or the President.
Section 13. BOND. The Board of Directors shall have power, to the
extent permitted by law, to require any officer, agent or employee of the
Corporation to give bond for the faithful discharge of his duties in such
form and with such
- 9 -
<PAGE>
surety or sureties as the Board of Directors may determine.
ARTICLE V - CAPITAL STOCK
Section 1. ISSUANCE OF CERTIFICATES FOR CAPITAL STOCK. Each stockholder
of the Corporation shall be entitled to a certificate or certificates in such
form as shall be approved by the Board of Directors, certifying the number of
shares of capital stock of the Corporation owned by such stockholder.
Section 2. SIGNATURE OF STOCK CERTIFICATES. Certificates for shares of
capital stock of the Corporation shall be signed by, or in the name of the
Corporation by, the President or a Vice President, and by the Secretary or an
Assistant Secretary and sealed with the seal of the Corporation. The
signature of any one of these officers upon a certificate may be a facsimile
if the certificate is signed by another of such officers, and the signatures
of both of such officers may be facsimiles if the certificate be
countersigned by a transfer agent, or registered by a registrar, other than
the Corporation itself or an employee of the Corporation. In case any officer
who has signed or whose facsimile signature has been placed upon such
certificate shall have ceased to be such officer before such certificate is
issued, it may be issued by the Corporation with the same effect as if he
were such officer at the date of its issue.
Section 3. STOCK LEDGER. A record of all certificates for capital stock
issued by the Corporation shall be kept by the Secretary or any other officer
or employee of the Corporation designated by the Secretary or by any transfer
clerk or transfer agent appointed pursuant to Section 4 hereof. Such record
shall show the name and address of the person, firm or corporation in which
certificates for capital stock are registered, the number represented by each
such certificate, the date of each such certificate, and in case of
certificates which have been cancelled the dates of cancellation thereof.
The Corporation shall be entitled to treat the holder of record of shares
of capital stock as shown on the stock ledger as the owner thereof and as the
person entitled to receive dividends thereon, to vote such shares and to
receive notice of meetings, and for all other purposes. The Corporation shall
not be bound to recognize any equitable or other claim to or interest in any
share of capital stock on the part of any other person whether or not the
Corporation shall have express or other notice thereof.
Section 4. REGULATIONS RELATING TO TRANSFER. Transfers of capital stock
shall be made on the books of the Corporation only upon delivery to the
Corporation or its transfer agent of (i) a written direction of the
registered holder named in the certificate or such holder's attorney lawfully
constituted in writing, (ii) the certificate for the shares of capital stock
-10-
<PAGE>
being transferred, and (iii) a written assignment of the shares of capital
stock evidenced thereby.
Section 5. CANCELLATION. Each certificate for capital stock surrendered
to the Corporation for exchange or transfer shall be cancelled and no new
certificate or certificates shall be issued in exchange for any existing
certificate (other than pursuant to Section 6) until such existing
certificate shall have been cancelled.
Section 6. LOST, DESTROYED, STOLEN AND MUTILATED CERTIFICATES. In the
event that any certificate for shares of capital stock of the Corporation
shall be mutilated, the Corporation shall issue a new certificate in place of
such mutilated certificate. In case any such certificate shall be lost,
stolen or destroyed, the Corporation may, in the discretion of the Board of
Directors or a committee designated thereby with power so to act, issue a new
certificate for capital stock in the place of any such lost, stolen or
destroyed certificate. The applicant for any substituted certificate or
certificates shall surrender any mutilated certificate or, in the case of any
lost, stolen or destroyed certificate, furnish satisfactory proof of such
loss, theft or destruction of such certificate and of the ownership thereof.
The Board of Directors or such committee may, in its discretion, require the
owner of a lost or destroyed certificate, or his representatives, to furnish
to the Corporation a bond with an acceptable surety or sureties and in such
sum as will be sufficient to indemnify the Corporation against any claim that
may be made against it on account of the lost, stolen or destroyed
certificate or the issuance of such new certificate.
ARTICLE VI - INDEMNIFICATION
Section 1. INDEMNIFICATION. The Corporation shall, to the full extent
permitted by applicable law, indemnify any person who, by reason of the fact
that he is or was a Director, officer, employee or agent of the Corporation,
is or was serving at the request of the Corporation as a Director, officer,
partner, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise, was or is a party or is threatened to be
made a party to:
(a) any threatened, pending or completed claim, action, suit or
proceeding, whether civil, criminal, administrative or investigative,
including appeals (other than an action by or in the right of the
Corporation), against expenses (including reasonable attorneys' fees),
judgments, fines and amounts paid in settlement actually and reasonably
incurred by such person in connection with any such action, suit or
proceeding; or
(b) any threatened, pending or completed claim, action or suit by or
in the right of the Corporation to procure a
-11-
<PAGE>
judgment in its favor, against expenses (including reasonable attorneys'
fees) actually and reasonably incurred by him in connection with the defense
or settlement of such action or suit.
Any indemnification by the Corporation pursuant hereto shall be only made
in the manner and to the extent authorized by applicable law, and any such
indemnification shall not be deemed exclusive of any other rights to which
those seeking indemnification may otherwise be entitled.
Section 2. INDEMNIFICATION INSURANCE. The Corporation shall have power
to purchase and maintain insurance on behalf of any person who is or was a
Director, officer, employee or agent of the Corporation, or is or was serving
at the request of the Corporation as a director, officer, employee or agent
of another corporation, partnership, joint venture, trust or other enterprise
against any liability asserted against him and incurred by him in any such
capacity, or arising out of his status as such, whether or not the
Corporation would have the power to indemnify him against such liability
under applicable law.
ARTICLE VII - GENERAL PROVISIONS
Section 1. CORPORATE SEAL. The seal of the Corporation shall be circular
in form with the name of the Corporation and the words "Corporate Seal"
engraved thereon. The seal may be used by causing it to be affixed or
impressed, or a facsimile thereof may be reproduced or otherwise used in such
manner as the Board of Directors may determine.
Section 2. FISCAL YEAR. The fiscal year shall end on the last day of
December of each year.
Section 3. WAIVER OF NOTICE. Whenever any notice is required to be given
under any provision of law, the Articles of Incorporation, or these Bylaws, a
waiver thereof in writing signed by the person or persons entitled to such
notice, whether before or after the time stated therein, shall be equivalent
to the giving of such notice. Neither the business to be transacted at, nor
the purpose of, any regular or special meeting of the stockholders,
Directors, or members of a committee of Directors need be specified in any
written waiver of notice unless so required by the Bylaws.
Attendance of a Director at a meeting shall constitute a waiver of notice
of such meeting, except where a Director attends a meeting for the express
purpose of objecting to the transaction of any business because the meeting
is not lawfully called or convened.
Section 4. EXECUTION OF INSTRUMENTS, CONTRACTS, ETC.
(a) All checks, drafts, bills of exchange, notes or
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<PAGE>
other obligations or orders for the payment of money issued by the
Corporation shall be signed in the name of the Corporation by the President
or such other officer or officers or person or persons, as the Board of
Directors may from time to time designate.
(b) Except as otherwise provided by law, the Board of Directors, any
committee given specific authority in the premises by the Board of Directors,
or any committee given authority to exercise generally the powers of the
Board of Directors during intervals between meetings of the Board of
Directors, may authorize any officer, employee or agent, in the name of and
on behalf of the Corporation, to enter into or execute and deliver deeds,
bonds, mortgages, contracts and other obligations or instruments, and such
authority may be general or confined to specific instances.
(c) All applications, written instruments and papers required by or
filed with any department of the United States government or any state,
county, municipal or other governmental official or authority, may, if
permitted by applicable law, be executed in the name of the Corporation by
any principal officer or subordinate officer of the Corporation, or, to the
extent designated for such purpose from time to time by the Board of
Directors, by an employee or agent of the Corporation. Such designation may
contain the power to substitute, in the discretion of the person named, one
or more other person named, one or more other persons.
Section 5. DIVIDENDS. Subject to the laws of the State of Maryland the
Board of Directors may, from time to time, declare and the Corporation may
pay, dividends on its outstanding shares in cash, property, or its own
shares, except when the Corporation is insolvent or when the payment thereof
would render the Corporation insolvent or when the declaration or payment
thereof would be contrary to any restrictions contained in the Certificate of
Incorporation.
Section 6. LOANS. No loans shall be contracted on behalf of the
Corporation and no evidences of indebtedness shall be issued in its name
unless authorized by a resolution of the Board of Directors. Such authority
may be general or confined to specific instances.
Section 7. DEPOSITS. All funds of the Corporation not otherwise employed
shall be deposited from time to time to the credit of the Corporation in such
banks, trust companies or other depositories as the Board of Directors may
select.
Section 8. PREEMPTIVE RIGHTS. Each holder of the common shares of the
Corporation shall have the preemptive right to purchase his pro rata portion
of the issuance of any class of stock, including Treasury stock, at such
price which may be in excess of par value, within such time and on such terms
as shall be fixed and determined by the Board of Directors;
-13-
<PAGE>
provided, that for purposes of this provision, the term "pro rata portion"
for each stockholder shall be equal to the product of the total number of
shares of such issuance, multiplied by a fraction, the denominator of which
shall be the total number of common shares then issued and outstanding
(exclusive of any shares being then issued) and the numerator of which shall
be the number of shares then owned by such stockholder (exclusive of any
shares being then issued).
Section 9. OTHER ACTIVITIES OF THE STOCKHOLDERS. Each of the
stockholders, in their individual capacity or in any other capacity, shall be
free in all respects to engage in, to conduct or participate in any business
or activity whatsoever and without any limitation, and to do all acts and
things incidental to such business, without any accountability, liability,
or obligation whatsoever, to the Corporation or any other officer, director
or stockholder or any other individual having an interest in the Corporation,
even if such business or activity competes with or is enhanced by the
business of the Corporation.
ARTICLE VIII - AMENDMENTS
Section 1. POWER OF DIRECTORS TO AMEND. The Board of Directors shall
have power to alter, amend and repeal the Bylaws of the Corporation or adopt
new Bylaws for the Corporation at any regular or special meeting of the
Board, provided that the Board of Directors may not alter, amend, or repeal
any Bylaw which establishes the number of Directors, the time or place of
stockholders' meetings, or what constitutes a quorum at such stockholders'
meetings, or which was adopted by the stockholders and specifically provides
that it cannot be altered, amended or repealed by the Board of Directors, or
the amendment or repeal of which is reserved to the stockholders by law.
Section 2. POWER OF STOCKHOLDERS TO AMEND. The stockholders may alter,
amend and repeal any Bylaw of the Corporation which establishes the number of
Directors, the time or place of Stockholders' meetings, or what constitutes a
quorum at such stockholders' meetings, or which was adopted by the
stockholders and specifically provides that it cannot be altered, amended or
repealed by the Board of Directors, or the amendment or repeal of which is
reserved to the stockholders by law. Any alteration, amendment, or repeal by
the stockholders shall be made at any annual meeting or at a special meeting
called for the purpose.
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<PAGE>
EXHIBIT 3.7
ARTICLES OF INCORPORATION OF SYLVEST MANAGEMENT SYSTEMS CORPORATION.
Article I. Incorporator. The undersigned, William A. McCampbell, Suite 300,
2550 M. Street, N.W., Washington, DC 20037, being at least 18 years old or
older, does hereby form a corporation under the general laws of the State
Maryland.
Article II. The name of the corporation is SYLVEST MANAGEMENT SYSTEMS
CORPORATION.
Article III Purpose. The purposes for which corporation is formed are:
(a) To engage in the business of buying, selling and developing goods,
services and technology in the computer field and to engage in all activities
related thereto; (b) To do all things lawful, necessary and incident to the
accomplishment of the purpose set forth above; to exercise all lawful powers now
possessed by Maryland corporations of similar character; and to engage in any
business in which a corporation organized under the laws of Maryland may engage
except any business that is required to be specifically set forth in the
Articles of Incorporation; (c) The objects powers and purposes specified in
any clause or paragraph hereinabove contained shall be constructed as objects
and powers in furtherance and not in limitation of the general powers conferred
by the laws of the State of Maryland; and it is expressly provided that the
foregoing enumeration of specific powers shall in no corporation, or in any
manner affect any general powers of authority of the corporation.
Article IV. Principal Office. The address of the principal office is 3009
Marcando Lane, Upper Marlboro, MD. 20772.
Article V. Resident Agent. The name of the resident agent of the
corporation is Gary S. Murray, whose address is 3009 Marcando Lane, Marlboro,
Md. 20772.
Article VI. Authorized Shares. The total number of shares of stock of all
classes which the corporation has authority to issue is 1000. All shares shall
be shares of common stock. At all elections of directors of the corporation,
each holder of common stock shall be entitled to one vote for each share
registered in his name on the books of the corporation. Shares of stock shall
have a par value of $1.00 per share.
Article VII. Directors. The number of directors of the corporation shall be
two. The name of the director(s) who will serve as director until the first
annual meeting and until a successor(s) is (are) elected and qualifies is (are):
Gary S. Murray and Areather T. Murray.
<PAGE>
Article VIII. The holders of the common stock of the corporation shall have
the right to purchase at such prices, and on such terms and conditions as
shall be fixed by the Board of Directors, such of the shares of the common
stock of the corporation as may be authorized but unissued or as may be
authorized from time to time in addition to the 1000 shares authorized in the
Articles of Incorporation. Such preemptive right shall be exercised in the
ratio which the number of shares held by each stockholder bears to the total
number of shares outstanding.
Article IX. No sale of stock shall be made by any stockholder to any person
who is not a stockholder of the corporation except in the pursuance of the
following terms and conditions:
(1) In the event any stockholder desires to sell his stock, or any
portion thereof to any person who is not a stockholder of the corporation, he
shall first submit to the stockholders of the corporation satisfactory
evidence of the agreement to purchase such stock by such third party and the
price to be paid therefore.
(2) In the event the remaining stockholders agree to purchase such
stock at the same price which the stockholder can receive from a third party,
then the stock shall be sold to the stockholders of the corporation in such
proportionate amounts as their respective stockholdings bear to the entire
stock held by the stockholders of the corporation.
(3) In the event that any of the stockholders do not desire to purchase
such stock, then such stock shall be sold at the price aforesaid to such of
the stockholders who may desire to purchase the same; and in the same
proportion as above specified.
(4) No stock shall be sold to any person other than the stockholders of
the corporation until each of the stockholders shall have been afforded an
opportunity to purchase such stock at the price evidenced as aforesaid, and
shall have declined to do so.
(5) Notice in writing to the stockholders of the corporation of the
desire of any stockholder to sell his stock, shall be given by such
stockholder, and at the same time, satisfactory evidence shall be furnished
to the stockholders as to the price as hereinbefore set forth. Stockholders
shall have thirty days' time after the receipt of said notice within which to
elect in writing to purchase such stock or to decline to do so.
Article X. Period of Existence. The period of existence of the corporation
shall be unlimited.
<PAGE>
IN WITNESS WHEREOF, I have signed these Articles of Incorporation and
acknowledged same to be my act on this 8th day of May, 1987.
/s/ William A. McCampbell III
_____________________________ _______________________
William A. McCampbell III Date
<PAGE>
ARTICLE OF AMENDMENT TO ARTICLES OF INCORPORATION
Sylvest Management Systems Corporation, a corporation organized and
existing under and by virtue of the law of the State of Maryland, DOES HEREBY
CERTIFY:
FIRST: That the Board of Directors of said corporation, at a meeting
duly held, adapted the resolutions set forth below, proposing and declaring
advisable the amendment to the Certificate of Incorporation of said
corporation:
RESOLVED, that the Certificate of Incorporation of Sylvest Management
Systems Corporation, Article VII thereof, be amended by changing the number of
Directors of the Corporation to not less than three (3) nor more than five (5).
SECOND: That the Shareholders of said corporation, at a meeting duly
held, approved the amendment.
THIRD: That the aforesaid amendment was duly adopted in accordance with
the applicable provisions of Section 2-602 and 2-607 of the Corporations and
Associations law of the State of Maryland.
IN WITNESS WHEREOF, said Sylvest Management Systems, Corporation has
caused its corporate seal to be hereunto affixed and this certificate to be
signed by Gary S. Murray, its President, and attested by Areather T. Murray,
its Secretary, this 15th day of December, 1987.
SYLVEST MANAGEMENT SYSTEMS, CORPORATION
By: /s/ Gary S. Murray
________________________________
Gary S. Murray, President
Attest:
By: /s/ Areather T. Murray
___________________________________
Areather T. Murray, Secretary
ACKNOWLEDGEMENT
I certify that these Articles of Amendment to the Articles of
Incorporation of Sylvest Management Systems, Corporation are the act and deed
of such corporation and the facts stated therein are true, and that the seal
affixed to said Articles of Amendment and attested by the secretary of said
corporation is the corporate seal of said corporation.
/s/ Gary S. Murray
_________________________________
Gary S. Murray, President
<PAGE>
CHANGE OF PRINCIPAL OFFICE
OF
SYLVEST MANAGEMENT SYSTEMS CORPORATION
APPROVED AND RECEIVED FOR RECORD BY THE STATE DEPARTMENT OF ASSESSMENTS AND
TAXATION OF MARYLAND MARCH 11, 1997 AT 11:55 O'CLOCK A.M. AS IN CONFORMITY
WITH LAW AND ORDERED RECORDED.
IT IS HEREBY CERTIFIED THAT THE WITHIN INSTRUMENT, TOGETHER WITH ALL
ENDORSEMENTS THEREON, HAS BEEN RECEIVED, APPROVED, AND RECORDED BY THE STATE
DEPARTMENT OF ASSESSMENTS AND TAXATION OF MARYLAND.
<PAGE>
EXHIBIT 3.8
ARTICLE OF AMENDMENT TO BY-LAWS
MEETING OF THE BOARD OF DIRECTORS OF
SYLVEST MANAGEMENT SYSTEMS CORPORATION
A meeting of the Board of Directors of Sylvest Management Systems
Corporation was held on October 19, 1992 at 10001 Derekwood Lane, Lanham,
Maryland. Gary S. Murray, Areather T. Murray, and William S. Strang being
all of the Directors, were present and waived notice of the meeting. Gary S.
Murray acted as Chairman and Areather T. Murray acted as Secretary.
That the Board of Directors of said corporation, hereby, unanimously
adopt the resolutions set forth below, proposing and declaring advisable the
amendments to the By-Laws of said corporation
RESOLVED, that the By-Laws of Sylvest Management Systems Corporation,
Article II, Section 1., thereof, be amended by changing Annual
Shareholders' Meeting Date to March 1 effective hereafter.
RESOLVED, that the By-Laws of Sylvest Management Systems Corporation,
Article VII, thereof, be amended effective fiscal year 1992, as follows:
The fiscal year of the Corporation shall begin on the first day of January
and end on the last day of December in each year.
IN WITNESS WHEREOF, said Sylvest Management Systems Corporation has
caused its corporate seal to be hereunto affixed and this certification to be
signed by its Board of Directors this 16th day of November, 1992.
SYLVEST MANAGEMENT SYSTEMS CORPORATION
By /s/ Gary S. Murray
----------------------------
Gary S. Murray, Chairman
Attest:
By: /s/ Areather T. Murray By /s/ William S. Strang
------------------------------ --------------------------------
Areather T. Murray, Secretary William S. Strang, Board Member
<PAGE>
ARTICLE OF AMENDMENT TO BY-LAWS
MEETING OF THE BOARD OF DIRECTORS OF
SYLVEST MANAGEMENT SYSTEMS CORPORATION
A meeting of the Board of Directors of Sylvest Management Systems
Corporation was held on October 24, 1991 at 10001 Derekwood Lane, Lanham,
Maryland. Gary S. Murray, Areather T. Murray, and William S. Strang being
all of the Directors, were present and waived notice of the meeting. Gary S.
Murray acted as Chairman and Areather T. Murray acted as Secretary.
That the Board of Directors of said corporation, hereby, unanimously
adopt the resolutions set forth below, proposing and declaring advisable the
amendments to the By-Laws of said corporation.
RESOLVED, that the By-Laws of Sylvest Management Systems Corporation,
Article I, Section 1., thereof, be amended by changing the principal
offices in the State of Maryland to 10001 Derekwood Lane, Lanham, Maryland
20706.
IN WITNESS WHEREOF, said Sylvest Management Systems Corporation has
caused its corporate seal to be hereunto affixed and this certification to be
signed by its Board of Directors this 19th day of November, 1991.
SYLVEST MANAGEMENT SYSTEMS CORPORATION
By /s/ Gary S. Murray
--------------------------
Gary S. Murray, Chairman
Attest:
By: /s/ Areather T. Murray By /s/ William S. Strang
------------------------------ --------------------------------
Areather T. Murray, Secretary William S. Strang, Board Member
<PAGE>
ARTICLE OF AMENDMENT TO BY-LAWS
SPECIAL MEETING OF THE BOARD OF DIRECTORS OF
SYLVEST MANAGEMENT SYSTEMS CORPORATION
A meeting of the Board of Directors of Sylvest Management Systems
Corporation was held on March 20, 1989 at 6411 Ivy Lane, Greenbelt, MD. Gary
S. Murray, Areather T. Murray and William S. Strang being all of the
Directors, were present and waived notice of the meeting. Gary S. Murray
acted as Chairman and Areather T. Murray acted as Secretary.
On motion duly made and seconded, the following resolutions were
unanimously adopted by the Board.
That the Board of Directors of said corporation, hereby, adopt the
resolutions set forth below, proposing and declaring advisable the amendment
to the By-Laws of said corporation:
RESOLVED, that the By-Laws of Sylvest Management Systems Corporation,
Article I, Section 1., thereof, be amended by changing the principal
offices in the State of Maryland to 6411 Ivy Lane, Greenbelt, Maryland
20770.
RESOLVED, that the By-Laws of Sylvest Management Systems Corporation,
Article III, Section 2., thereof, be amended by changing the number of
Directors of the Corporation to not less than three (3) nor more than
five (5), the precise number to be determined annually by a resolution
of the Board of Directors prior to mailing notice of any meeting of
the election of Directors.
RESOLVED, that the By-Laws of Sylvest Management Systems Corporation,
Article VII, thereof, be amended effective fiscal year 1988, as
follows: The fiscal year of the Corporation shall begin on the first
day of October and end on the last day of September in each year.
There being no further business to come before the meeting, it was on
motion duly made and seconded, adjourned.
IN WITNESS WHEREOF, said Sylvest Management Systems, Corporation has
caused its corporate seal to be hereunto affixed and this certificate to be
signed by its Board of Directors, this 20th day of March 1989.
SYLVEST MANAGEMENT SYSTEMS CORPORATION
By /s/ Gary S. Murray
-------------------------
Gary S. Murray, Chairman
Attest:
By: /s/ Areather T. Murray By /s/ William S. Strang
----------------------------- -------------------------------
Areather T. Murray, Secretary William S. Strang, Board Member
<PAGE>
By-Laws
SYLVEST MANAGEMENT SYSTEMS CORPORATION
ARTICLE I
OFFICES
SECTION 1. PRINCIPAL OFFICE. The principal offices of the Corporation in
the (1) AS PER ATTACHMENT ENTITLED "BY-LAWS"
----------------------------------------------------------------------
is at (2) .
----------------------------------------------------------------------
SECTION 2. OTHER OFFICES. The Corporation may also have offices at such
places both within and without the _____(3)_____ as the Board of
Directors may from time to time determine or the business of the Corporation
may require.
ARTICLE II
MEETINGS OF SHAREHOLDERS
SECTION 1. ANNUAL MEETINGS. The annual meeting of the Shareholders
shall be held __(4)___ at such hour as the Board of Directors may fix, for the
purpose of electing Directors and for the transaction of such other business
as may come before the meeting. If the election of Directors shall not be
held in the manner of designation herein for any annual meeting of the
Shareholders, or at any adjournment thereof, the Board of Directors shall
cause the election to be held at a special meeting of the Shareholders as
soon thereafter as may be convenient.
SECTION 2. SPECIAL MEETINGS. Special meetings of the Shareholders,
for any purpose or purposes, unless otherwise prescribed by statute, may be
called by the President, by the Chairman of the Board of Directors or by a
majority of the Board of Directors, and shall be called by the President or
the Secretary at the request of the holders of not less than _____(5)_____ of
all outstanding shares of the Corporation entitled to vote at the meeting.
SECTION 3. PLACE OF MEETING. The Board of Directors may designate
any place, either within or without the _____(6)_____ as the place of meeting
for any annual meeting or for any special meeting called by the Board of
Directors. A waiver of notice signed by a majority of Shareholders entitled
to vote at a meeting may designate any place, either within or without the
_____(7)_____, as the place for the holding of such meeting. If no
designation is made or if a special meeting be otherwise called, the place of
meeting shall be the registered office of the Corporation in the
(8) .
SECTION 4. NOTICE OF MEETING. (a) Written or printed notice stating
the place, date and hour of the meeting, and in the case of a special
meeting, the purpose or purposes for which the meeting is called, shall be
delivered not less than _____(9)_____ nor more than ______(10)_____ days
before the date of the meeting, either personally or by mail, by or at the
direction of the President, or the Secretary, or the
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officer of persons calling the meeting to each Shareholder of record entitled
to vote at such meeting. If mailed, such notice shall be deemed to be
delivered when deposited in the United States mail, addressed to the
Shareholder at his address as it appears on the stock transfer books of the
Corporation with postage thereon prepaid.
(b) Whenever notice is required to be given under any provisions of these
By-Laws, a written waiver thereof, signed by the person entitled to notice,
whether before or after the time stated in these By-Laws, shall be deemed to be
equivalent to notice. Attendance of a person at a meeting shall constitute a
waiver of notice of such meeting, except when the person attends a meeting for
the express purpose of objecting, at the beginning of the meeting, to the
transaction of any business because the meeting is not lawfully called or
convened.
SECTION 5. CLOSING OF TRANSFER BOOKS OR FIXING OF RECORD DATE.
(a) For the purpose of determining Shareholders or any adjournment
thereof, or Shareholders entitled to receive payment of any dividend, or in
order to make a determination of Shareholders for any other proper purpose,
the Board of Directors of the Corporation may provide that the stock transfer
books shall be closed for a stated period but not to exceed, in any case,
_____(11)_____ days. If the stock transfer books shall be closed for the
purpose of determining Shareholders entitled to notice or to vote at a
meeting of Shareholders, such books shall be closed for at least
_____(12)_____ days immediately preceding such meeting.
(b) In lieu of closing the stock transfer books, the Board of Directors
may fix in advance a date as the record date for any such determination of
Shareholders, such date in any case to be not more than _____(13)_____ days,
and in case of a meeting of Shareholders, not less than _____(14)_____ days
prior to the date on which the particular action, requiring such
determination of Shareholders, is to be taken.
(c) If no record date is fixed and the stock transfer books are not
closed:
(1) The record date for determining Shareholders entitled to
notice of or to vote at a meeting of Shareholders shall be at the
close of business on the day next preceding the day on which
notice is given, or, if notice is waived, at the close of
business on the day next preceding the day on which the meeting
is held.
(2) The record date for determining Shareholders entitled to
express consent to corporate action in writing without a meeting,
when no prior action by the Board of Directors is necessary,
shall be the day on which the first written consent is expressed.
(3) The record date for determining Shareholders for any other
purpose shall be at the close of business on the day on which the
Board of Directors adopts the resolution relating thereto.
(d) A determination of Shareholders of record entitled to notice of, or to
vote at, a meeting of Shareholders shall apply to any adjournment of the
meeting; provided, however, that the Board of Directors may fix a new record
date for the adjourned meeting.
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SECTION 6. VOTING LISTS. The officer or agent having charge of the
stock transfer books for the shares of the Corporation shall make, at least
ten (10) days before each meeting of Shareholders, a complete list of the
Shareholders entitled to vote at such meeting, or any adjournment thereof,
arranged in alphabetical order, with the address of and the number of shares
held by each, which list, for a period of ten (10) days prior to such
meeting, shall be kept on file at the registered office of the Corporation
and shall be subject to the inspection by any Shareholder, for any purpose
germane to the meeting, at any time during usual business hours. Such list
shall also be produced and kept open at the time and place of the meeting and
shall be subject to the inspection of any Shareholder during the whole time
of the meeting. The original stock transfer book shall be prima facie
evidence as to who are the Shareholders entitled to examine such list or
transfer book or to vote at any meeting of Shareholders.
SECTION 7. QUORUM. A majority of the outstanding shares of the
Corporation entitled to vote, represented in person or by proxy, shall
constitute a quorum at a meeting of Shareholders. If less than a majority of
the outstanding shares are represented at a meeting, a majority of the shares
so represented may adjourn the meeting from which a quorum shall be present
or represented, any business may be transacted which have been transacted at
the meeting as originally notified. The Shareholders present at a duly
organized meeting may continue to transact business until adjournment,
notwithstanding the withdrawal of enough Shareholders to leave less than
quorum.
SECTION 8. VOTING. A shareholder entitled to vote at a meeting may
vote at such meeting in person or by proxy. Except as otherwise provided by
law or the Certificate of Incorporation, every shareholder shall be entitled
to one vote for each share standing in his name on the record of
shareholders. Except as herein or in the Certificate of Incorporation
otherwise provided, all corporate action shall be determined by vote of a
majority of the votes cast by shareholders entitled to vote thereon at a
shareholders' meeting.
SECTION 9. PROXIES. Every proxy must be dated and signed by the
shareholder or by his attorney-in-fact. No proxy shall be valid after the
expiration of 11 months from the date on its execution, unless otherwise
provided therein. Every proxy shall be revocable at the pleasure of the
shareholder executing it, except where an irrevocable proxy is permitted by
statute.
SECTION 10. CONSENTS. Whenever by a provision of statute or the
Certificate of Incorporation or by these Bylaws the vote of shareholders is
required or permitted to be taken at a meeting and thereof in connection with
any corporate action, the meeting and the vote of shareholders may be
dispensed with, if all the shareholders who would have been entitled to vote
upon the action if such meeting were held shall consent in writing to such
corporate action's being taken.
ARTICLE III
BOARD OF DIRECTORS
SECTION 1. GENERAL POWERS. The business and affairs of the
Corporation shall be managed by its Board of Directors.
SECTION 2. NUMBER, TENURE AND QUALIFICATIONS. The number of
Directors of the Corporation shall be not less than _____(15)_____ nor more
than _____(16)_____, the precise number to be determined annually
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by a resolution of the Board of Directors prior to mailing notice of any
meeting of the election of Directors. The number of Directors shall not be
changed after the annual meeting except at a special meeting of Shareholders
called for that purpose. Each Director shall hold office until the next
annual meeting of Shareholders and until his successor shall have been
elected and qualified. Directors need not be residents of the _____(17)_____
or Shareholders of the Corporation. Any Director may resign at any time upon
notice to the Corporation.
SECTION 3. COMMITTEES. (a) The Board of Directors may, by
resolution passed by a majority of the whole board, designate one or more
committees, each committee to consist of one or more of the Directors of the
Corporation. The Board may designate one or more Directors as disqualified
member at any meeting of the committee, the member or members thereof present
at any meeting and not disqualified from voting, whether or not he or they
constitute a quorum may unanimously appoint another member of the Board of
Directors to act at the meeting in the place of such absent or disqualified
member.
(b) Any such committee, to the extent provided in the resolution of the
Board of Directors, shall have and may exercise all the powers and authority
of the Board of Directors in the management of the business and affairs of
the Corporation, and may authorize the seal of the Corporation to be affixed
to all papers which may require it, but no such committee shall have the
power to authority:
(1) in reference to amending the Certificate of Incorporation;
(2) adopting an agreement of merger or consolidation;
(3) recommending to the Shareholders the sale, lease or
exchange of all or substantially all of the Corporation's
property and assets;
(4) recommend to the Shareholders a dissolution of the
Corporation or a revocation of a dissolution;
(5) amending the By-Laws of Corporation; and
(6) unless the resolution so provides, no such committee shall
have the power or authority to declare a dividend or to
authorize the issuance of stock.
(c) Each such committee shall keep a written record of its facts and
proceedings and shall submit such record to the Board of Directors at each
regular meeting thereof and at such other times as requested by the Board of
Directors. Failure to submit such record, or failure of the Board to approve
any action indicated therein will not however, invalidate such action to the
extent it has been carried out by the Corporation prior to the time the record
of such action was, or should have been, submitted to the Board of Directors as
herein provided.
SECTION 4. REGULAR MEETINGS. A regular meeting of the Board of
Directors shall be held without other notice than this By-Law immediately
after, and at the same place as, the annual meeting of the Shareholders. The
Board of Directors may provide, by resolution, the time and place, either
within or without the _____(18)_____ for the holding of additional regular
meetings without other notice than such resolution.
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SECTION 5. SPECIAL MEETINGS. Special meetings of the Board of
Directors may be called by or at the request of the Chairman of the Board of
Directors, the President, or a majority of the Directors. The person or
persons authorized to call special meetings of the Board of Directors may fix
any place, either within or without the _____(19)_____ as the place for
holding any special meeting of the Board of Directors called by them.
SECTION 6. NOTICE. Notice of any special meeting shall be given at
least _____(20)_____ days previously thereto by written notice delivered
personally or mailed to each Director at his business address, or on
_____(21)_____ day's notice by telegraph or telegram. If mailed, such
notice shall be deemed to be delivered when deposited in the United States
Mail so addressed, with postage thereon prepaid. If notice be given by
telegram, such notice shall be deemed to be delivered when the telegram is
delivered to the telegram company. Any Director may waive notice of any
meeting. The attendance of a director at a meeting shall constitute a waiver
of notice of such meeting. The attendance of a director at a meeting shall
constitute a waiver of notice of such meeting, except where a Director
attends a meeting for the express purpose of objecting to the transaction of
any business because the meeting is not lawfully called or convened. Neither
the business to be transacted at, nor the purpose of, any regular or special
meeting of the Board of Directors need be specified in the notice or waiver
of notice of such meeting.
SECTION 7. QUORUM; INTERESTED DIRECTORS. (a) A majority of the
number of directors fixed in the manner provided by Section 2 of this Article
III shall constitute a quorum for the transaction of business at any meeting
of the Board of Directors, but if less than such majority is present at a
meeting, a majority of the Directors present may adjourn the meeting from
time to time without further notice.
(b) No contract or transaction between the Corporation and one or more
of the Directors or officers, or between the Corporation and any other
corporation, partnership, association, or other organization in which one or
more of the Directors or officers are Directors or officers or have a
financial interest, shall be void or voidable solely for this reason, or
solely because the Director or officer is present at or participates in the
meeting of the Board or committee thereof which authorizes counted for such
purpose, if:
(1) The material facts as to his relationship or interest and as
to the contract or transaction are disclosed or are known to the
Board of Directors or the Committee, and the Board or committee
in good faith authorizes the contract or transaction by the
affirmative votes of a majority of the disinterested Directors,
even though the disinterested Directors be less than a quorum; or
(2) The material facts as to his relationship or interest and as
to the contract or transaction are disclosed or are known to the
Shareholders entitled to vote thereon, and the contract or
transaction is specifically approved in good faith by the
Shareholders; or
(3) The contract or transaction is fair as to the Corporation as
of the time it is authorized, approved or ratified, by the Board
of Directors, a committee thereof, or the Shareholders.
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(c) Common or interested Directors may be counted in determining the
presence of a quorum at a meeting of the Board of Directors or of a committee
which authorizes the contract or transaction.
SECTION 8. MANNER OF ACTING. The act of the majority of the
Directors present at a meeting at which a quorum is present shall be the act
of the Board of Directors.
SECTION 9. VACANCIES. Any vacancy occurring in the Board of
Directors may be filled by the affirmative vote of a majority of the
remaining directors through less than a quorum of the Board of Directors. A
Director elected to fill a vacancy shall be elected for the unexpired term of
his predecessor in office. Any directorship to be filled by reason of an
increase in the number of Directors shall be filled by election at any annual
meeting or at a special meeting of Shareholders called for that purpose.
SECTION 10. COMPENSATION. When authorized by resolution of the Board
of Directors, Directors and members of any committee of the Board of
Directors shall be entitled to reasonable compensation for their services as
Directors and members of any such committee and to reimbursement for any
reasonable expenses incurred in attending such meeting. Any person receiving
compensation under this provision shall not be barred from serving the
Corporation in any other capacity and receiving reasonable compensation for
such other services.
SECTION 11. PRESUMPTION OF ASSENT. (a) A Director of the Corporation
who is present at a meeting of the Board of Directors at which action on any
corporate matter is taken shall be presumed to have assented to the action
taken unless his dissent shall be entered in the minutes of the meeting or
unless he shall file his written dissent to such action with the person
acting as the Secretary of the meeting before the adjournment thereof or
shall forward such dissent by registered mail to the Secretary of the
Corporation immediately after the adjournment of the meeting. Such right to
dissent shall not apply to a Director who voted in favor of such action.
(b) A member of the Board of Directors or of any committee designated
by the Directors shall, in the performance of his duties, be fully protected
in relying in good faith upon the books of account or reports made to the
Corporation by any of its officers, or by an independent certified public
accountant, or by an appraiser selected with reasonable care by the Board of
Directors or by such committee, or in relying in good faith upon other
records of the Corporation.
SECTION 12. INFORMAL ACTION. (a) Any action required or permitted to
be taken at any meeting of the Board of Directors or any committee thereof
may be taken without a meeting, if all members of the Board or committee, as
the case may be, consent thereto in writing, and the writing or writings are
filed with the minutes or proceedings of the Board or committee.
(b) The members of the Board of Directors or any committee designated
by such Board, may participate in a meeting of such Board or committee by
means of conference telephone or similar communication equipment by means of
which all persons participating in the meeting can hear each other, and
participation in a meeting pursuant to this subsection shall constitute
presence in person at such meeting.
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ARTICLE IV
OFFICERS
SECTION 1. NUMBER. The officers of the corporation shall be a
President, a Secretary and a Treasurer and, if determined by the Board of
Directors to be appropriate, one or more Vice Presidents, each of whom shall
be elected by the Board of Directors. The Board of Directors may from time
to time elect a Chairman of the Board, Assistant Secretaries, Assistant
Treasurers and such other officers, assistant officers, and agents as may be
deemed necessary. Any two or more offices may be held by the same person,
except of the offices of the President/ (22)
SECTION 2. ELECTION AND TERM OF OFFICE. The officers of the
Corporation to be elected by the Board of Directors shall be elected annually
by the Board of Directors at the first meeting of the Board held after each
annual meeting of the Shareholders. If the election of officers shall not be
held at such meeting, such election shall be held as soon thereafter as
conveniently may be. Each officer shall hold office until his successor
shall have been duly elected and shall have qualified or until his death or
until he shall resign or shall have been removed in the manner hereinafter
provided.
SECTION 3. REMOVAL. Any officer or agent elected or appointed by
the Board of Directors may be removed by the Board of Directors whenever in
its judgment the best interests of the Corporation would be served thereby,
but such removal shall be without prejudice to the contract rights, if any,
of the person so removed.
SECTION 4. VACANCIES. A vacancy in any office because of death,
resignation, removal, disqualification or otherwise, may be filled by the
Board of Directors for the unexpired portion of the term.
SECTION 5. THE CHAIRMAN OF THE BOARD. The Chairman of the Board, if
one be elected, shall, when present, preside at all meetings of the Board of
Directors. Except where required or permitted by law to be otherwise signed,
the Chairman shall possess the same power as the Corporation which may be
authorized by the Board of Directors.
SECTION 6. THE PRESIDENT. The President shall have general
supervision of the business and affairs of the Corporation and over its
several officers, subject to the control of the Board of Directors. He
shall, when present, preside at all meetings of the Shareholders. It shall
be his duty to have general and active management of the business of the
Corporation and to see that all orders and resolutions of the Board of
Directors are carried into effect. He may sign, with the Secretary or any
other proper officer of the Corporation thereunto authorized by the Board of
Directors, certificates for shares of the Corporation, any deeds, mortgages,
bonds, contracts, or other instruments which the Board of Directors has
authorized to be executed, except in cases where the signing and execution
thereof shall be expressly delegated by the Board of Directors or by these
By-Laws to some other officer or agent of the Corporation, or shall be
required by law to be otherwise signed or executed; and in general shall
perform all duties as may be prescribed by the Board of Directors from time
to time.
SECTION 7. THE VICE PRESIDENT. In the absence of the President or
in the event of his death, inability or refusal to act, the Executive Vice
President, if one be elected, shall perform the duties of the President, and
when so acting, shall have all the powers of and be subject to all the
restrictions upon the President. The Executive Vice President, if there be
one, may sign, with the Secretary or an
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Assistant Secretary, certificates for shares of the Corporation; and shall
perform such other duties as from time to time may be assigned to him by the
President or by the Board of Directors. Any additional Vice Presidents shall
perform such duties as the President or the Board of Directors may from time
to time designate.
SECTION 8. THE SECRETARY. The Secretary shall: (a) keep the
minutes of the Shareholders meetings, Board of Directors meetings and those
of the Committees thereof in one or more books provided for that purpose; (b)
see that all notices are duly given in accordance with the provisions of
these By-Laws or as required by law; (c) be custodian of the corporate
records and of the seal of the Corporation and see that the seal of the
Corporation is affixed to all documents, the execution of which on behalf of
the Corporation under its seal is duly authorized; (d) sign with the
President or the Executive Vice President, certificates for shares of the
Corporation the issuance of which shall have been authorized by resolution of
the Board of Directors; and (e) in general perform all duties as from time to
time may be assigned to him by the President or by the Board of Directors.
SECTION 9. THE TREASURER. If required by the Board of Directors,
the Treasurer shall give a bond for the faithful discharge of his duties in
such sum and with such surety or sureties as the Board of Directors may
determine. He shall: (a) have charge and custody of and be responsible for
all funds and securities of the Corporation from any source whatsoever, and
deposit all such monies in the name of the Corporation in such banks, trust
companies or other depositories as shall be selected in accordance with the
provisions of Article V of these By-Laws; and (b) in general perform all of
the duties incident to the office of Treasurer and such other duties as from
time to time may be assigned to him by the President or by the Board of
Directors.
SECTION 10. ASSISTANT SECRETARIES AND ASSISTANT TREASURERS. The
Assistant Secretaries, when authorized by the Board of Directors, may sign
with the President or a Vice President, certificates for shares of the
Corporation the issuance of which shall have been authorized by a resolution
of the Board of Directors. The Assistant Treasurer shall respectively, if
required by the Board of such sums and with such sureties as the Board of
Directors shall determine. The Assistant Secretaries and Assistant
Treasurers, in general, shall perform such duties as shall be assigned to
them by the Secretary or the Treasurer, respectively, or by the President or
by the Board of Directors.
SECTION 11. SALARIES. The salaries of the Officers shall be fixed
from time to time by the President (except as to his own salary) or the Board
of Directors and no officer shall be prevented from receiving such salary by
reason of the fact that he is also a Director of the Corporation.
ARTICLE V
CONTRACTS, LOANS, CHECKS AND DEPOSITS
SECTION 1. CONTRACTS. The Board of Directors or Executive Committee
may authorize any officer or officers, agent or agents, to enter into any
contract or execute and deliver any instrument in the name of and on behalf
of the Corporation, and such authority may be general or confined to specific
instances.
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SECTION 2. LOANS. No loans shall be contracted on behalf of the
Corporation and no evidence of indebtedness shall be issued in its name
unless authorized by a resolution of the Board of Directors or Executive
Committee. Such authority may be general or confined to specific instances.
SECTION 3. CHECKS, DRAFTS, ETC. All checks, drafts or other orders
for the payment of money, notes or other evidence of indebtedness issued in
the Corporation, shall be signed by such officer or officers, agent or agents
of the Corporation and in such manner as shall from time to time be
determined by resolution of the Board of Directors or Executive Committee.
SECTION 4. DEPOSITS. All funds of the Corporation not otherwise
disposed of shall be deposited from time to time to the credit of the
Corporation in such banks, trust companies or other depositaries as the Board
of Directors or Executive Committee may select.
ARTICLE VI
CERTIFICATES FOR SHARES AND THEIR TRANSFER
SECTION 1. CERTIFICATES FOR SHARES. Certificates representing
shares of the Corporation shall be in such form as shall be determined by the
Board of Directors. Such certificates shall be signed by the
President/Executive Vice President and by the Secretary or an Assistant
Secretary. If such certificate is countersigned (1) by a transfer agent
other than the Corporation or its employee, or (2) by a registrar other than
the corporation or its employee, any signature on the certificate may be a
facsimile. All certificates for shares shall be consecutively numbered or
otherwise identified. The name and address of the person to whom the shares
are issued and the date of issue shall be entered on the stock transfer books
of the Corporation. All certificates surrendered to the Corporation for
transfer shall be cancelled and no new certificate shall be issued until the
former certificate for a like number of shares has been surrendered or
cancelled, except that in case of a lost, destroyed or mutilated certificate
a new one may be issued therefor upon such terms and indemnity to the
Corporation as the Board of Directors may prescribe.
SECTION 2. TRANSFER OF SHARES. Transfer of shares of the
Corporation shall be made only on the stock transfer books of the Corporation
by the holder of record thereof or by his legal representative, who shall
furnish proper evidence of authority to transfer, or by his attorney
thereunto authorized by power of attorney duly executed and filed with the
Secretary of the Corporation, and on surrender for cancellation of the
certificate for such shares. The person in whose name shares stand on the
books of the Corporation shall be deemed by the Corporation to be the owner
thereof for all purposes.
SECTION 3. RESTRICTION ON TRANSFER OF SHARES. The Board of
Directors may place such restrictions on the transfer (whether inter-vivos,
by inheritance, or by testamentary disposition), hypothecation, or other
disposition of shares of capital stock issued by the Corporation, which, in
its judgment, it deems advisable, and which do not unreasonably restrain
alienation. Such restrictions may, among other things, require that the
Corporation be furnished with an opinion of Counsel satisfactory to it, that
such transfer, hypothecation, or other disposition will not result in the
violation of any Federal or State law relating to securities transactions, or
with a statement or ruling from the governmental agency administering such
law to that effect. The same restrictions may be placed on previously issued
and outstanding shares of capital stock of the Corporation if the consent of
the holders, thereof is
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obtained. Any such restrictions placed on the capital stock of the
Corporation shall be conspicuously noted on each certificate covering shares
affected by such restrictions.
SECTION 4. TRANSFER AGENT OR REGISTRAR. The Board of Directors may
appoint one or more transfer agents or transfer clerks and one or more
registrars and may require all certificates for shares to bear the signature
or signatures of any of them.
ARTICLE VII
FISCAL YEAR
The fiscal year of the Corporation shall begin on the first day of
_____(23)_____ and end of last day of _____(24)_____ in each year.
ARTICLE VIII
DIVIDENDS
The Board of Directors may from time to time declare, and the Corporation
may pay, dividends on its outstanding shares in the manner and upon the terms
and conditions provided by law.
ARTICLE IX
CORPORATE SEAL
The Board of Directors shall provide a corporate seal which shall be
circular in form and have inscribed thereon the name of the Corporation, the
state of incorporation, the date of same, and the words "Corporate Seal". In
lieu of the corporate seal, when so authorized by the Board of Directors, a
facsimile thereof may be impressed or affixed or reproduced.
ARTICLE X
INDEMNIFICATION
SECTION 1. COVERAGE. The Corporation shall indemnify to the full
extent permitted by law any person who is or was made, or threatened to be
made, a party to an action, suit or proceeding (whether civil, criminal,
administrative or investigative) by reason of the fact that he, his testator
or intestate is or was a Director, officer or employee of the Corporation or
serves or served any other corporation or enterprise at the request of the
Corporation.
SECTION 2. INSURANCE. The Corporation shall have the power to
purchase and maintain insurance on behalf of any person who is or was a
Director, officer, employee or agent of another corporation or other
enterprise against any liability asserted against him and incurred by him in
any such
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capacity or arising out of his status as such, whether or not the Corporation
would have the power to indemnify him against such liability under the
provisions of these By-Laws.
ARTICLE XI
AMENDMENTS
These By-Laws may be altered, amended or repealed and new By-Laws may be
adopted by the Board of Directors at any regular or special meeting of the Board
of Directors.
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BY-LAWS ATTACHMENT OF
SYLVEST MANAGEMENT SYSTEMS CORPORATION
The above named corporation has adopted the attached By-Laws to which this
attachment has been made a part.
1. State of MARYLAND
2. Business Address: 3009 Marcando Lane, Upper Marlboro, Md. 20772
3. State of MARYLAND
4. Annual Meeting Date: November 1
5. 50%
6. State of MARYLAND
7. State of MARYLAND
8. State of MARYLAND
9. 10
10. 20
11. 10
12. 10
13. 10
14. 10
15. Two directors
16. Two directors
17. State of MARYLAND
18. State of MARYLAND
19. State of MARYLAND
20. 10
21. 20
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22. EVP/ (strike one)
23. Fiscal Yr. Begins: January 1
24. Fiscal Yr. Ends: December 31 Initials of Board of Directors:
__________ __________
__________ __________
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EXHIBIT 3.9
CERTIFICATE OF INCORPORATION
OF
FDC TECHNOLOGIES, INC.
I, THE UNDERSIGNED, in order to form a corporation for the purposes
hereinafter stated, under and pursuant to the provisions of the General
Corporation Law of the State of Delaware (the "Delaware Corporation Law"), do
hereby certify as follows:
FIRST: The name of the corporation is FDC Technologies, Inc. (the
"Corporation").
SECOND: The address of the registered office of the Corporation in
the State of Delaware is 32 Loockerman Square, Suite L-100, City of Dover,
County of Kent. The name of its registered agent at such address is the
Prentice-Hall Corporation System, Inc.
<PAGE>
THIRD: The nature of the business and purposes to be conducted or
promoted by the Corporation are to engage in, carry on and conduct any lawful
act or activity for which corporations may be organized under the Delaware
Corporation Law.
FOURTH: The aggregate number of shares which the Corporation shall
have authority to issue is seventy-five thousand (75,000), all of which shall
be shares of Common Stock with a par value of $.01 per share.
FIFTH: The By-Laws of the Corporation may be made, altered,
amended, changed, added to or repealed by the Board of Directors without the
assent or vote of the stockholders.
SIXTH: The Corporation shall, to the fullest extent permitted by
the Delaware Corporation Law (including, without limitation, Section 145
thereof), as amended from time to time, or otherwise, indemnify all persons
whom it may indemnify pursuant thereto or otherwise.
<PAGE>
SEVENTH: The Corporation reserves the right to amend, alter, change
or repeal any Provision contained in this Certificate in the manner now or
hereafter prescribed by law, and all rights and powers conferred herein on
stockholders, directors and officers are subject to this reserved power.
EIGHTH: The name and mailing address of the sole incorporator is as
follows:
Marvin S. Haber
c/o Federal Data Corporation
4800 Hampden Lane
Bethesda, MD 20814
IN WITNESS WHEREOF, I have duly signed this Certificate on the 1st day
of December, 1992.
/s/ Marvin S. Haber
----------------------------
Marvin S. Haber
<PAGE>
EXHIBIT 3.10
BY-LAWS
FDC TECHNOLOGIES, INC.
OFFICES
1. The registered office of FDC Technologies, Inc. (the "Corporation") in
the State of Delaware shall be in the City of Dover, County of Kent.
2. The Principal office shall be located at 4800 Hampden Lane, Bethesda,
Maryland.
3. The corporation may have offices at such other places as the Board of
Directors may, from time to time, determine or the business of the corporation
require.
STOCKHOLDERS' MEETING
4. All meetings of the Stockholders shall be held at such place and time
as shall be stated in the notice of the meeting, or in a duly executed waiver of
notice thereof.
5. An annual meeting of stockholders, commencing with the year 1993,
shall be held on the third Thursday of April, in each year, if not a legal
holiday, and if a legal holiday, then on the next secular day following at 4:00
o'clock p.m. or at such other date and time as shall be designated by the Board
of Directors and stated in the notice of the meeting or as shall be stated in a
duly executed waiver of notice of the meeting. At each annual meeting, the
stockholders entitled to vote shall elect by plurality vote, by ballot, a Board
of Directors and transact such other business as may properly be brought before
the meeting.
6. Written notice of the annual meeting shall be served upon or mailed to
each stockholder entitled to vote thereat at such address as appears on the
books of the corporation, not less than ten nor more than sixty days prior to
the meeting.
7. At least ten but not more than sixty days before every election of
Directors, a complete list of the stockholders entitled to vote at said
election, arranged in alphabetical order, with the residence of each and the
number of voting shares held by each, shall be prepared by the Secretary. Such
list shall be opened at the place where the election is to be held for ten (10)
days, to the examination of any stockholder, and shall be produced and kept at
the time and place of election during the whole time thereof, and subject to the
inspection of any stockholder who may be present.
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8. Special meetings of the stockholders, for any purpose or purposes,
unless otherwise prescribed by statute or by the Certificate of Incorporation,
may be called by the President and shall be called by the President or Secretary
at the request, in writing, of a majority of the Board of Directors, or at the
request, in writing, of a stockholder owning a majority in amount of the entire
capital stock of the corporation issued and outstanding and entitled to vote or
of a stockholder owning a majority in amount of the issued and outstanding
shares of any class of Capital stock entitled to vote. Such request shall state
the purpose or purposes of proposed meeting.
9. Written notice of a special meeting of stockholders, stating the time
and place and object thereof, shall be served upon or mailed to each stockholder
entitled to vote thereat at such address as appears on the books of the
corporation, at least ten but not more than sixty days before such meeting.
10. Business transacted at all special meetings shall be confined to the
objects stated in the call.
11. The holders of a majority of the stock issued and outstanding and
entitled to vote thereat, present in person or represented by proxy, shall be
requisite and shall constitute a quorum at all meetings of the stockholders for
the transaction of business except as otherwise provided by statute, by the
Certificate of Incorporation or by these bylaws. If, however, such quorum shall
not be present or represented at any meeting of the stockholders, the
stockholders entitled to vote thereat, present in person or represented by
proxy, shall have the power to adjourn the meeting from time to time, without
notice other than announcement at the meeting, until a quorum shall be present
or represented. Any business may be transacted which might have been transacted
at the meeting as originally notified.
12. When a quorum is present at any meeting, the vote of the holders of a
majority of the stock having voting power present, in person or represented by
proxy, shall decide any question brought before such meeting, unless the
question is one upon which by express provision of the statute or of the
Certificate of Incorporation or of these bylaws a different vote is required, in
which case such express provision shall govern and control the decision of such
question.
13. At any meeting of the stockholders, every stockholder having the right
to vote shall be entitled to vote in person, or by proxy appointed by an
instrument in writing subscribed by such stockholder and bearing a date not more
than three months prior to said meeting, unless said instrument provides for a
longer period. Each stockholder shall have one (1) vote for each share of stock
having voting power, registered in his name on
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the books of the corporation, and except where the transfer books of the
corporation shall have been closed, or a date shall have been fixed as a record
date for the determination of its stockholders entitled to vote, no share of
stock shall be voted on at any election of Directors which shall have been
transferred on the books of the corporation within twenty days next preceding
such election of Directors.
14. Unless otherwise provided in the Corporation's Certificate of
Incorporation, any action required to be taken at any annual or special meeting
of stockholders of the Corporation or any action which may be taken at any
annual or special meeting of stockholders, may be taken without a meeting,
without prior notice and without a vote, if a consent in writing, setting forth
the action so taken, shall be signed by the holders of outstanding stock having
in the aggregate not less than the minimum number of votes that would be
necessary to authorize or take such action at a meeting at which all shares
entitled to vote thereon were present and voted. Prompt notice of the taking of
corporate action without a meeting by less than unanimous written consent shall
be given to those stockholders who have not consented in writing.
DIRECTORS
15. The business and affairs of the Corporation shall be managed by or
under the direction of the Board of Directors. The number of Directors which
shall constitute the whole Board shall be three (3). The Directors shall be
elected at the Annual Meeting or at any special meeting of the stockholders
called for such purpose, and each Director shall be elected to serve until his
successor shall be elected and shall qualify. Directors need not be
stockholders. The stockholders may, at any special meeting called for such
purpose, remove any Director or Directors, with or without specific cause, each
such vacancy to be filled by the person receiving the greatest number of votes
cast by the stockholders present and entitled to vote thereat. Any vacancy
caused by such removal and not filled by the stockholders at the meeting at
which such removal shall have been voted, may be filled by a majority vote of
the Directors remaining in office.
16. Bylaw 15 fixes three (3) as being the number of Directors that shall
constitute the whole Board, and the first Board shall so consist of three (3)
Directors. After the organizational or first meeting of the Board, the number of
Directors which shall constitute the whole Board shall not be less than three
(3) and may be increased to seven (7) as shall be determined by the stockholders
at the annual meeting or any special meeting.
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17. All meetings of the Board Of Directors shall be held at such place,
within or without the State of Delaware, as the Board may decide from time to
time.
18. Any vacancy in the office of any Director created by reason of an
increase in the number of Directors shall be filled by election at an annual
meeting or at a special meeting of stockholders entitled to vote called for that
purpose. If the office of any Director or Directors becomes vacant for any
other reason, a majority of the remaining directors, though less than a quorum,
shall choose a successor or successors unless the vacancy or vacancies shall
have been filled by the stockholders in the manner provided in paragraph 15
hereof. Such Directors selected shall hold office for the unexpired term in
respect to which such vacancy occurred or until the next election of Directors.
COMMITTEES OF DIRECTORS
19. The Board of Directors may, by resolution or resolutions passed by a
majority of the whole Board, designate one or more committees, each committee to
consist of two (2) or more of the Directors of the corporation, which, to the
extent provided in said resolution or resolutions, shall have and may exercise
the powers of the Board of Directors in the management of the business and
affairs of the corporation, and may have power to authorize the seal of the
corporation to be affixed to all papers which may require it but no such
committee shall have the power or authority to amend the Corporation's
Certificate of Incorporation, to adopt an agreement of merger or consolidation,
to recommend to the stockholders the sale, lease or exchange of all or
substantially all of the Corporation's property and assets or to recommend to
the stockholders a dissolution of the Corporation or a revocation of a
dissolution or to amend the By-Laws of the Corporation; and unless a resolution
of the Board of Directors or the Corporation's Certificate of Incorporation
expressly so provides, no such committee shall have the power or authority to
declare a dividend or to authorize the issuance of common or preferred stock.
Such committee or committees shall have such name or names as may be determined
from time to time by resolution adopted by the Board of Directors.
20. The committees shall keep regular minutes of their proceedings and
report the same to the Board when required.
COMPENSATION OF DIRECTORS
21. Directors, as such, shall not receive any stated salary for their
services, but, by resolution of the Board, a fixed
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sum and expenses of attendance, if any, may be allowed for attendance at each
regular or special meeting of the Board; provided, that nothing herein contained
shall be construed to preclude any Director from serving the corporation in any
other capacity and receiving compensation therefor.
22. Members of special or standing committees may be allowed like
compensation for attending committee meetings.
MEETINGS OF THE BOARD
23. The first meeting of each newly elected Board shall be held at such
time and place, either within or without the State of incorporation, as shall be
fixed by the vote of the stockholders at the annual meeting, and no notice of
such meeting shall be necessary to the newly elected Directors in order legally
to constitute the meeting, provided a quorum shall be present; or they may meet
at such place and time as shall be fixed by the consent, in writing, of all the
Directors.
24. Regular meetings of the Board may be held without notice at such time
and place, either within or without the State of Delaware, as shall, from time
to time, be determined by the Board.
25. Special meetings of the Board may be called by the President on one
(1) day's notice to each Director, either personally or by mail, or by telegram;
special meetings shall be called by the President or Secretary in like manner
and on like notice on the written request of two (2) Directors.
26. At all meetings of the Board, a majority of the entire Board of
Directors shall constitute a quorum for the transaction of business and the
action of a majority of the Directors present at any meeting at which a quorum
is present shall be the action of the Board of Directors unless the concurrence
of a greater proportion is required for such action by the statute, the charter
or by these bylaws. If a quorum shall not be present at any meeting of
Directors, the Directors present thereat may, by a majority vote, adjourn the
meeting from time to time, without notice other than announcement at the
meeting, until a quorum shall be present.
27. Any action required or permitted to be taken at any meeting of the
Board Of Directors, or of any committee thereof, may be taken without a meeting
if all members of the Board or committee, as the case may be, consent thereto in
writing, and the writing or writings are filed with the minutes of proceedings
of the Board or committee. Members of the Board of Directors may participate in
a meeting by means of a conference telephone or
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<PAGE>
similar communications equipment if all persons participating in the meeting can
hear and speak to each other at the same time. Participation in a meeting by
these means constitutes presence in person at a meeting.
NOTICES
28. Whenever under the provisions of the statutes or of the Certificate of
Incorporation or of these bylaws, notice is required to be given to any director
or stockholder, it shall not be construed to mean personal notice, but such
notice may be given in writing, by mail, by depositing the same in a post office
or letter box, in a post-paid sealed wrapper, addressed to such director or
stockholder at such address as appears on the books of the corporation; and such
notice shall be deemed to be given at the time when the same shall be thus
mailed.
29. Whenever any notice is required to be given under the provisions of
the statutes or of the Certificate of Incorporation, or of these bylaws, a
waiver thereof, in writing, signed by the person or persons entitled to said
notice, whether before or after the time stated therein, shall be deemed
equivalent thereto.
OFFICERS
30. The officers of the corporation shall be chosen by the Directors and
shall be a president, a vice president, a secretary and a treasurer. The Board
of Directors may also choose additional vice presidents, and one (1) or more
assistant secretaries and assistant treasurers. Two (2) or more offices may be
held by the same person, except that the offices of president and secretary may
not be held by the same person.
31. The Board of Directors at its first meeting after each annual meeting
of stockholders shall choose a president from its members, and one or more vice
presidents, a secretary and a treasurer, none of whom need be a member of the
Board.
32. The Board may appoint such other officers and agents as it shall deem
necessary, who shall hold their offices for such terms and shall exercise such
powers and perform such duties as shall be determined from time to time by the
Board.
33. The officers of the Corporation shall hold office until their
successors are chosen and qualify in their stead. Any officer elected or
appointed by the Board of Directors may be removed at any time by the
affirmative vote of a majority of the whole Board of Directors. If the office
of any officer becomes
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<PAGE>
vacant for any reason, the vacancy shall be filled by the Board of Directors.
THE PRESIDENT
34. The President shall be the chief executive officer of the corporation;
he shall preside at all meetings of the stockholders and directors, shall be ex
officio a member of all standing committees, shall have general and active
management of the business of the corporation, and shall see that all orders and
resolutions of the Board are carried into effect.
35. He shall execute bonds, mortgages and other contracts requiring a
seal, under the seal of the corporation except where required or permitted by
law to be otherwise signed and executed and except where the signing and
execution thereof shall be expressly delegated by the Board of Directors to some
other officer or agent of the corporation.
VICE PRESIDENT
36. The Vice Presidents, in the order of their seniority shall, in the
absence or disability of the President, perform such other duties as the Board
of Directors shall prescribe. The Board may prescribe certain Vice Presidents
to be designated as Senior Vice Presidents and may also designate one Vice
President to be known as an Executive Vice President. The Executive Vice
President shall, in the absence or disability of the President, perform the
duties and exercise the powers of the President and then the remaining Vice
Presidents in order of their seniority, shall in the absence or disability of
the President and Executive Vice President perform the duties and exercise the
powers of the President and each Vice President shall perform such other duties
as the Board of Directors shall prescribe.
THE SECRETARY AND ASSISTANT SECRETARIES
37. The Secretary shall attend all sessions of the Board and all meetings
of the stockholders and record all votes and the minutes of all proceedings in a
book to be kept for that purpose and shall perform like duties for the standing
committees when required. He shall give, or cause to be given, notice of all
meetings of the stockholders and special meetings of the Board of Directors. He
shall keep in safe custody the seal of the corporation and, when authorized by
the Board, affix the same to any instrument requiring it and, when so affixed,
it shall be attested by his signature or by the signature of the Treasurer or an
Assistant Secretary.
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38. The Assistant Secretaries, in order of their seniority, shall, in the
absence or disability of the Secretary, perform the duties and exercise the
powers of the Secretary and shall perform such other duties as the Board of
Directors shall prescribe.
THE TREASURER AND ASSISTANT TREASURER
39. The Treasurer shall have the custody of the corporate funds and
securities and shall keep full and accurate accounts of receipts and
disbursements in books belonging to the Corporation and shall deposit all monies
and other valuable effects in the name and to the credit of the corporation in
such depositories as may be designated by the Board of Directors.
40. He shall disburse the funds Of the Corporation as may be ordered by
the Board, taking proper vouchers for such disbursements, and shall render to
the President and Directors, at the regular meetings of the Board, or whenever
they may require it, an account of all his transactions as Treasurer and of the
financial condition of the Corporation.
41. If required by the Board of Directors, he shall give the corporation a
bond (which shall be renewed every six (6) years) in such sum and with such
surety or sureties as shall be satisfactory to the Board for the faithful
performance of the duties of his office and for the resignation, retirement or
removal from office, of all books, papers, vouchers, money and other property of
whatever kind in his possession or under his control belonging to the
corporation.
42. The Assistant Treasurers in the order of their seniority shall, in the
absence or disability of the Treasurer, perform the duties and exercise the
powers of the Treasurer, and shall perform such other duties as the Board of
Directors shall prescribe.
CERTIFICATES OF STOCK
43. The certificates of stock of the corporation shall be numbered and
shall be entered in the books of the corporation as they are issued. They shall
exhibit the holder's name and number of shares and shall be signed by the
President or a Vice President and the Treasurer or an Assistant Treasurer or the
Secretary or an Assistant Secretary. If any stock certificate is signed (1) by
a transfer agent or an assistant transfer agent, or (2) by a transfer clerk
acting on behalf of the corporation and a registrar, the signature of any such
officer may be a facsimile. The corporation shall not issue fractional shares
of stock or
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<PAGE>
script evidencing same.
TRANSFERS OF STOCK
44. Upon surrender to the corporation or the transfer agent of the
corporation of a certificate for shares fully endorsed or accompanied by proper
evidence of succession, assignment or authority to transfer, it shall be the
duty of the corporation to issue a new certificate to the person entitled
thereto, cancel the old certificate and record the transaction upon its books.
CLOSING OF TRANSFER BOOKS
45. The Board of Directors shall have power to close the stock transfer
books of the corporation for a period not exceeding sixty nor less than ten days
preceding to the date of any meeting of stockholders or the date for payment of
any dividend or the date for the allotment of rights or the date when any change
or conversion or exchange of capital stock shall go into effect or for a period
of not exceeding 60 days in connection with obtaining the consent of
stockholders for any other purpose; provided, however, that in lieu of closing
the stock transfer books as aforesaid, the Board of Directors may fix in advance
a date, not more than sixty nor less than ten days preceding the date of any
meeting of stockholders, or the date for the payment of any dividend, or the
date for the allotment of rights, or the date when any change or conversion or
exchange of capital stock shall go into effect, or a date in connection with
obtaining such consent, as a record date for the determination of the
stockholders entitled to notice of, and to vote at, any such meeting, and any
adjournment thereof, or entitled to receive payment of any such dividend, or to
any such allotment of rights, or to exercise the rights in respect of any such
change, conversion or exchange of capital stock, or to give such consent, and in
such case such stockholders and only such stockholders as shall be entitled to
such notice of, and to vote at, such meeting and any adjournment thereof, or to
receive payment of such dividend, or to receive such allotment of rights, or to
exercise such rights, or to give such consent, as the case may be,
notwithstanding any transfer of any stock on the books of the corporation after
any such record date fixed as aforesaid.
REGISTERED STOCKHOLDERS
46. The corporation shall be entitled to treat the holder of record of any
share or shares of stock as the holder in fact thereof; and, accordingly, shall
not be bound to recognize
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any equitable or other claim to or interest in such share or shares on the part
of any other person, whether or not it shall have express or other notice
thereof, except as otherwise provided by the laws of the State of Delaware.
LOST CERTIFICATE
47. The Board of Directors may direct a new certificate or certificates to
be issued in place of any certificate or certificates theretofore issued by the
corporation alleged to have been lost or destroyed, upon the making of an
affidavit of that fact by the person claiming the certificate of stock to be
lost or destroyed. When authorizing such issue of a new certificate or
certificates, the Board of Directors may, in its discretion and as a condition
precedent to the issuance thereof, require the owner of such lost or destroyed
certificate or certificates, or his legal representative, to advertise the same
in such manner as it shall require and/or give the corporation a bond in such
sum as it may direct as indemnity against any claim that may be made against the
corporation with respect to the certificate alleged to have been lost or
destroyed.
DIVIDENDS
48. Dividends upon the capital stock of the corporation, subject to the
provisions of the Certificate of Incorporation, if any, may be declared by the
Board of Directors at any regular or special meeting, pursuant to law.
Dividends may be paid in cash, in property, or in shares of the capital stock,
subject to the provisions of the Certificate of Incorporation.
49. Before payment of any dividend, there may be set aside out of any
funds of the corporation available for dividends such sum or sums as the
Directors, from time to time, in their absolute discretion, think proper as a
reserve fund to meet contingencies, or for equalizing dividends, or for
repairing or maintaining any property of the corporation, or for such other
purpose as the Directors shall think conducive to the interest of the
corporation, and the Directors may modify or abolish any such reserve in the
manner in which it was created.
CHECKS
50. All checks or demands for money and notes of the corporation shall be
signed by such officer or officers or such other person or persons as the Board
of Directors may, from time to time, designate.
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INDEMNIFICATION OF OFFICERS AND DIRECTORS
51. The corporation shall indemnify from all liabilities, civil or
criminal, incurred in relation to his duties, including the reasonable cost of
defense, its officers or directors or former officers or directors or any person
who may have served at its request as a director or officer of another
corporation in which it owns shares of capital stock or of which it is a
creditor, such indemnification to be the full extent permitted by the Delaware
General Corporation Law (including, without limitation, Section 145 thereof).
52. Any payments, made to an officer of the corporation such as a salary,
commission, bonus, interest, or rent, or entertainment expense incurred by him
which shall be disallowed in whole or in part as deductible expense by the
Internal Revenue Service, shall be reimbursed by such officer to the corporation
to the full extent such disallowance. It shall be the duty of the directors, as
a Board, to enforce payment of each such amount disallowed. In lieu of payment
by the officer, subject to the determination of the directors, proportionate
amounts may be withheld from his future compensation payments until the amount
owed to the corporation has been removed.
AMENDMENTS
53. The By-Laws of the Corporation may be altered, amended, changed, added
to or repealed by the Board of Directors without the assent or vote of the
stockholders.
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EXHIBIT 3.11
CERTIFICATE OF INCORPORATION
OF
DOXSYS, INC.
I, THE UNDERSIGNED, in order to form a corporation for the purposes
hereinafter stated, under and pursuant to the provisions of the General
Corporation Law of the State of Delaware (the "Delaware Corporation Law"), do
hereby certify as follows:
FIRST: The name of the corporation is DoxSys, Inc. (the
"Corporation").
SECOND: The address of the registered office of the Corporation in
the State of Delaware is 32 Loockerman Square, Suite L-100, City of Dover,
County of Kent. The name of its registered agent at such address is the
Prentice-Hall Corporation System, Inc.
THIRD: The nature of the business and purposes to be conducted or
promoted by the Corporation are to engage in, carry on and conduct any lawful
act or activity for which corporations may
<PAGE>
be organized under the Delaware Corporation Law.
FOURTH: The aggregate number of shares which the Corporation shall
have authority to issue is seventy-five thousand (75,000), all of which shall
be shares of Common Stock with a par value of $0.01 per share.
FIFTH: The By-Laws of the Corporation may be made, altered,
amended, changed, added to or repealed by the Board of Directors without the
assent or vote of the stockholders.
SIXTH: The Corporation shall, to the fullest extent permitted by
the Delaware Corporation Law (including, without limitation, Section 145
thereof), as amended from time to time, or otherwise, indemnify all persons
whom it may indemnify pursuant thereto or otherwise.
SEVENTH: The Corporation reserves the right to amend, alter,
change or repeal any Provision contained in this Certificate in the manner
now or hereafter prescribed by law, and all rights and powers conferred
herein on stockholders, directors and officers are subject to this reserved
power.
EIGHTH: The name and mailing address of the sole incorporator is
as follows:
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Marvin S. Haber
c/o Federal Data Corporation
4800 Hampden Lane
Bethesda, MD 20814
IN WITNESS WHEREOF, I have duly signed this Certificate on the 6th
day of November, 1992.
/s/ Marvin S. Haber
---------------------------------
Marvin S. Haber
<PAGE>
EXHIBIT 3.12
BY-LAWS
DOXSYS, INC.
OFFICES
1. The registered office of DoxSys, Inc. (the "Corporation") in
the State of Delaware shall be in the City of Dover, County of Kent.
2. The Principal office shall be located at 4800 Hampden Lane,
Bethesda, Maryland.
3. The corporation may have offices at such other places as the
Board of Directors may, from time to time, determine or the business of the
corporation require.
STOCKHOLDERS' MEETING
4. All meetings of the Stockholders shall be held at such place
and time as shall be stated in the notice of the meeting, or in a duly
executed waiver of notice thereof.
5. An annual meeting of stockholders, commencing with the year
1993, shall be held on the third Thursday of April, in each year, if not a
legal holiday, and if a legal holiday, then on the next secular day following
at 4:00 o'clock p.m. or at such other date and time as shall be designated by
the Board of Directors and stated in the notice of the meeting or as shall be
stated in a duly executed waiver of notice of the meeting. At each annual
meeting, the stockholders entitled to vote shall elect by plurality vote, by
ballot, a Board of Directors and transact such other business as may properly
be brought before the meeting.
6. Written notice of the annual meeting shall be served upon or
mailed to each stockholder entitled to vote thereat at such address as
appears on the books of the corporation, not less than ten nor more than
sixty days prior to the meeting.
7. At least ten but not more than sixty days before every
election of Directors, a complete list of the stockholders entitled to vote
at said election, arranged in alphabetical order, with the residence of each
and the number of voting shares held by each, shall be prepared by the
Secretary. Such list shall be opened at the place where the election is to
be held for ten (10) days, to the examination of any stockholder, and shall
be produced and kept at the time and place of election during the whole time
thereof, and subject to the inspection of any stockholder who may be present.
8. Special meetings of the stockholders, for any purpose or
purposes, unless otherwise prescribed by statute or by
<PAGE>
the Certificate of Incorporation, may be called by the President and shall be
called by the President or Secretary at the request, in writing, of a
majority of the Board of Directors, or at the request, in writing, of a
stockholder owning a majority in amount of the entire capital stock of the
corporation issued and outstanding and entitled to vote or of a stockholder
owning a majority in amount of the issued and outstanding shares of any class
of capital stock entitled to vote. Such request shall state the purpose or
purposes of proposed meeting.
9. Written notice of a special meeting of stockholders, stating
the time and place and object thereof, shall be served upon or mailed to each
stockholder entitled to vote thereat at such address as appears on the books
of the corporation, at least ten but not more than sixty days before such
meeting.
10. Business transacted at all special meetings shall be confined
to the objects stated in the call.
11. The holders of a majority of the stock issued and outstanding
and entitled to vote thereat, present in person or represented by proxy,
shall be requisite and shall constitute a quorum at all meetings of the
stockholders for the transaction of business except as otherwise provided by
statute, by the Certificate of Incorporation or by these bylaws. If,
however, such quorum shall not be present or represented at any meeting of
the stockholders, the stockholders entitled to vote thereat, present in
person or represented by proxy, shall have the power to adjourn the meeting
from time to time, without notice other than announcement at the meeting,
until a quorum shall be present or represented. Any business may be
transacted which might have been transacted at the meeting as originally
notified.
12. When a quorum is present at any meeting, the vote of the
holders of a majority of the stock having voting power present, in person or
represented by proxy, shall decide any question brought before such meeting,
unless the question is one upon which by express provision of the statute or
of the Certificate of Incorporation or of these bylaws a different vote is
required, in which case such express provision shall govern and control the
decision of such question.
13. At any meeting of the stockholders, every stockholder having
the right to vote shall be entitled to vote in person, or by proxy appointed
by an instrument in writing subscribed by such stockholder and bearing a date
not more than three months prior to said meeting, unless said instrument
provides for a longer period. Each stockholder shall have one (1) vote for
each share of stock having voting power, registered in his name on the books
of the corporation, and except where the transfer books of the corporation
shall have been closed, or a date shall have
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been fixed as a record date for the determination of its stockholders
entitled to vote, no share of stock shall be voted on at any election of
Directors which shall have been transferred on the books of the corporation
within twenty days next preceding such election of Directors.
14. Unless otherwise provided in the Corporation's Certificate of
Incorporation, any action required to be taken at any annual or special
meeting of stockholders of the Corporation or any action which may be taken
at any annual or special meeting of stockholders, may be taken without a
meeting, without prior notice and without a vote, if a consent in writing,
setting forth the action so taken, shall be signed by the holders of
outstanding stock having in the aggregate not less than the minimum number of
votes that would be necessary to authorize or take such action at a meeting
at which all shares entitled to vote thereon were present and voted. Prompt
notice of the taking of corporate action without a meeting by less than
unanimous written consent shall be given to those stockholders who have not
consented in writing.
DIRECTORS
15. The business and affairs of the Corporation shall be managed
by or under the direction of the Board of Directors. The number of Directors
which shall constitute the whole Board shall be three (3). The Directors
shall be elected at the Annual Meeting or at any special meeting of the
stockholders called for such purpose, and each Director shall be elected to
serve until his successor shall be elected and shall qualify. Directors need
not be stockholders. The stockholders may, at any special meeting called for
such purpose, remove any Director or Directors, with or without specific
cause, each such vacancy to be filled by the person receiving the greatest
number of votes cast by the stockholders present and entitled to vote
thereat. Any vacancy caused by such removal and not filled by the
stockholders at the meeting at which such removal shall have been voted, may
be filled by a majority vote of the Directors remaining in office.
16. Bylaw 15 fixes three (3) as being the number of Directors that
shall constitute the whole Board, and the first Board shall so consist of
three (3) Directors. After the organizational or first meeting of the Board,
the number of Directors which shall constitute the whole Board shall not be
less than three (3) and may be increased to seven (7) as shall be determined
by the stockholders at the annual meeting or any special meeting.
17. All meetings of the Board Of Directors shall be held at such
place, within or without the State of Delaware, as the Board may decide from
time to time.
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18. Any vacancy in the office of any Director created by reason of
an increase in the number of Directors shall be filled by election at an
annual meeting or at a special meeting of stockholders entitled to vote
called for that purpose. If the office of any Director or Directors becomes
vacant for any other reason, a majority of the remaining directors, though
less than a quorum, shall choose a successor or successors unless the vacancy
or vacancies shall have been filled by the stockholders in the manner
provided in paragraph 15 hereof. Such Directors selected shall hold office
for the unexpired term in respect to which such vacancy occurred or until the
next election of Directors.
COMMITTEES OF DIRECTORS
19. The Board of Directors may, by resolution or resolutions
passed by a majority of the whole Board, designate one or more committees,
each committee to consist of two (2) or more of the Directors of the
corporation, which, to the extent provided in said resolution or resolutions,
shall have and may exercise the powers of the Board of Directors in the
management of the business and affairs of the corporation, and may have power
to authorize the seal of the corporation to be affixed to all papers which
may require it but no such committee shall have the power or authority to
amend the Corporation's Certificate of Incorporation, to adopt an agreement
of merger or consolidation, to recommend to the stockholders the sale, lease
or exchange of all or substantially all of the Corporation's property and
assets or to recommend to the stockholders a dissolution of the Corporation
or a revocation of a dissolution or to amend the By-Laws of the Corporation;
and unless a resolution of the Board of Directors or the Corporation's
Certificate of Incorporation expressly so provides, no such committee shall
have the power or authority to declare a dividend or to authorize the
issuance of common or preferred stock. Such committee or committees shall
have such name or names as may be determined from time to time by resolution
adopted by the Board of Directors.
20. The committees shall keep regular minutes of their proceedings
and report the same to the Board when required.
COMPENSATION OF DIRECTORS
21. Directors, as such, shall not receive any stated salary for
their services, but, by resolution of the Board, a fixed sum and expenses of
attendance, if any, may be allowed for attendance at each regular or special
meeting of the Board; provided, that noting herein contained shall be
construed to preclude any Director from serving the corporation in any other
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capacity and receiving compensation therefor.
22. Members of special or standing committees may be allowed like
compensation for attending committee meetings.
MEETINGS OF THE BOARD
23. The first meeting of each newly elected Board shall be held at
such time and place, either within or without the State of incorporation, as
shall be fixed by the vote of the stockholders at the annual meeting, and no
notice of such meeting shall be necessary to the newly elected Directors in
order legally to constitute the meeting, provided a quorum shall be present;
or they may meet at such place and time as shall be fixed by the consent, in
writing, of all the Directors.
24. Regular meetings of the Board may be held without notice at
such time and place, either within or without the State of Delaware, as
shall, from time to time, be determined by the Board.
25. Special meetings of the Board may be called by the President
on one (1) day's notice to each Director, either personally or by mail, or by
telegram; special meetings shall be called by the President or Secretary in
like manner and on like notice on the written request of two (2) Directors.
26. At all meetings of the Board, a majority of the entire Board
of Directors shall constitute a quorum for the transaction of business and
the action of a majority of the Directors present at any meeting at which a
quorum is present shall be the action of the Board of Directors unless the
concurrence of a greater proportion is required for such action by the
statute, the charter or by these bylaws. If a quorum shall not be present at
any meeting of Directors, the Directors present thereat may, by a majority
vote, adjourn the meeting from time to time, without notice other than
announcement at the meeting, until a quorum shall be present.
27. Any action required or permitted to be taken at any meeting of
the Board Of Directors, or of any committee thereof, may be taken without a
meeting if all members of the Board or committee, as the case may be, consent
thereto in writing, and the writing or writings are filed with the minutes of
proceedings of the Board or committee. Members of the Board of Directors may
participate in a meeting by means of a conference telephone or similar
communications equipment if all persons participating in the meeting can hear
and speak to each other at the same time. Participation in a meeting by
these means constitutes presence in person at a meeting.
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NOTICES
28. Whenever under the provisions of the statutes or of the
Certificate of Incorporation or of these bylaws, notice is required to be
given to any Director or Stockholder, it shall not be construed to mean
personal notice, but such notice may be given in writing, by mail, by
depositing the same in a post office or letter box, in a post-paid sealed
wrapper, addressed to such director or stockholder at such address as appears
on the books of the corporation; and such notice shall be deemed to be given
at the time when the same shall be thus mailed.
29. Whenever any notice is required to be given under the
provisions of the statutes or of the Certificate of Incorporation, or of
these bylaws, a waiver thereof, in writing, signed by the person or persons
entitled to said notice, whether before or after the time stated therein,
shall be deemed equivalent thereto.
OFFICERS
30. The officers of the corporation shall be chosen by the
Directors and shall be a president, a vice president, a secretary and a
treasurer. The Board of Directors may also choose additional vice
presidents, and one (1) or more assistant secretaries and assistant
treasurers. Two (2) or more offices may be held by the same person, except
that the offices of president and secretary may not be held by the same
person.
31. The Board of Directors at its first meeting after each annual
meeting of stockholders shall choose a president from its members, and one or
more vice presidents, a secretary and a treasurer, none of whom need be a
member of the Board.
32. The Board may appoint such other officers and agents as it
shall deem necessary, who shall hold their offices for such terms and shall
exercise such powers and perform such duties as shall be determined from time
to time by the Board.
33. The officers of the Corporation shall hold office until their
successors are chosen and qualify in their stead. Any officer elected or
appointed by the Board of Directors may be removed at any time by the
affirmative vote of a majority of the whole Board of Directors. If the
office of any officer becomes vacant for any reason, the vacancy shall be
filled by the Board of Directors.
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THE PRESIDENT
34. The President shall be the chief executive officer of the
corporation; he shall preside at all meetings of the stockholders and
directors, shall be ex officio a member of all standing committees, shall
have general and active management of the business of the corporation, and
shall see that all orders and resolutions of the Board are carried into
effect.
35. He shall execute bonds, mortgages and other contracts
requiring a seal, under the seal of the corporation except where required or
permitted by law to be otherwise signed and executed and except where the
signing and execution thereof shall be expressly delegated by the Board of
Directors to some other officer or agent of the corporation.
VICE PRESIDENT
36. The Vice Presidents, in the order of their seniority shall, in
the absence or disability of the President, perform such other duties as the
Board of Directors shall prescribe. The Board may prescribe certain Vice
Presidents to be designated as Senior Vice Presidents and may also designate
one Vice President to be known as an Executive Vice President. The Executive
Vice President shall, in the absence or disability of the President, perform
the duties and exercise the powers of the President and then the remaining
Vice Presidents in order of their seniority, shall in the absence or
disability of the President and Executive Vice President perform the duties
and exercise the powers of the President and each Vice President shall
perform such other duties as the Board of Directors shall prescribe.
THE SECRETARY AND ASSISTANT SECRETARIES
37. The Secretary shall attend all sessions of the Board and all
meetings of the stockholders and record all votes and the minutes of all
proceedings in a book to be kept for that purpose and shall perform like
duties for the standing committees when required. He shall give, or cause to
be given, notice of all meetings of the stockholders and special meetings of
the Board of Directors. He shall keep in safe custody the seal of the
corporation and, when authorized by the Board, affix the same to any
instrument requiring it and, when so affixed, it shall be attested by his
signature or by the signature of the Treasurer or an Assistant Secretary.
38. The Assistant Secretaries, in order of their seniority, shall,
in the absence or disability of the Secretary,
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perform the duties and exercise the powers of the Secretary and shall perform
such other duties as the Board of Directors shall prescribe.
THE TREASURER AND ASSISTANT TREASURER
39. The Treasurer shall have the custody of the corporate funds
and securities and shall keep full and accurate accounts of receipts and
disbursements in books belonging to the Corporation and shall deposit all
monies and other valuable effects in the name and to the credit of the
corporation in such depositories as may be designated by the Board of
Directors.
40. He shall disburse the funds Of the Corporation as may be
ordered by the Board, taking proper vouchers for such disbursements, and
shall render to the President and Directors, at the regular meetings of the
Board, or whenever they may require it, an account of all his transactions as
Treasurer and of the financial condition of the Corporation.
41. If required by the Board of Directors, he shall give the
corporation a bond (which shall be renewed every six (6) years) in such sum
and with such surety or sureties as shall be satisfactory to the Board for
the faithful performance of the duties of his office and for the resignation,
retirement or removal from office, of all books, papers, vouchers, money and
other property of whatever kind in his possession or under his control
belonging to the corporation.
42. The Assistant Treasurers in the order of their seniority
shall, in the absence or disability of the Treasurer, perform the duties and
exercise the powers of the Treasurer, and shall perform such other duties as
the Board of Directors shall prescribe.
CERTIFICATES OF STOCK
43. The certificates of stock of the corporation shall be numbered
and shall be entered in the books of the corporation as they are issued.
They shall exhibit the holder's name and number of shares and shall be signed
by the President or a Vice President and the Treasurer or an Assistant
Treasurer or the Secretary or an Assistant Secretary. If any stock
certificate is signed (1) by a transfer agent or an assistant transfer agent,
or (2) by a transfer clerk acting on behalf of the corporation and a
registrar, the signature of any such officer may be a facsimile. The
corporation shall not issue fractional shares of stock or script evidencing
same.
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TRANSFERS OF STOCK
44. Upon surrender to the corporation or the transfer agent of the
corporation of a certificate for shares fully endorsed or accompanied by
proper evidence of succession, assignment or authority to transfer, it shall
be the duty of the corporation to issue a new certificate to the person
entitled thereto, cancel the old certificate and record the transaction upon
its books.
CLOSING OF TRANSFER BOOKS
45. The Board of Directors shall have power to close the stock
transfer books of the corporation for a period not exceeding sixty nor less
than ten days preceding to the date of any meeting of stockholders or the
date for payment of any dividend or the date for the allotment of rights or
the date when any change or conversion or exchange of capital stock shall go
into effect or for a period of not exceeding 60 days in connection with
obtaining the consent of stockholders for any other purpose; provided,
however, that in lieu of closing the stock transfer books as aforesaid, the
Board of Directors may fix in advance a date, not more than sixty nor less
than ten days preceding the date of any meeting of stockholders, or the date
for the payment of any dividend, or the date for the allotment of rights, or
the date when any change or conversion or exchange of capital stock shall go
into effect, or a date in connection with obtaining such consent, as a record
date for the determination of the stockholders entitled to notice of, and to
vote at, any such meeting, and any adjournment thereof, or entitled to
receive payment of any such dividend, or to any such allotment of rights, or
to exercise the rights in respect of any such change, conversion or exchange
of capital stock, or to give such consent, and in such case such stockholders
and only such stockholders as shall be entitled to such notice of, and to
vote at, such meeting and any adjournment thereof, or to receive payment of
such dividend, or to receive such allotment of rights, or to exercise such
rights, or to give such consent, as the case may be, notwithstanding any
transfer of any stock on the books of the corporation after any such record
date fixed as aforesaid.
REGISTERED STOCKHOLDERS
46. The corporation shall be entitled to treat the holder of
record of any share or shares of stock as the holder in fact thereof; and,
accordingly, shall not be bound to recognize any equitable or other claim to
or interest in such share or shares on the part of any other person, whether
or not it shall have express or other notice thereof, except as otherwise
provided by the laws of the State of Delaware.
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LOST CERTIFICATE
47. The Board of Directors may direct a new certificate or
certificates to be issued in place of any certificate or certificates
theretofore issued by the corporation alleged to have been lost or destroyed,
upon making of an affidavit of that fact by the person claiming the
certificate of stock to be lost or destroyed. When authorizing such issue of
a new certificate or certificates, the Board of Directors may, in its
discretion and as a condition precedent to the issuance thereof, require the
owner of such lost or destroyed certificate or certificates, or his legal
representative, to advertise the same in such manner as it shall require
and/or give the corporation a bond in such sum as it may direct as indemnity
against any claim that may be made against the corporation with respect to
the certificate alleged to have been lost or destroyed.
DIVIDENDS
48. Dividends upon the capital stock of the corporation, subject
to the provisions of the Certificate of Incorporation, if any, may be
declared by the Board of Directors at any regular or special meeting,
pursuant to law. Dividends may be paid in cash, in property, or in shares of
the capital stock, subject to the provisions of the Certificate of
Incorporation.
49. Before payment of any dividend, there may be set aside out of
any funds of the corporation available for dividends such sum or sums as the
Directors, from time to time, in their absolute discretion, think proper as a
reserve fund to meet contingencies, or for equalizing dividends, or for
repairing or maintaining any property of the corporation, or for such other
purpose as the Directors shall think conducive to the interest of the
corporation, and the Directors may modify or abolish any such reserve in the
manner in which it was created.
CHECKS
50. All checks or demands for money and notes of the corporation
shall be signed by such officer or officers or such other person or persons
as the Board of Directors may, from time to time, designate.
INDEMNIFICATION OF OFFICERS AND DIRECTORS
51. The corporation shall indemnify from all liabilities, civil or
criminal, incurred in relation to his duties, including the reasonable cost
of defense, its officers or directors or former officers or directors or any
person who may have served at its request as a director or officer of another
corporation in which it owns shares of capital stock or of which it is a
creditor,
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such indemnification to be the full extent permitted by the Delaware General
Corporation Law (including, without limitation, Section 145 thereof).
52. Any payments, made to an officer of the corporation such as a
salary, commission, bonus, interest, or rent, or entertainment expense
incurred by him which shall be disallowed in whole or in part as deductible
expense by the Internal Revenue Service, shall be reimbursed by such officer
to the corporation to the full extent such disallowance. It shall be the
duty of the directors, as a Board, to enforce payment of each such amount
disallowed. In lieu of payment by the officer, subject to the determination
of the directors, proportionate amounts may be withheld from his future
compensation payments until the amount owed to the corporation has been
removed.
AMENDMENTS
53. The By-Laws of the Corporation may be altered, amended,
changed, added to or repealed by the Board of Directors without the assent or
vote of the stockholders.
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ARTICLES OF INCORPORATION
OF
VAD INTERNATIONAL, INC.
The undersigned, being a natural person and acting as incorporator,
does hereby adopt the following Articles of Incorporation for the purpose of
forming a business corporation in the State of Maryland, pursuant to the
provisions of the Maryland General Corporation Law.
FIRST: (1) The name of the incorporator is Peter R. Gilbert.
(2) The said incorporator's address is c/o Manatt, Phelps &
Phillips, LLP, 1501 M Street, N.W., Suite 700, Washington, D.C. 20005.
(3) The said incorporator is at least eighteen years of age.
(4) The said incorporator is forming the corporation named in
these Articles of Incorporation under the general laws of the State of
Maryland, to wit, the Maryland General Corporation Law.
SECOND: The name of the corporation (hereinafter called the
"Corporation") is VAD INTERNATIONAL, INC.
THIRD: The purposes for which the Corporation is formed and the
business or objects to be carried on and promoted by it are as follows:
(1) To engage generally in business as a value-added
distributor of high performance hardware and software products and related
services, and all matters consistent therewith.
(2) To purchase, receive, take by grant, gift, devise, bequest
or otherwise, lease, or otherwise deal in and with real or personal property,
or any interest therein, wherever situated, and to sell, convey, lease,
exchange, transfer or otherwise dispose of, or mortgage or pledge, all or any
of its property and assets, or any interest therein, wherever situated.
(3) To engage generally in real estate as principal, agent,
broker, and in any lawful capacity, and generally to take, lease, purchase,
or otherwise acquire, and to own, use, hold, sell convey, exchange, lease,
mortgage, work, clear, improve, develop, divide, and otherwise handle,
manage, operate, deal in, and dispose of real estate, real property, lands,
multiple-dwelling structures, houses, buildings, and other works and any
interest or right therein; to take, lease, purchase, or otherwise acquire,
and to own, use, hold, sell, convey, exchange, hire,
<PAGE>
lease, pledge, mortgage, and otherwise handle, and deal in and dispose of, as
principal, agent, broker, and in any lawful capacity, such personal property,
chattels, chattels real, rights, easements, privileges, choses in action,
notes, bonds, mortgages, and securities as may lawfully be acquired, held, or
disposed of, and to acquire, purchase, sell, assign, transfer, dispose of, and
generally deal in and with, as principal, agent, broker, and in any lawful
capacity, mortgages and other interest in real, personal, and mixed
properties; to carry on a general construction, contracting, building, and
realty management business as principal, agent, representative, contractor,
subcontractor, and in any other lawful capacity.
(4) To carry on a general mercantile, industrial, investing,
and trading business in all its branches; to devise, invent, manufacture,
fabricate, assemble, install, service, maintain, alter, buy, sell, import,
export, license as licensor or licensee, lease as lessor or lessee,
distribute, job, enter into, negotiate, execute, acquire, and assign
contracts in respect of, acquire, receive, grant, and assign licensing
arrangements, options, franchises, and other rights in respect of, and
generally deal in and with, at wholesale and retail, as principal, and as
sales, business, special, or general agent, representative, broker, factor,
merchant, distributor, jobber, advisor, and in any other lawful capacity,
goods, wares, merchandise, commodities, and unimproved, improved, finished,
processed, and other real, personal, and mixed property of any and all kinds,
together with the components, resultants, and by-products thereof.
(5) To apply for, register, obtain, purchase, lease, take
licenses in respect of, or otherwise acquire, and to hold, own, use, operate,
develop, enjoy, turn to account, grant licenses and immunities in respect of,
manufacture under and to introduce, sell, assign, mortgage, pledge or
otherwise dispose of, and, in any manner deal with and contract with
reference to:
(a) inventions, devices, formulae, processes, and any
improvements and modifications thereof;
(b) letters patent, patent rights, patented processes,
copyrights, designs, and similar rights, trademarks, trade symbols and
other indications of origin and ownership granted by or recognized
under the laws of the United States of America or of any state or
subdivision thereof, or of any foreign country or subdivision thereof,
and all rights connected therewith or appertaining thereunto;
(c) franchises, licenses, grants, and concessions.
(6) To engage in any other lawful act or activity for which
corporations may be organized under the Maryland General Corporation Law.
(7) To have all of the powers conferred upon corporations
organized under the provisions of the Maryland General Corporation Law.
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FOURTH: The address of the principal office of the Corporation is 7501
Greenway Center Drive, Suite 1200, Greenbelt, MD 20770.
FIFTH: The name and the address, including street and number, if any,
and the county or municipal area, of the resident agent of the Corporation
within the State of Maryland, is NYMA, Inc., a Maryland corporation, 7501
Greenway Center Drive, Suite 1200, Greenbelt, MD 20770.
SIXTH: (1) The total number of shares of stock which the Corporation
has authority to issue is four million (4,000,000), all of which are of a par
value of One Cent ($.01) each and are designated as Common Stock.
(2) The aggregate par value of all the authorized shares of
stock is Forty Thousand Dollars ($40,000.00).
SEVENTH (1) The number of directors of the Corporation, until such
number shall be changed by the Bylaws of the Corporation, is seven.
(2) The names of the persons who will serve as directors of the
Corporation until the first annual meeting of stockholders and until their
successors are elected and qualified are as follows:
Azmat Ali
Peter C. Belford
Timothy M. Fowler
Kevin E. Kelly
Richard Litsinger
Joseph T. Pisula
Arthur P. Verbin
(3) The initial Bylaws of the Corporation shall be adopted by
the initial directors. Thereafter, the power to adopt, alter, and repeal the
Bylaws of the Corporation shall be vested in the Board of Directors of the
Corporation.
(4) The liability of the directors of the Corporation is
limited to the fullest extent permitted by the provisions of Section 2-405.2
of the Maryland General Corporation Law, as the same may be amended and
supplemented.
(5) The Corporation shall, to the fullest extent permitted by
the Maryland General Corporation Law, as the same may be amended and
supplemented, and, without limiting the generality of the foregoing, in
accordance with Section 2-418 of said Maryland General Corporation Law,
indemnify any and all persons whom it shall have power to
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indemnify under said law from and against any and all of the expenses,
liabilities or other matters referred to in or covered by said Maryland
General Corporation Law.
EIGHTH: The duration of the Corporation is perpetual.
NINTH: From time to time, any of the provisions of these Articles of
Incorporation may be amended, altered or repealed, and other provisions
authorized by the Maryland General Corporation Law at the time in force may
be added or inserted in the manner and at the time prescribed by said laws,
and any contract rights at any time conferred upon the stockholders of the
Corporation by these Articles of Incorporation are granted subject to the
provisions of this Article.
IN WITNESS WHEREOF, I have adopted and signed these Articles of
Incorporation and do hereby acknowledge that the adoption and signing are my
act on this 19th day of June, 1996.
/s/ Peter R. Gilbert
-----------------------------
Peter R. Gilbert, Incorporator
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BY-LAWS
OF
VAD INTERNATIONAL, INC.
_________________
ARTICLE 1
STOCKHOLDERS
1. CERTIFICATES REPRESENTING STOCK. Every holder of stock in the
corporation shall be entitled to have a certificate signed by, or in the name
of, the corporation by the Chairman or Vice Chairman of the Board of
Directors, if any, or by the President or a Vice-President and by the
Treasurer or an Assistant Treasurer or the Secretary or an Assistant Secretary
of the corporation certifying the number of shares owned by him in the
corporation. If such certificate is countersigned by a transfer agent other
than the corporation or its employee or by a registrar other than the
corporation or its employee, all other signatures on the certificate may be a
facsimile. In case any officer, transfer agent, or registrar who has signed
or whose facsimile signature has been placed upon a certificate shall have
ceased to be such officer, transfer agent, or registrar before such
certificate is issued, it may be issued by the corporation with the same
effect as if he were such officer, transfer agent, or registrar at the date
of issue.
The corporation may issue a new certificate of stock in place of any
certificate theretofore issued by it, alleged to have been lost, stolen, or
destroyed. The Board of Directors, in its sole discretion and as a condition
precedent to the issuance thereof, may require the owner of any lost, stolen,
or destroyed certificate, or his legal representative, to give the
corporation a bond sufficient to indemnify the corporation against any claim
that may be made against it on account of the alleged loss, theft, or
destruction of any such certificate or the issuance of any such new
certificate.
2. FRACTIONAL SHARE INTERESTS. The corporation may, but shall not be
required to, issue fractions of a share. In lieu thereof it shall either pay
in cash the fair value of fractions of a share, as determined by the Board of
Directors, to those entitled thereto or issue scrip or fractional warrants in
registered or bearer form over the manual or facsimile signature of an
officer of the corporation or of its agent, exchangeable as therein provided
for full shares, but such scrip or fractional warrants shall not entitle the
holder to any rights of a shareholder except as therein provided.
<PAGE>
Such scrip or fractional warrants may be issued subject to the condition that
the same shall become void if not exchanged for certificates representing
full shares of stock before a specified date, or subject to the condition
that the shares of stock for which such scrip or fractional warrants are
exchangeable may be sold by the corporation and the proceeds thereof
distributed to the holders of such scrip or fractional warrants, or subject
to any other conditions which the Board of Directors may determine.
3. STOCK TRANSFERS. Upon compliance with provisions restricting the
transfer or registration of transfer of shares of stock, if any, transfers or
registration of transfers of shares of stock of the corporation shall be made
on the stock ledger of the corporation by the registered holder thereof, or
by his attorney thereunto authorized by power of attorney duly executed and
filed with the Secretary of the corporation or with a transfer agent or a
registrar, if any, and on surrender of the certificate or certificates for
such shares of stock properly endorsed and the payment of all taxes due
thereon.
Upon surrender to the corporation or the transfer agent of the
corporation of a certificate for shares duly endorsed or accompanied by
proper evidence of succession, assignment or authority to transfer, the
corporation shall issue a new certificate to the person entitled thereto,
cancel the old certificate and record the transaction upon its books.
4. RECORD DATE FOR STOCKHOLDERS. For the purpose of determining the
stockholders entitled to notice of or to vote and any meeting of stockholders
or any adjournment thereof, or to express consent to or dissent from any
corporate action in writing without a meeting, or for the purpose of
determining stockholders entitled to receive payment of any dividend or
other distribution or the allotment of any rights, or entitled to exercise
any rights in respect of any change, conversion, or exchange of stock, or for
the purpose of any other lawful action, the directors may fix, in advance, a
date as the record date for any such determination of stockholders. Such date
shall not be more than sixty days nor less than ten days before the date of
such meeting, nor more than sixty days prior to any other action. If no
record date is fixed, the record date for the determination of stockholders
entitled to notice of or to vote at a meeting of stockholders shall be at the
close of business on the day next preceding the day on which notice is given,
or, if notice is waived, at the close of business on the day next preceding
the day on which the meeting is held; the record date for determining
stockholders for any other purpose shall be at the close of business on the
day on which the Board of Directors adopts the resolution relating thereto.
When a determination of stockholders of record entitled to notice of or
to vote at any meeting of stockholders has been made as provided in this
paragraph, such determination shall apply to any adjournment thereof;
provided, however, that the Board of Directors may fix a new record date for
the adjourned meeting.
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5. MEANING OF CERTAIN TERMS. As used herein in respect of the right to
notice of a meeting of stockholders or a waiver thereof or to participate or
vote thereat or to consent or dissent in writing in lieu of a meeting, as the
case may be, the term "share" or "shares" or "share of stock" or "shares of
stock" or "stockholder" or "stockholders" refers to an outstanding share or
shares of stock and to a holder or holders of record of outstanding shares of
stock when the corporation is authorized to issue only one class of shares of
stock, and said reference is also intended to include any outstanding share
or shares of stock and any holder or holders of record of outstanding shares
of stock of any class upon which or upon whom the certificate of
incorporation confers such rights where there are two or more classes or
series of shares of stock or upon which or upon whom the Maryland General
Corporation Law confers such rights notwithstanding that the certificate of
incorporation may provide for more than one class or series of shares of
stock, one or more of which are limited or denied such rights thereunder;
provided, however, that no such right shall vest in the event of an increase
or a decrease in the authorized number of shares of stock of any class or
series which is otherwise denied voting rights under the provisions of the
certificate of incorporation.
6. STOCKHOLDERS MEETINGS.
-TIME. The annual meeting shall be held on the date and at the time
fixed, from time to time, by the directors, provided, that the first annual
meeting shall be held on a date within thirteen months after the
organization of the corporation, and each successive annual meeting. A
special meeting shall be held on the date and at the time as shall be
designated from time to time by the directors and stated in the notice of
the meeting.
-PLACE. Annual meetings and special meeting shall be held at such place,
within or without the State of Maryland, as the directors may, from time to
time, fix. Whenever the directors shall fail to fix such place, the meetings
shall be held at the registered office of the corporation in the State of
Maryland.
-CALL. Annual meetings may be called by the directors. Special meetings
may be called by the President, the directors or by any officer instructed
by the directors to call the meeting.
-NOTICE OR WAIVER OF NOTICE. Written notice of all meetings shall be
given, stating the place, date, and hour of the meeting and stating the place
within the city or other municipality or community at which the list of
stockholders of the corporation may be examined. The notice of an annual
meeting shall state that the meeting is called for the election of directors
and for the transaction of other business which may properly come before the
meeting, and shall (if any other action which could be taken at a special
meeting is to be taken at such annual meeting) state the
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purposes or purposes. The notice of a special meeting shall in all instances
state the purpose or purposes for which the meeting is called. If any action
is proposed to be taken which would, if taken, entitle stockholders to
receive payment for their shares of stock, the notice shall include a
statement of that purpose and to that effect. A copy of the notice of any
meeting shall be given, personally or by mail, not less than ten days nor
more than sixty days before the date of the meeting, unless the lapse of the
prescribed period of time shall have been waived, and directed to each
stockholder at his record address or at such other address which he may have
furnished by request in writing to the Secretary of the corporation. Notice
by mail shall be deemed to be given when deposited in the United State mail,
postage prepaid. If a meeting is adjourned to another time, not more than
thirty days hence, and/or to another place, and if an announcement of the
adjourned time and/or place is made at the meeting, it shall not be necessary
to give notice of the adjourned meeting. Notice need not be given to any
stockholder who submits a written waiver of notice by him before or after the
time stated therein. Attendance of a person at a meeting of stockholders
shall constitute a waiver of notice of such meeting, except when the
stockholder attends a meeting for the express purpose of objecting, at the
beginning of the meeting, to the transaction of any business because the
meeting is not lawfully called or convened. Neither the business to be
transacted at, nor the purpose of, any regular or special meeting of the
stockholders need be specified in any written waiver of notice.
-STOCKHOLDER LIST. The officer who has charge of the stock ledger of the
corporation shall prepare and make, at least ten days before every meeting of
stockholders, a complete list of the stockholders, arranged in alphabetical
order, and showing the address of each stockholder and the number of shares
registered in the name of each stockholder. Such list shall be open to the
examination of any stockholder, for any purpose germane to the meeting,
during ordinary business hours, for a period of at least ten days prior to
the meeting, either at a place within the city or other municipality or
community where the meeting is to be held, which place shall be specified in
the notice of the meeting, or if not so specified, at the place where the
meeting is to be held. The list shall also be produced and kept at the time
and place where the meeting is to be held. The list shall also be produced
and kept at the time and place of the meeting during the whole time thereof,
and may be inspected by any stockholder who is present. The stock ledger
shall be the only evidence as to who are the stockholders entitled to examine
the stock ledger, the list required by this section or the books of the
corporation, or to vote any meeting of stockholders.
-CONDUCT OF MEETING. Meetings of the stockholders shall be presided over
by one of the following officers in the order of seniority and if present and
acting - the Chairman of the Board, if any, the Vice-Chairman of the Board,
if any, the President, a Vice-President, or, if none of the foregoing is in
office and present and acting, by a chairman to be chosen by the
stockholders. The Secretary
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of the corporation, or in his absence, an Assistant Secretary, shall act as
secretary of every meeting, but if neither the Secretary nor an Assistant
Secretary is present, the Chairman of the meeting shall appoint a secretary
of the meeting.
- PROXY REPRESENTATION. Every stockholder may authorize another
person or persons to act for him by proxy in all matters in which a
stockholder is entitled to participate, whether by waiving notice of any
meeting, voting or participating at a meeting, or expressing consent or
dissent without a meeting. Every proxy must be signed by the stockholder or
by his attorney-in-fact. No proxy shall be voted or acted upon after three
years from its date unless such proxy provides for a longer period. A duly
executed proxy shall be irrevocable if it states that it is irrevocable and,
if, and only as long as, it is coupled with an interest sufficient in law to
support an irrevocable power. A proxy may be made irrevocable regardless of
whether the interest with which it is coupled is an interest in the stock
itself or an interest in the corporation generally.
- INSPECTORS AND JUDGES. The directors, in advance of any meeting,
may, but need not, appoint one or more inspectors of election or judges of
the vote, as the case may be, to act at the meeting or any adjournment
thereof. If an inspector or inspectors or judge or judges are not appointed,
the person presiding at the meeting may, but need not, appoint one or more
inspectors or judges. In case any person who may be appointed as an inspector
or judge fails to appear or act, the vacancy may be filled by appointment
made by the directors in advance of the meeting or at the meeting by the
person presiding thereat. Each inspector or judge, if any, before entering
upon the discharge of his duties, shall take and sign an oath faithfully to
execute the duties of inspector or judge at such meeting with strict
impartiality and according to the best of his ability. The inspectors or
judges, if any, shall determine the number of shares of stock outstanding and
the voting power of each, the shares of stock represented at the meeting, the
existence of a quorum, the validity and effect of proxies, and shall receive
votes, ballots or consents, hear and determine all challenges and questions
arising in connection with the right to vote, count and tabulate all votes,
ballots or consents, determine the result, and do such acts as are proper to
conduct the election or vote with fairness to all stockholders. On request of
the person presiding at the meeting, the inspector or inspectors or judge or
judges, if any, shall make a report in writing of any challenge, question or
matter determined by him or them and execute a certificate of any fact found
by him or them.
- QUORUM. The holders of a majority of the stock issued and
outstanding and entitled to vote thereat, present in person or represented by
proxy, shall constitute a quorum at a meeting of stockholders for the
transaction of any business, except as provided by statute or in the
certificate of incorporation.
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If, however, such quorum shall not be present or represented at any
meeting of stockholders, the stockholders entitled to vote thereat, present
in person or represented by proxy, shall have the power to adjourn the
meeting from time to time, without notice other than announcement at the
meeting, until a quorum shall be present or represented. At such adjourned
meeting at which a quorum shall be present or represented any business may be
transacted which might have been transacted at the meeting as originally
notified. If the adjournment is for more than thirty days, or if after the
adjournment a new record date is fixed for the adjourned meeting, a notice of
the adjourned meeting shall be given to each stockholder of record entitled
to vote at the meeting.
- VOTING. When a quorum is present at any meeting, the vote of the
holders of a majority of the stock having voting power present in person or
represented by proxy shall decide any question brought before such meeting,
unless the question is one upon which, by express provision of statute or the
certificate of incorporation, a different vote is required in which case such
express provision shall govern and control the decision of such question.
Unless otherwise provided in the certificate of incorporation, each
stockholder shall at every meeting of the stockholders be entitled to one
vote in person or by proxy for each share of stock having voting power held
by such stockholder. In the election of directors, a majority of the votes
cast shall elect. Any other action shall be authorized by a majority of the
votes cast except where the Maryland General Corporation Law prescribes a
different percentage of votes and/or a different exercise of voting power. In
the election of directors, voting need not be by ballot. Voting by ballot
shall not be required for any other corporate action except as otherwise
provided by the Maryland General Corporation Law.
7. STOCKHOLDER ACTION WITHOUT MEETINGS. Whenever the vote of
stockholders at a meeting thereof is required or permitted to be taken for or
in connection with any corporate action, the meeting and vote of stockholders
may be dispensed with if all of the stockholders who would have been entitled
to vote upon the action if such meeting were held shall consent in writing to
such corporate action being taken and the writing or writings are filed with
the minutes of proceedings of the stockholders of the corporation.
ARTICLE II
DIRECTORS
1. FUNCTIONS AND DEFINITION. The business of the corporation shall be
managed by the Board of Directors of the corporation. The use of the phrase
"whole Board" herein refers to the number of directors which the corporation
would have if there were no vacancies.
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2. QUALIFICATIONS AND NUMBER. Each director shall be a natural person
of full age and need not be a stockholder, a citizen of the United States, or
of the State of Maryland. The initial Board of Directors shall consist of
seven (7) persons, which is the number set forth in the Articles of
Incorporation. The number of directors constituting the whole Board may be
increased or decreased from time to time by action of the Board of Directors
or by stockholders at the annual meeting.
3. ELECTION AND TERM. The first Board of Directors shall be elected by
the incorporator and shall hold office until the first annual meeting of
stockholders and until their successors have been elected and qualified or
until their earlier resignation or removal. Any director may resign at any
time upon prior written notice to the corporation. Thereafter, directors who
are elected at an annual meeting of stockholders, and directors who are
elected in the interim to fill vacancies and newly created directorships,
shall hold office until the next annual meeting of stockholders and until
their successors have been elected and qualified or until their earlier
resignation or removal.
Vacancies and newly created directorships resulting from any increase in
the authorized number of directors may be filled by a majority of the
directors then in office, though less than a quorum, or by the sole remaining
director. If there are no directors in office, then an election of directors
may be held in the manner provided by statute.
4. MEETINGS.
- TIME. The Board of Directors may hold meetings, both regular
and special, at such time as the Board shall fix, except that the first
meeting of a newly elected Board shall be held as soon after its election as
the directors may conveniently assemble.
- PLACE. Meetings shall be held at such place within or without
the State of Maryland as shall be fixed by the Board or may be held by
telephone.
- CALL. No call shall be required for regular meetings for which
the time and place have been fixed. Special meetings may be called by or at
the direction of the Chairman of the Board, if any, the Vice-Chairman of the
Board, if any, or the President, or a Vice President, or of a majority of the
directors in office.
- NOTICE OR ACTUAL OR CONSTRUCTIVE WAIVER. No notice shall be
required for regular meetings for which the time and place have been fixed.
Written, oral, or any other mode of notice of the time and place shall be
given for special meetings in sufficient time for the convenient assembly of
the directors thereat. The notice of any meeting need not specify the purpose
of the meeting. Any requirement
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of furnishing a notice shall be waived by any director who signs a written
waiver of such notice before or after the time stated therein.
- QUORUM AND ACTION. A majority of the whole Board shall
constitute a quorum, except when a vacancy or vacancies prevents such
majority, whereupon a majority of the directors in office shall constitute a
quorum, provided, that such majority shall constitute at least one-third of
the whole Board. A majority of the directors present, whether or not a quorum
is present, may adjourn a meeting to another time and place. Except where the
Maryland General Corporation Law may require a greater number, the act of the
Board shall be the act by the affirmative vote of a majority of the directors
present at a meeting, a quorum being present.
- CHAIRMAN OF THE MEETING. The Chairman of the Board, if any and
if present and acting, shall preside at all meetings. Otherwise, the Vice
Chairman or the President, if any and if present and acting, or any other
director chosen by the Board, shall preside.
5. REMOVAL OF DIRECTORS. Unless otherwise restricted by the certificate
of incorporation or By-Laws, any director or the entire Board of Directors
may be removed, with or without cause, by the holders of a majority of shares
entitled to vote at a meeting called for such purpose.
6. ACTION IN WRITING. Any action required or permitted to be taken at
any meeting of the Board of Directors may be taken without a meeting if all
members of the Board or committee, as the case may be, consent thereto in
writing, and the writing or writings are filed with the minutes of
proceedings of the Board or committee.
7. COMMITTEES OF DIRECTORS. The Board of Directors may, by resolution
passed by a majority of the whole Board, designate one or more committees,
each committee to consist of two or more of the directors of the corporation.
The Board may designate one or more directors as alternate members of any
committee, who may replace any absent or disqualified member at any meeting
of the committee.
In the absence or disqualification of a member of a committee, the
member or members thereof present at any meeting and not disqualified from
voting, whether or not he or they constitute a quorum, may unanimously
appoint another member of the Board of Directors to act at the meeting in the
place of any such absent or disqualified member.
Any such committee, to the extent provided in the resolution of the
Board of Directors, shall have and may exercise all the powers and authority
of the Board of Directors in the management of the business and affairs of
the corporation, and may
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authorize the seal of the corporation to be affixed to all papers which may
require it; but no such committee shall have the power or authority to
declare dividends or distributions on stock, issue stock other than as
provided in subsection (b) of Section 2-41 1 of the Maryland General
Corporation Law, recommended to the stockholders any action which requires
stockholder approval, amend the By-Laws or approve any merger or share
exchange which does not require stockholder approval. Such committee or
committees shall have such name or names as may be determined from time to
time by resolution adopted by the Board of Directors. Each committee shall
keep regular minutes of its meetings and report the same to the Board of
Directors when required.
8. COMPENSATION OF DIRECTORS. Unless otherwise restricted by the
certificate of incorporation or these By-Laws, the Board of Directors shall
have the authority to fix the compensation of directors. The directors may be
paid their expenses, if any, of attendance at each meeting of the Board of
Directors and may be paid a fixed sum for attendance at each meeting of the
Board of Directors or a stated salary as director. No such payment shall
preclude any director from serving the corporation in any other capacity and
receiving compensation therefor. Members of special or standing committees
may be allowed like compensation for attending committee meetings.
ARTICLE III
OFFICERS
1. ELECTIONS; NUMBER; QUALIFICATIONS. The officers of the corporation
shall be elected by the Board of Directors, and may include a Chairman of the
Board, a Vice Chairman of the Board, a President, one or more Vice
Presidents, a Secretary, one or more Assistant Secretaries, a Treasurer and
such other officers as the Board of Directors shall choose. The Board of
Directors may, by resolution, create, increase, reduce or eliminate the
number of offices to be filled by vice presidents, assistant vice presidents,
assistant secretaries or assistant treasurers. The Board of Directors may
choose such other officers and appoint such agents as it shall deem necessary
who shall hold office for such terms and shall exercise such powers and
perform such duties as the Board shall determine. Any two or more offices may
be held by the same individual, except that no person may hold the offices of
President and Vice President at the same time.
2. ELECTION AND TERMINATION. The officers of the corporation shall be
chosen by the Board of Directors at the annual meeting of the Board following
the annual meeting of stockholders or as soon thereafter as conveniently
possible. Each officer shall hold office until his successor shall have been
chosen and shall have qualified or until his death or the effective date of
his resignation or removal. Any
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vacancy occurring in any office of the corporation shall be filled by the
Board of Directors.
3. SALARIES. The salaries of all corporate officers and agents shall be
fixed from time to time as may be authorized by the Board of Directors. No
officer shall be prevented from receiving such salary by reason of being a
director.
4. (a) CHAIRMAN OF THE BOARD. The Chairman of the Board, if one shall
have been elected, shall preside at all meetings of the directors and
committees of directors at which he is present. He shall perform such other
duties as may be designated by the Board of Directors.
(b) VICE CHAIRMAN OF THE BOARD. The Vice Chairman of the Board, if
one shall have been elected, shall be the Chief Executive Officer of the
corporation and shall be responsible for the overall supervision of the
affairs of the corporation.
(c) PRESIDENT. The President shall be the chief operating officer of
the corporation and shall, in general, supervise, manage and control all of
the day-to-day business and affairs of the corporation. He shall report to
the Vice Chairman of the Board. He may sign with the Secretary or any other
officer of the corporation thereunto authorized by the Board of Directors,
any deeds, bonds, mortgages, contracts or other instruments which the Board
of Directors has authorized to be executed, except in cases where the signing
and execution thereof has been expressly delegated by these By-Laws or by the
Board of Directors to some other officer or agent of the corporation, or
shall be required by law to be otherwise executed. He shall perform such
other duties as usually pertain to the office or may be designated by the
Board of Directors.
(d) VICE PRESIDENT. Any Vice President shall perform such duties as
from time to time may be assigned to him by the Board of Directors or the
President. In the absence of the President or in the event of his inability
or refusal to act, the Vice President (or in the event there be more than one
Vice President, the Vice Presidents in the order designated by the Board of
Directors, or in the absence of any designation, then in the order of their
election) shall perform the duties of the President, and when so acting shall
have all the powers of and be subject to all the restrictions upon the
President.
(e) THE SECRETARY. The Secretary shall attend all meetings of the
Board of Directors and all meetings of the stockholders and record all
proceedings of the meetings of the stockholders and directors in the minute
book of the corporation. He shall cause all notices to be duly given in
accordance with the provisions of these By-Laws and as required by law, and
shall perform such other duties as may be prescribed by the Board of
Directors or President, under whose supervision he shall
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be. He shall see that the lists, books, reports, statements, certificates and
other documents and records required by law are properly kept and filed. He
shall have charge and custody of the seal of the corporation, and he, or an
assistant secretary, shall have authority to affix the same to any instrument
requiring it and when as affixed, it may be attested by his signature.
(f) THE TREASURER. The Treasurer shall have the custody of the
corporate funds and securities, shall keep full and accurate accounts of
receipts and disbursements in books belonging to the corporation, shall
deposit all monies and other valuable effects in the name and to the credit
of the corporation in such depositories as may be designated by the Board of
Directors, and shall render a report and account of the transactions of the
corporation and of the financial condition of the corporation whenever so
required by the Board of Directors.
5. RESIGNATIONS: REMOVAL, FILLING OF VACANCIES. Any officer may resign at
any time by giving notice of such resignation to the Board of Directors, the
Chairman of the Boards or President or the Secretary of the corporation.
Unless otherwise specified in such notice, such resignation shall be
effective upon receipt of such notice by the Board of Directors or such
officer. Any officer may be removed at any time, either for or without cause,
by action of the Board of Directors. Any vacancy in any office may be filled
at any time by action of the Board of Directors.
6. BONDING. Except as otherwise provided in the certificate of
incorporation or the By-Laws, none of the officers, assistant officers or
other employees, agents or representatives of the corporation shall be
required to give bond unless the Board of Directors shall in its discretion
require any such bond or bonds. Any bond so required shall be payable to the
corporation in such amount and with such conditions and security as the Board
of Directors may require.
ARTICLE IV
INSTRUMENTS, DEPOSITS, CHECKS, PROXIES
1. EXECUTION OF INSTRUMENTS. The Chairman of Vice Chairman may enter into
any contract or execute and deliver any instrument in the name and on behalf
of the corporation, subject to the control of the Board of Directors. The
Board of Directors may authorize any officer or officers, or agent or agents,
to enter into any contract or execute and deliver any instrument in the name
and on behalf of the corporation, and such authorization may be general or
confined to specific instances.
2. DEPOSITS. Funds of the corporation may be deposited from time to time to
the credit of the corporation with such depositories as may be select by the
Board of Directors or by any committee, officer or officers, agent or agents
of the
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corporation to whom such power may be delegated from time to time by the
Board of Directors.
3. CHECKS, DRAFTS, ETC. All checks, bills of exchange and other orders for
payment of money, promissory notes, acceptances or other evidences of
indebtedness are to be signed by such officer or officers, employee or
employees, agent or agents of the corporation, and in such manner, as are
authorized by resolution of the Board of Directors, or are authorized by any
committee, officer or officers, employee or employees, of the corporation to
whom such power is delegated from time to time by the Board of Directors.
To the extent authorized by the Board of Directors such signature or
signatures may be facsimiles.
4. PROXIES. Proxies to vote with respect to shares of stock of other
corporations owned by or standing in the name of the corporation may be
executed and delivered from time to time on behalf of the corporation by the
Chairman of Vice Chairman or any other person or persons thereunto authorized
by the Board of Directors.
ARTICLE V
DIVIDENDS
1. DECLARATION. Dividends upon the capital stock of the corporation,
subject to the provisions of the certificate of incorporation, if any, may be
declared by the Board of Directors at any regular or special meeting,
pursuant to law. Dividends may be paid in cash, in property, or in shares of
the capital stock, subject to the provisions of the certificate of
incorporation.
2. RESERVE. Before payment of any dividend, there may be set aside out of
any funds of the corporation available for dividends such sum or sums as the
Board of Directors from time to time think proper as a reserve or reserves to
meet contingencies, or for equalizing dividends, or for repairing or
maintaining any property of the corporation, or for such other purpose as the
Board of Directors shall think conducive to the interests of the corporation,
and the Board of Directors may modify or abolish any such reserve in the
manner in which it was created.
ARTICLE VI
INDEMNIFICATION OF DIRECTORS AND OFFICERS
Any person who was or is a party or is threatened to be made a party to
any threatened, pending or completed action, suit or proceeding, whether
civil, criminal, administrative or investigative (other than an action by or
in the right of the
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corporation) by reason of the fact that he is or was a director, officer,
employee or agent of the corporation, or is or was serving at the request of
the corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise, shall be
indemnified against expenses (including attorneys' fees), judgements, fines
and amounts paid in settlement actually and reasonably incurred by him in
connection with such action, suit or proceeding if he acted in good faith and
in a manner he reasonably believed to be in or not opposed to the best
interests of the corporation, and, with respect to any criminal action or
proceeding, had no reasonable cause to believe his conduct was unlawful.
Any person who was or is a party or is threatened to be made a party to
any threatened, pending or completed action or suit by or in the right of the
corporation to procure a judgement in its favor by reason of the fact that he
is or was a director, officer, employee or agent of the corporation, or is or
was serving at the request of the corporation as a director, officer, employee
or agent of another corporation, partnership, joint venture, trust or other
enterprise shall be indemnified against expenses (including attorneys' fees)
actually and reasonably incurred by him in connection with the defense or
settlement of such action or suit if he acted in good faith and in a manner
he reasonably believed to be in or not opposed to the best interests of the
corporation and except that no indemnification shall be made in respect of any
claim, issue or matter as to which such person shall have been adjudged to be
liable to the corporation unless and only to the extent that despite the
adjudication of liability but in view of all the circumstances of the case,
such person is fairly and reasonably entitled to indemnity pursuant to the
applicable provisions of the Maryland General Corporation Law.
It is the intention of this Article that the corporation indemnify
directors and officers to the fullest extent permitted by law. The foregoing
right of indemnification shall not be exclusive of other rights to which
such director or officer may be entitled as a matter of law or otherwise.
Expenses incurred and amounts paid in settlement with respect to any
action, suit or proceeding of the character described above may be advanced
by the corporation prior to the final disposition thereof upon receipt of an
undertaking by or on behalf of the director or officer, in form and substance
satisfactory to the corporation, to repay such amounts so advanced as shall
not ultimately be determined to be payable to him under this Article.
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ARTICLE VII
MISCELLANEOUS
1. FISCAL YEAR. The fiscal year of the corporation shall be determined
by the Board of Directors.
2. AMENDMENT OF BY-LAWS. The By-Laws may be altered, amended or repealed
from time to time, and new By-Laws may be made and adopted by action of the
stockholders or by action of the Board of Directors, when such power is
conferred upon the Board of Directors by the certificate of incorporation,
at any regular meeting of the stockholders or of the Board of Directors or at
any special meeting of the stockholders or of the Board of Directors (if
notice of such alteration, amendment, repeal or adopting of new By-Laws be
contained in the notice of such special meeting).
3. SEAL. The corporation seal shall be a flat-faced circular die and
shall have inscribed thereon the name of the corporation, the year of its
organization and the words "Corporate Seal, Maryland."
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EXHIBIT 4.1
FEDERAL DATA CORPORATION,
AS ISSUER,
and
THE SUBSIDIARY GUARANTORS
(DEFINED HEREIN)
and
NORWEST BANK, MINNESOTA, NATIONAL ASSOCIATION,
AS TRUSTEE
-------------------
INDENTURE
Dated as of July 15, 1997
-------------------
up to $175,000,000
10 1/8% Senior Subordinated Notes due 2005
<PAGE>
CROSS-REFERENCE TABLE
TIA Indenture
Section Section
- ---------- ---------
310(a)(1) . . . . . . . . . . . . . . . . . . . . . . . . 7.10
(a)(2) . . . . . . . . . . . . . . . . . . . . . . . . 7.10
(a)(3) . . . . . . . . . . . . . . . . . . . . . . . . N.A.
(a)(4) . . . . . . . . . . . . . . . . . . . . . . . . N.A.
(a)(5) . . . . . . . . . . . . . . . . . . . . . . . . 7.08; 7.10
(b). . . . . . . . . . . . . . . . . . . . . . . . . . 7.08; 7.10; 12.02
(c). . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
311(a). . . . . . . . . . . . . . . . . . . . . . . . . . 7.11
(b). . . . . . . . . . . . . . . . . . . . . . . . . . 7.11
(c). . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
312(a). . . . . . . . . . . . . . . . . . . . . . . . . . 2.05
(b). . . . . . . . . . . . . . . . . . . . . . . . . . 12.03
(c). . . . . . . . . . . . . . . . . . . . . . . . . . 12.03
313(a). . . . . . . . . . . . . . . . . . . . . . . . . . 7.06
(b)(1) . . . . . . . . . . . . . . . . . . . . . . . . N.A.
(b)(2) . . . . . . . . . . . . . . . . . . . . . . . . 7.06
(c). . . . . . . . . . . . . . . . . . . . . . . . . . 7.06; 12.02
(d). . . . . . . . . . . . . . . . . . . . . . . . . . 7.06
314(a). . . . . . . . . . . . . . . . . . . . . . . . . . 4.06; 4.08; 12.02
(b). . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
(c)(1) . . . . . . . . . . . . . . . . . . . . . . . . 12.04
(c)(2) . . . . . . . . . . . . . . . . . . . . . . . . 12.04
(c)(3) . . . . . . . . . . . . . . . . . . . . . . . . N.A.
(d). . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
(e). . . . . . . . . . . . . . . . . . . . . . . . . . 12.05
(f). . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
315(a). . . . . . . . . . . . . . . . . . . . . . . . . . 7.01(b)
(b). . . . . . . . . . . . . . . . . . . . . . . . . . 7.05; 12.02
(c). . . . . . . . . . . . . . . . . . . . . . . . . . 7.01(a)
(d). . . . . . . . . . . . . . . . . . . . . . . . . . 7.01(c)
(e). . . . . . . . . . . . . . . . . . . . . . . . . . 6.11
316(a)(last sentence) . . . . . . . . . . . . . . . . . . 2.09
(a)(1)(A). . . . . . . . . . . . . . . . . . . . . . . 6.05
(a)(1)(B). . . . . . . . . . . . . . . . . . . . . . . 6.04
(a)(2) . . . . . . . . . . . . . . . . . . . . . . . . N.A.
(b). . . . . . . . . . . . . . . . . . . . . . . . . . 6.07
(c). . . . . . . . . . . . . . . . . . . . . . . . . . 9.05
317(a)(1) . . . . . . . . . . . . . . . . . . . . . . . . 6.08
(a)(2) . . . . . . . . . . . . . . . . . . . . . . . . 6.09
(b). . . . . . . . . . . . . . . . . . . . . . . . . . 2.04
318(a). . . . . . . . . . . . . . . . . . . . . . . . . . 12.01
(c). . . . . . . . . . . . . . . . . . . . . . . . . . 12.01
______________________
N.A. means Not Applicable
NOTE: This Cross-Reference Table shall not, for any purpose, be deemed to be
a part of the Indenture.
<PAGE>
TABLE OF CONTENTS
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ARTICLE ONE
DEFINITIONS AND INCORPORATION BY REFERENCE
SECTION 1.01. Definitions.. . . . . . . . . . . . . . . . . . . 1
SECTION 1.02. Incorporation by Reference of TIA.. . . . . . . . 24
SECTION 1.03. Rules of Construction.. . . . . . . . . . . . . . 24
ARTICLE TWO
THE NOTES
SECTION 2.01. Form and Dating.. . . . . . . . . . . . . . . . . 25
SECTION 2.02. Execution and Authentication; Aggregate
Principal Amount. . . . . . . . . . . . . . . . 26
SECTION 2.03. Registrar and Paying Agent. . . . . . . . . . . . 27
SECTION 2.04. Paying Agent To Hold Assets in Trust. . . . . . . 28
SECTION 2.05. Noteholder Lists. . . . . . . . . . . . . . . . . 28
SECTION 2.06. Transfer and Exchange.. . . . . . . . . . . . . . 28
SECTION 2.07. Replacement Notes.. . . . . . . . . . . . . . . . 29
SECTION 2.08. Outstanding Notes.. . . . . . . . . . . . . . . . 29
SECTION 2.09. Treasury Notes. . . . . . . . . . . . . . . . . . 30
SECTION 2.10. Temporary Notes.. . . . . . . . . . . . . . . . . 30
SECTION 2.11. Cancellation. . . . . . . . . . . . . . . . . . . 31
SECTION 2.12. Defaulted Interest. . . . . . . . . . . . . . . . 31
SECTION 2.13. CUSIP Number. . . . . . . . . . . . . . . . . . . 31
SECTION 2.14. Deposit of Moneys.. . . . . . . . . . . . . . . . 31
SECTION 2.15. Book-Entry Provisions for Global Note.. . . . . . 32
SECTION 2.16. Special Transfer Provisions.. . . . . . . . . . . 33
ARTICLE THREE
REDEMPTION
SECTION 3.01. Notices to Trustee. . . . . . . . . . . . . . . . 35
SECTION 3.02. Selection of Notes To Be Redeemed.. . . . . . . . 35
SECTION 3.03. Notice of Redemption. . . . . . . . . . . . . . . 35
SECTION 3.04. Effect of Notice of Redemption. . . . . . . . . . 36
SECTION 3.05. Deposit of Redemption Price.. . . . . . . . . . . 37
SECTION 3.06. Notes Redeemed in Part. . . . . . . . . . . . . . 37
ARTICLE FOUR
COVENANTS
SECTION 4.01. Payment of Notes. . . . . . . . . . . . . . . . . 37
SECTION 4.02. Maintenance of Office or Agency.. . . . . . . . . 38
SECTION 4.03. Corporate Existence.. . . . . . . . . . . . . . . 38
SECTION 4.04. Payment of Taxes and Other Claims.. . . . . . . . 38
SECTION 4.05. Maintenance of Properties and Insurance.. . . . . 39
SECTION 4.06. Compliance Certificate; Notice of Default.. . . . 39
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SECTION 4.07. Compliance with Laws. . . . . . . . . . . . . . . 40
SECTION 4.08. SEC Reports.. . . . . . . . . . . . . . . . . . . 40
SECTION 4.09. Waiver of Stay, Extension or Usury Laws.. . . . . 41
SECTION 4.10. Limitation on Restricted Payments.. . . . . . . . 41
SECTION 4.11. Limitation on Transactions with Affiliates. . . . 44
SECTION 4.12. Limitation on Indebtedness. . . . . . . . . . . . 44
SECTION 4.13. Limitation on Payment Restrictions Affecting
Subsidiaries. . . . . . . . . . . . . . . . . . 48
SECTION 4.14. Limitation on Additional Senior Subordinated
Indebtedness. . . . . . . . . . . . . . . . . . 48
SECTION 4.15. Limitation on Change of Control.. . . . . . . . . 49
SECTION 4.16. Limitation on Asset Sales.. . . . . . . . . . . . 50
SECTION 4.17. Limitation on Capital Stock of Restricted
Subsidiaries. . . . . . . . . . . . . . . . . . 53
SECTION 4.18. Limitation on Liens.. . . . . . . . . . . . . . . 53
SECTION 4.19. Limitation on Transfer of Assets to Certain
Subsidiaries. . . . . . . . . . . . . . . . . . 53
SECTION 4.20. Guarantees of Certain Indebtedness. . . . . . . . 54
ARTICLE FIVE
SUCCESSOR CORPORATION
SECTION 5.01. When Company May Merge, Etc.. . . . . . . . . . . 54
SECTION 5.02. Successor Corporation Substituted.. . . . . . . . 55
ARTICLE SIX
DEFAULT AND REMEDIES
SECTION 6.01. Events of Default.. . . . . . . . . . . . . . . . 55
SECTION 6.02. Acceleration. . . . . . . . . . . . . . . . . . . 57
SECTION 6.03. Other Remedies. . . . . . . . . . . . . . . . . . 58
SECTION 6.04. Waiver of Past Defaults.. . . . . . . . . . . . . 59
SECTION 6.05. Control by Majority.. . . . . . . . . . . . . . . 59
SECTION 6.06. Limitation on Suits.. . . . . . . . . . . . . . . 59
SECTION 6.07. Rights of Holders To Receive Payment. . . . . . . 60
SECTION 6.08. Collection Suit by Trustee. . . . . . . . . . . . 60
SECTION 6.09. Trustee May File Proofs of Claim. . . . . . . . . 60
SECTION 6.10. Priorities. . . . . . . . . . . . . . . . . . . . 61
SECTION 6.11. Undertaking for Costs.. . . . . . . . . . . . . . 61
SECTION 6.12. Restoration of Rights and Remedies. . . . . . . . 62
ARTICLE SEVEN
TRUSTEE
SECTION 7.01. Duties of Trustee.. . . . . . . . . . . . . . . . 62
SECTION 7.02. Rights of Trustee.. . . . . . . . . . . . . . . . 63
SECTION 7.03. Individual Rights of Trustee. . . . . . . . . . . 64
SECTION 7.04. Trustee's Disclaimer. . . . . . . . . . . . . . . 64
SECTION 7.05. Notice of Default.. . . . . . . . . . . . . . . . 65
SECTION 7.06. Reports by Trustee to Holders.. . . . . . . . . . 65
SECTION 7.07. Compensation and Indemnity. . . . . . . . . . . . 65
SECTION 7.08. Replacement of Trustee. . . . . . . . . . . . . . 66
SECTION 7.09. Successor Trustee by Merger, Etc. . . . . . . . . 67
SECTION 7.10. Eligibility; Disqualification.. . . . . . . . . . 67
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SECTION 7.11. Preferential Collection of Claims Against
Company.. . . . . . . . . . . . . . . . . . . . 68
ARTICLE EIGHT
DISCHARGE OF INDENTURE; DEFEASANCE
SECTION 8.01. Termination of the Company's Obligations. . . . . 68
SECTION 8.02. Legal Defeasance and Covenant Defeasance. . . . . 69
SECTION 8.03. Conditions to Legal Defeasance or Covenant
Defeasance. . . . . . . . . . . . . . . . . . . 71
SECTION 8.04. Application of Trust Money. . . . . . . . . . . . 72
SECTION 8.05. Repayment to the Company or the Subsidiary
Guarantors. . . . . . . . . . . . . . . . . . . 73
SECTION 8.06. Satisfaction and Discharge. . . . . . . . . . . . 73
SECTION 8.07. Reinstatement.. . . . . . . . . . . . . . . . . .
ARTICLE NINE
AMENDMENTS, SUPPLEMENTS AND WAIVERS
SECTION 9.01. Without Consent of Holders. . . . . . . . . . . . 74
SECTION 9.02. With Consent of Holders.. . . . . . . . . . . . . 75
SECTION 9.03. Effect on Senior Indebtedness.. . . . . . . . . . 76
SECTION 9.04. Compliance with TIA.. . . . . . . . . . . . . . . 76
SECTION 9.05. Revocation and Effect of Consents.. . . . . . . . 76
SECTION 9.06. Notation on or Exchange of Notes. . . . . . . . . 77
SECTION 9.07. Trustee To Sign Amendments, Etc.. . . . . . . . . 77
ARTICLE TEN
SUBORDINATION
SECTION 10.01. Notes Subordinated to Senior Indebtedness.. . . . 78
SECTION 10.02. No Payment on Notes in Certain Circumstances. . . 78
SECTION 10.03. Payment Over of Proceeds Upon Dissolution, Etc.. 80
SECTION 10.04. Payments May Be Paid Prior to Dissolution. . . . 81
SECTION 10.05. Subrogation.. . . . . . . . . . . . . . . . . . . 81
SECTION 10.06. Obligations of the Company Unconditional. . . . . 82
SECTION 10.07. Notice to Trustee.. . . . . . . . . . . . . . . . 82
SECTION 10.08. Reliance on Judicial Order or Certificate
of Liquidating Agent. . . . . . . . . . . . . . 83
SECTION 10.09. Trustee's Relation to Senior Indebtedness.. . . . 83
SECTION 10.10. Subordination Rights Not Impaired by Acts or
Omissions of the Company or Holders of
Senior Indebtedness.. . . . . . . . . . . . . . 84
SECTION 10.11. Noteholders Authorize Trustee To Effectuate
Subordination of Notes. . . . . . . . . . . . . 84
SECTION 10.12. This Article Ten Not To Prevent Events
of Default. . . . . . . . . . . . . . . . . . . 84
SECTION 10.13. Trustee's Compensation Not Prejudiced.. . . . . . 85
ARTICLE ELEVEN
GUARANTEES
SECTION 11.01. Unconditional Guarantee.. . . . . . . . . . . . . 85
SECTION 11.02. Subordination of Guarantee. . . . . . . . . . . . 86
SECTION 11.03. Severability. . . . . . . . . . . . . . . . . . . 86
SECTION 11.04. Release of a Subsidiary Guarantor.. . . . . . . . 86
SECTION 11.05. Limitation of Subsidiary Guarantor's Liability. . 87
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SECTION 11.06. Subsidiary Guarantors May Consolidate, Etc.,
on Certain Terms. . . . . . . . . . . . . . . . 87
SECTION 11.07. Contribution. . . . . . . . . . . . . . . . . . . 88
SECTION 11.08. Waiver of Subrogation.. . . . . . . . . . . . . . 89
SECTION 11.09. Execution of Guarantee. . . . . . . . . . . . . . 89
SECTION 11.10. No Payment on Guarantees in Certain
Circumstances.. . . . . . . . . . . . . . . . . 90
SECTION 11.11. Payment Over of Proceeds Upon Dissolution, Etc. . 91
SECTION 11.12. Payments May Be Paid Prior to Dissolution.. . . . 93
SECTION 11.13. Subrogation.. . . . . . . . . . . . . . . . . . . 93
SECTION 11.14. Obligations of Each Guarantor Unconditional.. . . 94
SECTION 11.15. Notice to Trustee.. . . . . . . . . . . . . . . . 94
SECTION 11.16. Reliance on Judicial Order or Certificate
of Liquidating Agent. . . . . . . . . . . . . . 95
SECTION 11.17. Trustee's Relation to Guarantor Senior
Indebtedness. . . . . . . . . . . . . . . . . . 95
SECTION 11.18. Subordination Rights Not Impaired by Acts or
Omissions of a Subsidiary Guarantor or
Holders of Guarantor Senior Indebtedness. . . . 96
SECTION 11.19. Noteholders Authorize Trustee To Effectuate
Subordination of Guarantees. . . . . . . . . . . 96
SECTION 11.20. This Article Eleven Not To Prevent Events
of Default. . . . . . . . . . . . . . . . . . . 96
SECTION 11.21. Trustee's Compensation Not Prejudiced.. . . . . . 97
ARTICLE TWELVE
MISCELLANEOUS
SECTION 12.01. TIA Controls. . . . . . . . . . . . . . . . . . . 97
SECTION 12.02. Notices.. . . . . . . . . . . . . . . . . . . . . 97
SECTION 12.03. Communications by Holders with Other Holders. . . 99
SECTION 12.04. Certificate and Opinion as to Conditions
Precedent.. . . . . . . . . . . . . . . . . . . 99
SECTION 12.05. Statements Required in Certificate or Opinion.. . 99
SECTION 12.06. Rules by Trustee, Paying Agent, Registrar.. . . . 100
SECTION 12.07. Legal Holidays. . . . . . . . . . . . . . . . . . 100
SECTION 12.08. Governing Law.. . . . . . . . . . . . . . . . . . 100
SECTION 12.09. No Adverse Interpretation of Other Agreements.. . 100
SECTION 12.10. No Recourse Against Others. . . . . . . . . . . . 101
SECTION 12.11. Successors. . . . . . . . . . . . . . . . . . . . 101
SECTION 12.12. Duplicate Originals.. . . . . . . . . . . . . . . 101
SECTION 12.13. Severability. . . . . . . . . . . . . . . . . . . 101
Signatures . . . . . . . . . . . . . . . . . . . . . . . . . . . . 102
Exhibit A(1) - Form of Initial Note with Guarantee . . . . . . . . A.1-1
Exhibit A(2) - Form of Exchange Note with Guarantee. . . . . . . . A.2-1
Exhibit B - Form of Legend for Global Notes. . . . . . . . . . . . B-1
Exhibit C - Form of Certificate To Be Delivered in Connection with
Transfers to Non-QIB Accredited Investors . . . . C-1
Exhibit D - Form of Certificate To Be Delivered in Connection with
Transfers Pursuant to Regulation S. . . . . . . . D-1
Note: This Table of Contents shall not, for any purpose, be deemed
to be part of the Indenture.
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<PAGE>
INDENTURE, dated as of July 15, 1997, among Federal Data Corporation, a
Delaware corporation (the "COMPANY"), the Subsidiary Guarantors (as hereinafter
defined) and Norwest Bank, Minnesota, National Association, as Trustee (the
"TRUSTEE").
The Company has duly authorized the creation of an issue of 10 1/8% Senior
Subordinated Notes due 2005 (the "NOTES") and, to provide therefor, the Company
has duly authorized the execution and delivery of this Indenture. All things
necessary to make the Notes, when duly issued and executed by the Company and
authenticated and delivered hereunder, the valid obligations of the Company, and
to make this Indenture a valid and binding agreement of the Company, have been
done.
Each party hereto agrees as follows for the benefit of the other parties
and for the equal and ratable benefit of the Holders of the Notes.
ARTICLE ONE
DEFINITIONS AND INCORPORATION BY REFERENCE
SECTION 1.01. DEFINITIONS.
"ACCELERATION NOTICE" has the meaning provided in Section 6.02.
"ACQUIRED INDEBTEDNESS" means (i) with respect to any person that becomes a
Restricted Subsidiary, Indebtedness of such person at the time such person
becomes a Restricted Subsidiary and not incurred in connection with, or in
contemplation of, such person becoming a Restricted Subsidiary, treating for
purposes of this definition as Indebtedness the unused portion of any revolving
loan commitments provided in agreements to which such person is a party as
borrower or guarantor, and (ii) with respect to the Company or any of its
Restricted Subsidiaries, any Indebtedness assumed by the Company or any of its
Restricted Subsidiaries in connection with the acquisition of any assets from
another person (other than the Company or any of its Restricted Subsidiaries),
and which was not incurred by such other person in connection with, or in
contemplation of, such acquisition.
"ACT" means the Securities Act of 1933, as amended.
"ADJUSTED NET ASSETS" of a Subsidiary Guarantor at any date shall mean the
lesser of the amount by which (i) the fair value of the property of such
Subsidiary Guarantor exceeds the total amount of liabilities, including, without
limitation, contingent liabilities (after giving effect to all other fixed and
contingent liabilities incurred or assumed on such date), but excluding
liabilities under the Subsidiary Guarantee, of such Subsidiary Guarantor at such
date and (ii) the present fair salable value of the assets of such Subsidiary
Guarantor at such date exceeds the amount that will be required to pay the
probable liability of such Subsidiary
<PAGE>
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Guarantor on its debts (after giving effect to all other fixed and contingent
liabilities incurred or assumed on such date and after giving effect to any
collection from any Subsidiary of such Subsidiary Guarantor in respect of the
obligations of such Subsidiary under the Subsidiary Guarantee), excluding debt
in respect of the Subsidiary Guarantee, as they become absolute and matured.
"AFFILIATE" of any specified person means any other person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified person. For the purposes of this definition,
"control" when used with respect to any person means the power to direct the
management and policies of such person, directly or indirectly, whether through
the ownership of voting securities, by contract or otherwise; and the terms
"affiliated," "controlling" and "controlled" have meanings correlative to the
foregoing.
"AFFILIATE TRANSACTION" has the meaning provided in Section 4.11.
"AGENT" means any Registrar, Paying Agent or co-Registrar.
"AGENT MEMBERS" has the meaning provided in Section 2.15.
"APPLICABLE PREMIUM" means, with respect to a Note at any Redemption Date,
the greater of (i) 1.0% of the principal amount of such Note and (ii) the excess
of (A) the present value at such time of (1) the redemption price of such Note
at August 1, 2001 (such redemption price being described under Paragraph 6 of
the Note) plus (2) all required interest payments due on such Note through
August 1, 2001, computed using a discount rate equal to the Treasury Rate plus
50 basis points, over (B) the principal amount of such Note.
"ASSET SALE" means any direct or indirect sale, issuance, conveyance,
transfer, lease, assignment or other transfer for value (including any sale and
leaseback transaction) by the Company or any of its Restricted Subsidiaries to
any person other than the Company or any Wholly Owned Restricted Subsidiary of
(i) any Capital Stock of any Restricted Subsidiary; or (ii) any other property
or assets of the Company or any Restricted Subsidiary other than in the ordinary
course of business, in each case, resulting in Net Cash Proceeds to the Company
and its Restricted Subsidiaries of $500,000 or more, provided that the sale,
conveyance, transfer, assignment or other transfer of substantially all of the
assets of the Company and its Restricted Subsidiaries taken as a whole will be
governed by Article Five; PROVIDED, HOWEVER, an Asset Sale shall not mean (a) a
disposition of Cash Equivalents or Investment Grade Securities or obsolete
equipment in the ordinary course of business; (b) the disposition of all or
substantially all of the assets in a manner permitted pursuant to the provisions
of Article Five or any disposition that constitutes a Change of Control pursuant
to this Indenture; (c) any Restricted Payment that is permitted to be made, and
is made, under the first paragraph of Section 4.10; and (d) any disposition by a
Restricted Subsidiary to the Company or by the Company or a Restricted
Subsidiary to a Wholly Owned Restricted Subsidiary.
<PAGE>
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"AUTHENTICATING AGENT" has the meaning provided in Section 2.02.
"BANKRUPTCY LAW" means Title 11, U.S. Code or any similar Federal, state or
foreign law for the relief of debtors.
"BLOCKAGE PERIOD" has the meaning provided in Section 10.02(a).
"BOARD OF DIRECTORS" means, as to any person, the board of directors of
such person or any duly authorized committee thereof.
"BOARD RESOLUTION" means, with respect to any person, a copy of a
resolution certified by the Secretary or an Assistant Secretary of such person
to have been duly adopted by the Board of Directors of such person and to be in
full force and effect on the date of such certification, and delivered to the
Trustee.
"BUSINESS DAY" means a day that is not a Legal Holiday.
"CAPITAL STOCK" means, with respect to any person, any and all shares,
interests, participations or other equivalents (however designated) of corporate
stock, including each class of common stock and preferred stock of such person,
including, without limitation, if such person is a partnership, partnership
interests (whether general or limited) and 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, such partnership.
"CAPITALIZED LEASE OBLIGATION" means obligations under a lease that is
required to be capitalized for financial reporting purposes in accordance with
GAAP, and the amount of Indebtedness represented by such obligations shall be
the capitalized amount of such obligations determined in accordance with GAAP.
"CASH EQUIVALENTS" means (i) obligations issued or unconditionally
guaranteed by the United States of America or any agency thereof, or obligations
issued by any agency or instrumentality thereof and backed by the full faith and
credit of the United States of America, (ii) commercial paper rated the highest
grade by Moody's Investors Service, Inc. ("MOODY'S") and Standard & Poor's
Corporation ("S&P") and maturing not more than one year from the date of
creation thereof, (iii) demand and time deposits with, and certificates of
deposit and banker's acceptances issued by, any bank having capital surplus and
undivided profits aggregating at least $250 million and maturing not more than
one year from the date of creation thereof, (iv) repurchase agreements that are
secured by a perfected security interest in an obligation described in clause
(i) and are with any bank described in clause (iii), (v) readily marketable
direct obligations issued by any state of the United States of America or any
political subdivision thereof having one of the two highest rating categories
obtainable from either Moody's or S&P and (vi) investments in money market funds
which invest substantially all of their assets in securities of the types
described in clauses (i) through (v) above.
<PAGE>
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"CHANGE OF CONTROL" means the occurrence of one or more of the following
events: (i) any sale, lease, exchange or other transfer (in one transaction or a
series of related transactions) of all or substantially all of the assets of the
Company to any person or group of related persons for purposes of Section
13(d) of the Exchange Act (a "GROUP") together with any Affiliates thereof
(whether or not otherwise in compliance with the provisions of this Indenture);
(ii) the approval by the holders of Capital Stock of the Company of any plan or
proposal for the liquidation or dissolution of the Company (whether or not
otherwise in compliance with the provisions of this Indenture); or (iii) the
acquisition in one or more transactions, of beneficial ownership (within the
meaning of Rule 13d-3 under the Exchange Act) by (x) any person or Group (other
than a Group the majority in economic interests and voting or similar rights is
owned by Permitted Holders) that either (A) beneficially owns (within the
meaning of Rule 13d-3 under the Exchange Act), directly or indirectly, (I) at
least 30% (or, in the case of a transaction or transactions approved before the
consummation of same by a majority of the directors of the Company, 35%) of the
Company's then outstanding voting securities entitled to vote on a regular basis
for the Board of Directors of the Company and (II) a greater beneficial interest
than the Permitted Holders, or (B) otherwise has the ability to elect, directly
or indirectly, a majority of the members of the Company's Board of Directors,
including without limitation by the acquisition of revocable proxies for the
election of directors.
"CHANGE OF CONTROL DATE" has the meaning provided in Section 4.15.
"CHANGE OF CONTROL OFFER" has the meaning provided in Section 4.15.
"CHANGE OF CONTROL PAYMENT DATE" has the meaning provided in Section 4.15.
"COMPANY" means Federal Data Corporation, a Delaware corporation, and its
successors that become a party to this Indenture in accordance with its terms.
"CONSOLIDATED EBITDA" of the Company means, for any period, the sum
(without duplication) of (i) Consolidated Net Income, (ii) to the extent
Consolidated Net Income has been reduced thereby, all income taxes of the
Company and its Restricted Subsidiaries paid or accrued in accordance with GAAP
for such period, Consolidated Interest Expense, amortization expense (including
write-off of intangible assets and deferred financing costs), depreciation
expense, and any restructuring reserve or charge recorded during such period in
accordance with GAAP, (iii) LIFO charge (credit) of the Company and its
Restricted Subsidiaries for such period, (iv) other non-cash items reducing
Consolidated Net Income (excluding any such charge which requires an accrual of
or a cash reserve for cash charges for any future period) and (v) cash received
with respect to any non-cash item previously deducted from Consolidated Net
Income pursuant to clause (x) below less (x) other non-cash items increasing
Consolidated Net Income (excluding any reversal of any non-cash item to the
extent such reversed non-cash item previously reduced an addition to
Consolidated EBITDA pursuant to the parenthetical to clause (iv) above) and (y)
the amount of all cash payments
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made by such person or its subsidiaries during such period to the extent that
such cash payment has been provided for in a reserve or charge referred to (and
previously added back to such Consolidated Net Income) in clause (ii) or
(iv) above (and were not otherwise deducted in the computation of Consolidated
Net Income of such person for such period), all as determined on a consolidated
basis for the Company and its Restricted Subsidiaries in conformity with GAAP.
"CONSOLIDATED INTEREST EXPENSE" of the Company means the aggregate of
(i) all cash and non-cash interest expense (minus amortization or write-off of
deferred financing costs included in cash or non-cash interest expense and minus
interest income (other than the interest income, if any, attributable to the
assets of the type financed pursuant to clause (m) of the second paragraph of
Section 4.12) and capitalized interest) with respect to all outstanding
Indebtedness of the Company and its Restricted Subsidiaries for such period
(other than Indebtedness of the type permitted to be incurred pursuant to clause
(m) of the second paragraph of Section 4.12) PLUS (ii) the product of (x) the
amount of all cash dividend payments on any series of Preferred Stock of the
Company and its Restricted Subsidiaries (other than to or for the benefit of the
Company or a Restricted Subsidiary); PROVIDED that with respect to any series of
Preferred Stock that is Disqualified Capital Stock (including, without
limitation, Designated Preferred Stock) that has not paid cash dividends during
such period but accrues dividends according to its terms during any period prior
to the maturity date of the Notes, cash dividends shall be deemed to have been
paid with respect to such series of Designated Preferred Stock during such
period for purposes of clause (i) of this definition; times (y) a fraction, the
numerator of which is one and the denominator of which is one minus the then
current effective consolidated federal, state and local tax rate of the Company
expressed as a decimal.
"CONSOLIDATED NET INCOME" of the Company means, for any period, the
aggregate net income (or loss) of the Company and its Restricted Subsidiaries
for such period on a consolidated basis, determined in accordance with GAAP;
PROVIDED that there shall be excluded therefrom (i) gains and losses from Asset
Sales or abandonments or reserves relating thereto and the related tax effects,
(ii) items classified as extraordinary, nonrecurring or unusual gains and
losses, and the related tax effects, each determined in accordance with GAAP,
(iii) the net income of any person acquired in a pooling of interests
transaction accrued prior to the date it becomes a Restricted Subsidiary of the
Company or is merged or consolidated with the Company or any Restricted
Subsidiary, (iv) the net income (or loss) of any Restricted Subsidiary to the
extent that the declaration of dividends or similar distributions by that
Restricted Subsidiary of that income was actually prevented by contract,
operation of law or otherwise, (v) the net income (or loss) of any person, other
than a Restricted Subsidiary, except to the extent of the lesser of (x) cash
dividends or distributions paid to the Company or a Restricted Subsidiary of the
Company by such person and (y) the net income of such person (but in no event
less than zero) and (vi) the cumulative effects of any change in accounting
principles.
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"CONTROLLED SUBSIDIARY" of the Company means a Restricted Subsidiary
(i) 90% or more of the total Equity Interests or other ownership interests of
which (other than directors' qualifying shares) shall at the time be owned by
the Company (directly or through one or more Controlled Subsidiaries of the
Company), and (ii) of which the Company possesses, directly or indirectly, the
power to direct or cause the direction of the management or policies, whether
through the ownership of voting securities, by agreement or otherwise.
"COVENANT DEFEASANCE" has the meaning provided in Section 8.02(c).
"CURRENCY AGREEMENT" means any foreign exchange contract, currency swap
agreement or other similar agreement or arrangement designed to protect the
Company or any Restricted Subsidiary against fluctuations in currency values.
"CUSTODIAN" means any receiver, trustee, assignee, liquidator, sequestrator
or similar official under any Bankruptcy Law.
"DEFAULT" means any event which is, or after notice or passage of time or
both would be, an Event of Default.
"DEFAULT NOTICE" has the meaning provided in Section 10.02(a).
"DEPOSITORY" means The Depository Trust Company, its nominees and
successors.
"DESIGNATED PREFERRED STOCK" means Preferred Stock of the Company that is
issued for cash (other than to a Restricted Subsidiary) and is so designated as
Designated Preferred Stock, pursuant to an Officers' Certificate executed by the
principal executive officer and the principal financial officer of the Company,
on the issuance date thereof, the cash proceeds of which are excluded from the
calculation set forth in clause (A) of the first paragraph of Section 4.10.
"DESIGNATED SENIOR INDEBTEDNESS" means any Indebtedness under or in respect
of the Senior Credit Facility or any other Senior Indebtedness designated as
such in an Officers' Certificate delivered to the Trustee, in aggregate
principal amount outstanding of $25.0 million or more.
"DISINTERESTED DIRECTOR" means, with respect to any transaction or series
of transactions in respect of which the Board of Directors is required to
deliver a resolution of the Board of Directors under this Indenture, a member of
the Board of Directors who does not have any material direct or indirect
financial interest in or with respect to such transaction or series of
transactions (except arising exclusively as a consequence of such member's
relationship to the Company).
"DISQUALIFIED CAPITAL STOCK" means, with respect to any person, any Capital
Stock which, by its terms (or by the terms of any security into which it is
convertible or for which it
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is exchangeable), or upon the happening of any event (other than an event which
would constitute a Change of Control), matures or is mandatorily redeemable,
pursuant to a sinking fund obligation or otherwise, or is exchangeable for
Indebtedness, or is redeemable at the option of the holder thereof (except, in
each case, upon the occurrence of a Change of Control), in whole or in part, on
or prior to the maturity date of the Notes.
"EQUITY INTEREST" means Capital Stock and all warrants, options or other
rights to acquire Capital Stock (but excluding any debt security that is
convertible into, or exchangeable for, Capital Stock).
"EVENT OF DEFAULT" has the meaning provided in Section 6.01.
"EXCESS NET PROCEEDS" shall mean Net Cash Proceeds of any Asset Sale not
applied in accordance with clause (iii)(x) or (y) of the first paragraph of
Section 4.16.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended.
"EXCHANGE NOTES" means the 10 1/8% Senior Subordinated Notes due 2005 to be
issued in exchange for the Initial Notes pursuant to the Registration Rights
Agreement or, with respect to Initial Notes issued under this Indenture
subsequent to the Issue Date pursuant to Section 2.02, a registration rights
agreement substantially identical to the Registration Rights Agreement.
"EXCHANGE OFFER" has the meaning assigned to such term in the Registration
Rights Agreement, dated as of July 25, 1997, by and among the Company, the
Subsidiary Guarantors and BT Securities Corporation and Lehman Brothers Inc., as
Initial Purchasers (the "REGISTRATION RIGHTS AGREEMENT").
"EXCLUDED CONTRIBUTIONS" means net cash proceeds received by the Company
after the Issue Date from (a) capital contributions and (b) the private sale of
common stock of the Company to Carlyle or its Affiliates, in each case
designated as Excluded Contributions pursuant to an Officers' Certificate
executed by the principal executive officer and the principal financial officer
of the Company on the date such capital contributions are made or the date such
Equity Interests are sold, as the case may be, the cash proceeds of which are
excluded from the calculation set forth in clause (c) of the first paragraph of
Section 4.10.
"FAIR MARKET VALUE" means, with respect to any asset or Property, the price
which could be negotiated in an arm's-length, free market transaction, for cash,
between a willing seller and a willing and able buyer, neither of whom is under
undue pressure or compulsion to complete the transaction. Fair market value
shall be determined by the Board of Directors of the Company acting reasonably
and in good faith and shall be evidenced by a Board Resolution of the Board of
Directors of the Company delivered to the Trustee (PROVIDED that no
determination shall be required in connection with any Asset Sale of less than
$1,000,000).
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"FLOOR PLAN FINANCING FACILITY" means any facility (including without
limitation the Agreement for Wholesale Financing and the STAR Agreement (Short
Term Accounts Receivable Program) dated as of September 17, 1996 by and between
Deutsche Financial Services Corporation and Sylvest Management Systems
Corporation, as amended, extended, renewed, restated, supplemented, replaced or
otherwise modified (in whole or in part, and without limitation as to amount,
terms, conditions, covenants and other provisions) from time to time) entered or
to be entered into by the Company or any Restricted Subsidiary pursuant to which
the Company or such Restricted Subsidiary may (i) borrow funds to purchase
inventory from certain vendors for prompt resale to customers and to finance
related accounts receivable and (ii) grant a security interest in such entity's
assets (including the accounts receivable generated by such resales) to secure
such borrowings.
"FUNDING GUARANTOR" has the meaning provided in Section 11.07.
"GAAP" or "GENERALLY ACCEPTED ACCOUNTING PRINCIPLES" means generally
accepted accounting principles in the United States as in effect from time to
time, including, without limitation, those set forth in the opinions and
pronouncements of the Accounting Principles Board of the American Institute of
Certified Public Accountants and statements and pronouncements of the Financial
Accounting Standards Board or in such other statements by such other entity as
approved by a significant segment of the accounting profession.
"GLOBAL NOTE" has the meaning provided in Section 2.01.
"GUARANTEE" means a guarantee, direct or indirect, in any manner of all or
any part of any Indebtedness.
"GUARANTOR BLOCKAGE PERIOD" has the meaning provided in Section 11.10(a).
"GUARANTOR DEFAULT NOTICE" has the meaning provided in Section 11.10(a).
"GUARANTOR SENIOR INDEBTEDNESS" means (i) indebtedness of a Subsidiary
Guarantor for money borrowed and all obligations, whether direct or indirect,
under guarantees, letters of credit, foreign currency or interest rate swaps,
foreign exchange contracts, caps, collars, options, hedges or other agreements
or arrangements designed to protect against fluctuations in currency values or
interest rates, other extensions of credit, expenses, fees, reimbursements,
indemnities and all other amounts (including interest at the contract rate
accruing on or after the filing of any petition in bankruptcy or reorganization
relating to such Subsidiary Guarantor whether or not a claim for post-filing
interest is allowed in such proceeding) owed by such Subsidiary Guarantor under,
or with respect to, the Senior Credit Facility, (ii) the principal of and
premium, if any, and accrued and unpaid interest (including interest at the
contract rate accruing on or after the filing of any petition in bankruptcy or
for reorganization relating to a Subsidiary Guarantor whether or not a claim for
post-filing interest is allowed in such proceeding), whether existing on the
date hereof or hereafter incurred, in respect of (A)
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indebtedness of such Subsidiary Guarantor for money borrowed, (B) express
written guarantees by such Subsidiary Guarantor of indebtedness for money
borrowed by any other person, (C) indebtedness evidenced by notes, debentures,
bonds, or other instruments of indebtedness for the payment of which such
Subsidiary Guarantor is responsible or liable, by guarantees or otherwise,
(D) obligations of such Subsidiary Guarantor for the reimbursement of any
obligor on any letter of credit, banker's acceptance or similar credit
transaction, (E) obligations of such Subsidiary Guarantor under any agreement to
lease, or any lease of, any real or personal property which, in accordance with
GAAP, is classified upon Subsidiary Guarantor's consolidated balance sheet as a
liability, and (F) obligations of such Subsidiary Guarantor under or
guaranteeing interest rate swaps, caps, collars, options and similar
arrangements and foreign currency hedges and (iii) modifications, renewals,
extensions, replacements, refinancings, and refundings of any such indebtedness,
obligations or guarantees, unless, in the instrument creating or evidencing the
same or pursuant to which the same is outstanding, it is expressly provided that
such indebtedness, obligations or guarantees, or such modifications, renewals,
extensions, replacements, refinancings, or refundings thereof, are not superior
in right of payment to the Guarantee of such Subsidiary Guarantor; PROVIDED that
Guarantor Senior Indebtedness will not be deemed to include (a) any liability
for Federal, state, local or other taxes owed or owing by a Subsidiary
Guarantor, (b) any accounts payable or other liability to trade creditors
arising in the ordinary course of business, (c) any Indebtedness, guarantee or
obligation of a Subsidiary Guarantor which is expressly subordinate or junior by
its terms in any respect to any other Indebtedness, guarantee or obligations of
such Subsidiary Guarantor, (d) Indebtedness incurred in violation of
Section 4.12 or (e) Indebtedness of a Subsidiary Guarantor which is classified
as nonrecourse in accordance with GAAP or any unsecured claim arising in respect
thereof by reason of the application of section 1111(b)(1) of the Bankruptcy
Law.
"HEDGING OBLIGATIONS" means, with respect to the Company or a Restricted
Subsidiary, (i) the obligations of such person under Interest Rate Agreements,
(ii) the obligations of such person under Currency Agreements and
(iii) obligations under agreements or arrangements designed to protect such
person against fluctuations in the value of commodities entered into in such
person's business.
"HOLDER" or "NOTEHOLDER" means the person in whose name a Note is
registered on the Registrar's books.
"INDEBTEDNESS" of any person means, at any time, without duplication:
(i) the principal of and, if any is due and payable at such time, premium in
respect of (A) indebtedness of such person for money borrowed and
(B) indebtedness evidenced by notes, debentures, bonds, or other similar
instruments for the payment of which such person is responsible or liable;
(ii) all Capitalized Lease Obligations of such person; (iii) all obligations of
such person issued or assumed as the deferred purchase price of property, all
conditional sale obligations of such person and all obligations of such person
under any title retention agreement (but excluding trade accounts payable
arising in the ordinary course of business); (iv) all obligations of such
<PAGE>
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person for the reimbursement of any obligor on any letter of credit, banker's
acceptance or similar credit transaction (other than obligations with respect to
letters of credit securing obligations (other than obligations described in
(i) through (iii) above) entered into in the ordinary course of business of such
person; PROVIDED that, for the purpose of determining Events of Default referred
to in clause (4) of Section 6.01, obligations with respect to letters of credit
securing obligations entered into in the ordinary course of business shall be
excluded only to the extent such letters of credit are not drawn upon or, if and
to the extent drawn upon, such drawing is reimbursed no later than the third
Business Day following receipt by such person of a demand for reimbursement
following payment on the letter of credit); (v) the principal amount of all
obligations of such person with respect to the redemption, repayment or other
purchase of any Disqualified Capital Stock; (vi) in the case of the Company, any
Preferred Stock of a Restricted Subsidiary, valued at the aggregate liquidation
preference thereof plus accrued and unpaid dividends thereon; (vii) all
obligations of the type referred to in clauses (i) through (vi) above of other
persons and all dividends of other persons the payment of which, in either case,
such person is responsible or liable for as obligor, guarantor or otherwise; and
(viii) all obligations of the type referred to in clauses (i) through (vii) of
other persons secured by a lien, mortgage, pledge or encumbrance of any kind on
any property or asset of such person (whether or not such obligation is assumed
by such person), the amount of such obligation being deemed to be the lesser of
the value of such property or assets or the amount of the obligation so secured;
PROVIDED, HOWEVER, that Indebtedness shall not include any interest, commitment
or other fees.
"INDENTURE" means this Indenture, as amended or supplemented from time to
time in accordance with the terms hereof.
"INDEPENDENT" means with respect to the Company and its Subsidiaries, any
person who (i) is in fact independent, (ii) does not have any direct financial
interest or any material indirect financial interest in the Company or any of
its Subsidiaries, or in any Affiliate of the Company or any of its Subsidiaries
(other than as a result of holding securities of the Company in trading
accounts) and (iii) is not an officer, employee, promoter, underwriter, trustee,
partner, director or person performing similar functions for the Company or any
of its Subsidiaries or any Affiliate of the Company or any of its Subsidiaries.
"INDEPENDENT FINANCIAL ADVISOR" means a reputable accounting, appraisal or
investment banking firm that is, in the reasonable judgment of the Board of
Directors of the Company, qualified to perform the task for which such firm has
been engaged hereunder and disinterested and independent with respect to the
Company and its Affiliates.
"INITIAL NOTES" means, collectively, (i) the 10 1/8% Senior Subordinated
Notes due 2005 of the Company issued on the Issue Date and (ii) one or more
series of 10 1/8% Senior Subordinated Notes due 2005 that are issued under this
Indenture subsequent to the Issue Date pursuant to Section 2.02, in each case
for so long as such securities constitute Restricted Securities.
<PAGE>
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"INSTITUTIONAL ACCREDITED INVESTOR" means an institution that is an
"accredited investor" as that term is defined in Rule 501(a)(1), (2), (3) or (7)
under the Securities Act.
"INTEREST PAYMENT DATE" when used with respect to any Note, means the
stated maturity of an installment of interest specified in such Note.
"INTEREST RATE AGREEMENTS" means, with respect to the Company and the
Restricted Subsidiaries, any arrangements with any other person, whereby,
directly or indirectly, such person is entitled to receive from time to time
periodic payments calculated by applying either a floating or a fixed rate of
interest on a stated notional amount in exchange for periodic payments made by
such other person calculated by applying a fixed or a floating rate of interest
on the same notional amount and shall include, without limitation, interest rate
swaps, caps, floors, collars and similar agreements.
"INVESTMENT" means, with respect to any person, all investments by such
person in other persons (including Affiliates of such person) in the form of
loans, guarantees, advances of assets or capital contributions (excluding
commission, travel and similar advances to, and compensation and benefits of,
officers and employees of such person made in the ordinary course of
business), purchases or other acquisitions for consideration of Indebtedness,
Capital Stock or other securities and all other items that are or would be
classified as investments on a balance sheet prepared in accordance with
GAAP. In addition, the fair market value (as determined by the Board of
Directors of the Company in good faith) of the assets of any Subsidiary of
the Company at the time that such Subsidiary is designated as an Unrestricted
Subsidiary shall be deemed to be an Investment made by the Company in such
Unrestricted Subsidiary at such time. "Investment" shall exclude (i)
extensions of trade credit by the Company and the Restricted Subsidiaries on
commercially reasonable terms in the ordinary course of business and (ii)
sales, assignments, transfers, contributions, licenses or other dispositions
of patents, copyrights, applications with respect thereto, and other
trademarks, intellectual property and other technological "know-how"
(collectively, "INTELLECTUAL PROPERTY") to joint ventures in which the
Company or a wholly-owned Restricted Subsidiary owns at least 50% of the
equity interests (PROVIDED that if the equity interest of the Company or such
Restricted Subsidiary, as the case may be, in such joint venture is reduced
below 50%, the Company shall have been deemed to make an Investment in such
joint venture in an amount equal to the fair market value (as determined by
the Board of Directors of the Company in good faith) of such Intellectual
Property).
"INVESTMENT GRADE SECURITIES" means (i) securities issued or directly and
fully guaranteed or insured by the United States government or any agency or
instrumentality thereof (other than Cash Equivalents), (ii) debt securities or
debt instruments with a rating of BBB- or higher by S&P or Baa3 or higher by
Moody's or the equivalent of such rating by such rating organization, or, if no
rating of S&P or Moody's then exists, the equivalent of such rating by any other
nationally recognized securities rating agency, but excluding any debt
securities or instruments constituting loans or advances among the Company and
its
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Subsidiaries, and (iii) investments in any fund that invests exclusively in
investments of the type described in clauses (i) and (ii) which fund may also
hold immaterial amounts of cash pending investment and/or distribution.
"ISSUE" has the meaning provided in Section 4.12.
"ISSUE DATE" means July 25, 1997.
"JUNIOR SECURITIES" means Equity Interests of the Company or debt
securities that are subordinated to all Senior Indebtedness (and any debt
securities issued in exchange for Senior Indebtedness) to substantially the same
extent as, or greater extent than the Notes are subordinated to Senior
Indebtedness pursuant to this Indenture.
"LEGAL DEFEASANCE" has the meaning provided in Section 8.02(b).
"LEGAL HOLIDAY" has the meaning provided in Section 12.07.
"LIEN" means with respect to any property or assets of any person, any
mortgage or deed of trust, pledge, hypothecation, assignment, deposit
arrangement, security interest, lien, charge, easement, encumbrance, preference,
priority, or other security agreement or preferential arrangement of any kind or
nature whatsoever on or with respect to such property or assets (including,
without limitation, any Capitalized Lease Obligation, conditional sales, or
other title retention agreement having substantially the same economic effect as
any of the foregoing).
"MATURITY DATE" means August 1, 2005.
"NET CASH PROCEEDS" means cash payments received (including any cash
payments received by way of deferred payment of principal pursuant to a note or
installment receivable or otherwise, but only as and when received) from any
sale, lease, transfer or other disposition of Capital Stock of the Company or a
Restricted Subsidiary or property or other assets of the Company or a Restricted
Subsidiary, in each case net of (i) any reserve for adjustment in respect of the
sale price of such asset or assets as required by GAAP (provided, that upon the
payment of such adjustment amount the excess, if any, of the amount so reserved
over the amount so paid shall be deemed "Net Cash Proceeds"), (ii) repayment of
any Purchase Money Indebtedness secured by a Lien on the sold asset or assets
and (iii) all legal, title and recording tax expenses, commissions and other
fees and expenses incurred, and any taxes payable and reasonably estimated
income taxes, as a consequence of such sale, lease, transfer or other
disposition.
"NET PROCEEDS OFFER" has the meaning provided in Section 4.16.
"NET WORTH" of any person means the total of the amounts shown on the
balance sheet of such person, as of the end of the most recent fiscal quarter of
such person ending at least 45
<PAGE>
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days prior to the taking of any action for the purpose of which the
determination is being made, as the sum of (i) par or stated value for all
outstanding Capital Stock of such person plus (ii) paid-in capital or capital
surplus relating to such Capital Stock plus (iii) any retained earnings or
earned surplus less (x) any accumulated deficit and (y) any amounts attributable
to Disqualified Capital Stock.
"NON-U.S. PERSON" means a person who is not a U.S. person, as defined in
Regulation S.
"NOTES" means, collectively, the Initial Notes, the Private Exchange Notes,
if any, and the Unrestricted Notes, treated as a single class of securities, as
amended or supplemented from time to time in accordance with the terms hereof,
that are issued pursuant to this Indenture.
"OBLIGATIONS" means all obligations for principal, premium, interest,
penalties, fees, indemnifications, reimbursements, damages and other
liabilities payable under, or with respect to, the documentation governing
any Indebtedness.
"OFFERING" means the issuance and sale of Initial Notes in an aggregate
principal amount of $105,000,000 on the Issue Date.
"OFFICER" means, with respect to any person, the Chairman of the Board, the
Chief Executive Officer, the President, any Vice President, the Chief Financial
Officer, the Treasurer, the Controller, or the Secretary of such person, or any
other officer designated by the Board of Directors serving in a similar
capacity.
"OFFICERS' CERTIFICATE" means, with respect to any person, a certificate
signed by two Officers or by an Officer and either an Assistant Treasurer or an
Assistant Secretary of such person and otherwise complying with the requirements
of Sections 12.04 and 12.05, as they relate to the making of an Officers'
Certificate.
"OFFSHORE PHYSICAL NOTES" has the meaning provided in Section 2.01.
"OPERATING COVERAGE RATIO" means the ratio of Consolidated EBITDA of the
Company and the Restricted Subsidiaries during the four most recent full fiscal
quarters for which financial information is available (the "FOUR QUARTER
PERIOD") ending not more than 135 days prior to the date of the transaction
giving rise to the need to calculate the Operating Coverage Ratio (the
"TRANSACTION DATE") of the Company and the Restricted Subsidiaries for the Four
Quarter Period to Consolidated Interest Expense of the Company and the
Restricted Subsidiaries for the Four Quarter Period. In addition to and without
limitation of the foregoing, for purposes of this definition, "Consolidated
EBITDA" and "Consolidated Interest Expense" shall be calculated after giving
effect on a pro forma basis for the Four Quarter Period to (i) the incurrence or
repayment of any Indebtedness (excluding the incurrence of
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Indebtedness under any revolving credit facility and including repayments of
Indebtedness under any revolving credit facility only to the extent that such
repayment effects, or is accompanied by, a permanent reduction in the
availability thereunder) or the issuance of any Designated Preferred Stock
(and the application of the proceeds of such Indebtedness or Designated
Preferred Stock) of the Company and the Restricted Subsidiaries at any time
subsequent to the last day of the Four Quarter Period and on or prior to the
Transaction Date, as if such incurrence or repayment or issuance, as the case
may be (and the application of the proceeds thereof), occurred on the first
day of the Four Quarter Period and (ii) any Asset Sales (and the application
of proceeds thereof) or asset acquisitions (including Capital Stock) outside
the ordinary course of business in excess of $100,000 occurring during the
Four Quarter Period or at any time subsequent to the last day of the Four
Quarter Period and on or prior to the Transaction Date, as if such Asset Sale
(and the application of proceeds thereof) or asset acquisition occurred on
the first day of the Four Quarter Period, without giving effect to the
limitations set forth in clause (iii) of the definition of Consolidated Net
Income. If the Company or any of its Restricted Subsidiaries directly or
indirectly guarantees Indebtedness of a third person (other than the Company
or any of its Restricted Subsidiaries), the preceding sentence shall give
effect to the incurrence of such guaranteed Indebtedness as if such person or
any subsidiary (other than an Unrestricted Subsidiary) of such person had
directly incurred or otherwise assumed such guaranteed Indebtedness.
Furthermore, in calculating "Consolidated Interest Expense," (A) interest on
Indebtedness or dividends on Designated Preferred Stock determined on a
fluctuating basis as of the Transaction Date and which will continue to be so
determined thereafter shall be deemed to have accrued at a fixed rate per
annum equal to the rate of interest on such Indebtedness in effect on the
Transaction Date, (B) if interest on any Indebtedness actually incurred on
the Transaction Date may optionally be determined at an interest rate based
upon a factor of a prime or similar rate, a eurocurrency interbank offered
rate, or other rates, then the interest rate or dividend rate in effect on
the Transaction Date will be deemed to have been in effect during the Four
Quarter Period and (C) notwithstanding clause (A) above, interest on
Indebtedness determined on a fluctuating basis, to the extent such interest
is covered by Interest Rate Agreements, shall be deemed to accrue at the rate
per annum resulting after giving effect to the operation of such Interest
Rate Agreements. Any such pro forma calculation may include (a) any
adjustments, that would, in the reasonable determination of the Company set
forth in an Officers' Certificate, satisfy the requirements of Rule 11-02(a)
of Regulation S-X as if included in a registration statement filed with the
Commission, and (b) any other operating expense reductions reasonably
expected to result from any acquisition of assets (including any Permitted
Investment provided for in clause (iv) of the definition of such term), if
such expected reductions are (i) set forth in reasonable detail in a plan
approved by or resolutions of the Board of Directors, and (ii) limited to
operating expenses specified in such plan (and, if any such reductions are
set forth as a range, the lowest amount of such range) that would otherwise
have resulted in the payment of cash within twelve months after the date of
consummation of such transaction, net of any operating expenses (other than
extraordinary items, non-recurring or temporary charges and other similar
one-time expenses) reasonably expected to be incurred to implement
<PAGE>
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such plan or to obtain goods or services (including without limitation
personnel, occupancy and transportation expenses) in replacement of goods and
services that are being curtailed or eliminated to result in such expected
reductions, and that are to be paid in cash during such twelve-month period, and
such Officers' Certificate so states.
"OPINION OF COUNSEL" means a written opinion from legal counsel, who may be
counsel for the Company and who is reasonably acceptable to the Trustee,
complying with the requirements of Sections 12.04 and 12.05, as they relate to
the giving of an Opinion of Counsel.
"PAYING AGENT" has the meaning provided in Section 2.03.
"PERMITTED HOLDERS" or "CARLYLE" means TC Group, L.L.C., a Delaware limited
liability company, and its Affiliates, and any successors thereof that are
Permitted Holders.
"PERMITTED INVESTMENT" means (i) cash and Cash Equivalents; (ii) any
Investment in the Company or in a Controlled Subsidiary of the Company;
(iii) any Investment by the Company or any Subsidiary existing on the Issue
Date; (iv) any Investment by the Company or any Subsidiary of the Company in a
person, if as a result of such Investment (A) such person becomes a Controlled
Subsidiary of the Company or (B) such person is merged, consolidated or
amalgamated with or into, or transfers or conveys substantially all of its
assets to, or is liquidated into, the Company or a Controlled Subsidiary of the
Company; (v) advances to employees in an aggregate principal amount not to
exceed $500,000 at any time outstanding; (vi) any Investment acquired by the
Company or any of its Restricted Subsidiaries (a) in exchange for any other
Investment or accounts receivable held by the Company or any such Restricted
Subsidiary in connection with or as a result of a bankruptcy, workout,
reorganization or recapitalization of the issuer of such other Investment or
accounts receivable or (b) as a result of a foreclosure by the Company or any of
its Restricted Subsidiaries with respect to any secured Investment or other
transfer of title with respect to any secured Investment in default;
(vii) Hedging Obligations; (viii) loans and advances to officers, directors and
employees for business-related travel expenses, moving expenses and other
similar expenses, in each case incurred in the ordinary course of business;
(ix) Investments the payment for which consists of Equity Interests of the
Company (exclusive of Disqualified Capital Stock); PROVIDED, HOWEVER, that such
Equity Interests will not increase the amount available for Restricted Payments
under clause (c) of the first paragraph of Section 4.10; and (x) additional
Investments having an aggregate fair market value, taken together with all other
Investments made pursuant to this clause (x) that are at that time outstanding,
not to exceed $5.0 million at the time of such Investment (with the fair market
value of each Investment being measured at the time made and without giving
effect to subsequent changes in value) (subject in each case to Section 4.12 and
Article Five).
"PERMITTED LIENS" means (i) Liens on property or assets of, or any shares
of stock of or secured debt of, any corporation existing at the time such
corporation becomes a Restricted
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Subsidiary of the Company or at the time such corporation is merged into the
Company or any of its Restricted Subsidiaries, provided that such Liens are not
incurred in connection with, or in contemplation of, such corporation becoming a
Restricted Subsidiary of the Company or merging into the Company or any of its
Restricted Subsidiaries, (ii) Liens securing Refinancing Indebtedness; PROVIDED
that any such Lien does not extend to or cover any Property, shares or debt
other than the Property, shares or debt securing the Indebtedness so refunded,
refinanced or extended, (iii) Liens in favor of the Company or any of its
Restricted Subsidiaries, (iv) Liens securing industrial revenue bonds, (v) Liens
to secure Purchase Money Indebtedness that is otherwise permitted under this
Indenture; PROVIDED that (A) any such Lien is created solely for the purpose of
securing Indebtedness representing, or incurred to finance, refinance or refund,
the cost (including sales and excise taxes, installation and delivery charges
and other direct costs of, and other direct expenses paid or charged in
connection with, such purchase or construction) of such Property, (B) the
principal amount of the Indebtedness secured by such Lien does not exceed 100%
of such costs, and (C) such Lien does not extend to or cover any Property other
than such item of Property and any improvements on such item, (vi) statutory
Liens or landlords', carriers', warehousemen's, mechanics', suppliers',
materialmen's, repairmen's or other like Liens arising in the ordinary course of
business which do not secure any Indebtedness and with respect to amounts not
yet delinquent or being contested in good faith by appropriate proceedings, if a
reserve or other appropriate provisions, if any, as shall be required in
conformity with GAAP shall have been made therefor, (vii) Liens in favor of the
Trustee under this Indenture and any substantially equivalent Lien granted to
any trustee or similar institution under any indenture for Indebtedness
permitted by the terms of this Indenture, (viii) Liens incurred or pledges or
deposits made in the ordinary course of business to secure obligations under
workers' compensation, unemployment insurance or other types of social security
or similar legislation, (ix) Liens incurred or deposits made to secure the
performance of tenders, bids, leases, statutory obligations, surety and appeal
bonds, government contracts, performance and return of money bonds and other
obligations of a like nature incurred in the ordinary course of business
(exclusive of obligations for the payment of borrowed money), (x) Liens upon
specific items of inventory or other goods and proceeds of any person securing
such person's obligations in respect of bankers' acceptances issued or created
for the account of such person to facilitate the purchase, shipment or storage
of such inventory or other goods in the ordinary course of business, (xi) Liens
securing reimbursement obligations with respect to letters of credit which
encumber documents and other property relating to such letters of credit and the
products and proceeds thereof, (xii) Liens in favor of customs and revenue
authorities arising as a matter of law to secure payment of nondelinquent
customs duties in connection with the importation of goods, (xiii) judgment and
attachment Liens not giving rise to a Default or Event of Default, (xiv) leases
or subleases granted to others not interfering in any material respect with the
business of the Company or any Subsidiary, (xv) Liens encumbering customary
initial deposits and margin deposits, and other Liens incurred in the ordinary
course of business that are within the general parameters customary in the
industry, in each case securing Indebtedness under Hedging Obligations, (xvi)
Liens encumbering deposits made in
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the ordinary course of business to secure nondelinquent obligations arising from
statutory, regulatory, contractual or warranty requirements of the Company or
its Subsidiaries for which a reserve or other appropriate provision, if any, as
shall be required by GAAP shall have been made, (xvii) Liens arising out of
consignment or similar arrangements for the sale of goods entered into by the
Company or any Subsidiary in the ordinary course of business in accordance with
past practices, (xviii) any interest or title of a lessor in the property
subject to any lease, whether characterized as capitalized or operating other
than any such interest or title resulting from or arising out of a default by
the Company or any Subsidiary of its obligations under such lease, (xix) Liens
arising from filing UCC financing statements for precautionary purposes in
connection with true leases of personal property that are otherwise permitted
under the applicable indenture and under which the Company or any Subsidiary is
lessee, (xx) other Liens securing obligations incurred in the ordinary course of
business which obligations or judgments do not exceed $10.0 million in the
aggregate at any one time outstanding, (xxi) Liens securing Capitalized Lease
Obligations permitted to be incurred; PROVIDED that such Lien does not extend to
any property other than that subject to the underlying lease, (xxii) Liens on
assets or capital stock of Unrestricted Subsidiaries, (xxiii) Liens securing
Indebtedness under the Senior Credit Facility or any Floor Plan Financing
Facility, (xxiv) Liens existing on the Issue Date, (xxv) Liens on assets of the
Company securing Senior Indebtedness and Liens on assets of a Subsidiary
Guarantor securing Guarantor Senior Indebtedness, (xxvi) any extensions,
substitutions, replacements or renewals of the foregoing, (xxvii) Liens for
taxes, assessments or governmental charges that are not delinquent or are being
contested in good faith by appropriate proceedings and (xxviii) easements or
minor defects or irregularities in title and other similar charges or
encumbrances on property not interfering in any material respect with the
Company's use of such property.
"PERSON" means any individual, corporation, partnership, joint venture,
association, joint-stock company, trust, unincorporated organization or
government or other agency or political subdivision thereof.
"PHYSICAL NOTES" has the meaning provided in Section 2.01.
"PREFERRED STOCK" means any Capital Stock of a person, however designated,
which entitles the holder thereof to a preference with respect to dividends,
distributions or liquidation proceeds of such person over the holders of other
Capital Stock issued by such person.
"PRINCIPAL" of any Indebtedness (including the Notes) means the principal
amount of such Indebtedness plus the premium, if any, on such Indebtedness.
"PRIVATE EXCHANGE NOTES" has the meaning set forth in the Registration
Rights Agreement.
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"PRIVATE PLACEMENT LEGEND" means the legend initially set forth on the
Initial Notes in the form set forth in Exhibit A(1).
"PROCEEDS PURCHASE DATE" has the meaning provided in Section 4.16.
"PRO FORMA" means, except as otherwise provided in the definition of
"Operating Coverage Ratio," with respect to any calculation made or required to
be made pursuant to the terms of this Indenture, a calculation in accordance
with Article 11 of Regulation S-X under the Securities Act, as determined by the
Board of Directors or the Chief Financial Officer of the Company in consultation
with its independent public accountants.
"PROPERTY" of any person means all types of real, personal, tangible,
intangible or mixed property owned by such person whether or not included in the
most recent consolidated balance sheet of such person and its Subsidiaries under
GAAP.
"PUBLIC EQUITY OFFERING" means an underwritten equity offering of the
Qualified Capital Stock of the Company, or of any entity of which the Company is
a direct or indirect subsidiary, to the extent the proceeds thereof shall have
been contributed to the Company, pursuant to an effective registration statement
under the Act.
"PURCHASE MONEY INDEBTEDNESS" means any Indebtedness incurred in the
ordinary course of business by a person to finance the cost (including the cost
of construction) of an item of property, the principal amount of which
Indebtedness does not exceed the sum of (i) 100% of such cost and
(ii) reasonable fees and expenses of such person incurred in connection
therewith.
"QUALIFIED CAPITAL STOCK" means, with respect to any person, any Capital
Stock of such person that is not Disqualified Capital Stock.
"QUALIFIED INSTITUTIONAL BUYER" or "QIB" shall have the meaning specified
in Rule 144A under the Securities Act.
"RECORD DATE" means, with respect to any Note, any of the Record Dates
specified in such Note, whether or not a Legal Holiday.
"REDEMPTION DATE," when used with respect to any Note to be redeemed, means
the date fixed for such redemption pursuant to this Indenture and the Notes.
"REDEMPTION PRICE," when used with respect to any Note to be redeemed,
means the price fixed for such redemption pursuant to this Indenture and the
Notes.
"REFERENCE DATE" has the meaning provided in Section 4.10.
"REFINANCING INDEBTEDNESS" has the meaning provided in Section 4.12.
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"REGISTRAR" has the meaning provided in Section 2.03.
"REGISTRATION RIGHTS AGREEMENT" has the meaning provided in the definition
of "Exchange Offer."
"REGULATION S" means Regulation S under the Securities Act.
"REPRESENTATIVE" means the agent or representative in respect of any
Designated Senior Indebtedness; PROVIDED that if, and for so long as, any
Designated Senior Indebtedness lacks such a representative, then the
Representative for such Designated Senior Indebtedness shall at all times
constitute the holders of a majority in outstanding principal amount of such
Designated Senior Indebtedness in respect of any Designated Senior
Indebtedness.
"RESTRICTED PAYMENT" has the meaning provided in Section 4.10.
"RESTRICTED SECURITY" has the meaning assigned to such term in Rule
144(a)(3) under the Securities Act; PROVIDED that the Trustee shall be entitled
to request and conclusively rely on an Opinion of Counsel with respect to
whether any Note constitutes a Restricted Security.
"RESTRICTED SUBSIDIARY" means any Subsidiary that is not an Unrestricted
Subsidiary.
"RULE 144A" means Rule 144A under the Securities Act.
"SEC" means the United States Securities and Exchange Commission.
"SECURITIES ACT" means the Securities Act of 1933, as amended, and the
rules and regulations of the SEC promulgated thereunder.
"SELLER NOTES" means the 9% Increasing Rate Subordinated Notes outstanding
on the Issue Date that were issued by the Company to certain present and former
shareholders of the Company and former shareholders of NYMA, Inc. and Sylvest
Management Systems Corporation, as in effect on the Issue Date.
"SENIOR CREDIT FACILITY" means the Credit Agreement to be entered into by
and among the Company, certain of its Subsidiaries, the lenders referred to
therein and Bankers Trust Company, as Agent, together with the related documents
thereto (including, without limitation, any guarantees and security documents),
as amended, extended, renewed, restated, supplemented or otherwise modified (in
whole or in part, and without limitation as to amount, terms, conditions,
covenants and other provisions) from time to time and any agreement (and related
documents) governing Indebtedness incurred to refund or refinance the entirety
of the borrowings and commitments then outstanding or permitted to be
outstanding under such Credit Agreement or a successor Senior Credit Facility,
whether by the same or any other lender or group of lenders. The Company shall
promptly notify the Trustee of any other lender
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or group of lenders. The Company shall promptly notify the Trustee of any such
refunding or refinancing of the Senior Credit Facility.
"SENIOR INDEBTEDNESS" means (i) indebtedness of the Company for money
borrowed and all obligations, whether direct or indirect, under guarantees,
letters of credit, foreign currency or interest rate swaps, foreign exchange
contracts, caps, collars, options, hedges or other agreements or arrangements
designed to protect against fluctuations in currency values or interest rates,
other extensions of credit, expenses, fees, reimbursements, indemnities and all
other amounts (including interest at the contract rate accruing on or after the
filing of any petition in bankruptcy or reorganization relating to the Company
whether or not a claim for post-filing interest is allowed in such proceeding)
owed by the Company under, or with respect to, the Senior Credit Facility, or
any Floor Plan Financing Facility, (ii) the principal of and premium, if any,
and accrued and unpaid interest, whether existing on the date hereof or
hereafter incurred, in respect of (A) indebtedness of the Company for money
borrowed, (B) express written guarantees by the Company of indebtedness for
money borrowed by any other person, (C) indebtedness evidenced by notes,
debentures, bonds, or other instruments of indebtedness for the payment of which
the Company is responsible or liable, by guarantees or otherwise,
(D) obligations of the Company for the reimbursement of any obligor on any
letter of credit, banker's acceptance or similar credit transaction,
(E) obligations of the Company under any agreement to lease, or any lease of,
any real or personal property which, in accordance with GAAP, is classified on
the Company's consolidated balance sheet as a liability, and (F) obligations of
the Company under interest rate swaps, caps, collars, options and similar
arrangements and foreign currency hedges and (iii) modifications, renewals,
extensions, replacements, refinancings and refundings of any such indebtedness,
obligations or guarantees, unless, in the instrument creating or evidencing the
same or pursuant to which the same is outstanding, it is expressly provided that
such indebtedness, obligations or guarantees, or such modifications, renewals,
extensions, replacements, refinancings or refundings thereof, are not superior
in right of payment to the Notes; PROVIDED that Senior Indebtedness will not be
deemed to include (a) any obligation of the Company to any Subsidiary (other
than obligations pledged pursuant to the Senior Credit Facility, as security for
the obligations of the Company thereunder), (b) any liability for federal,
state, local or other taxes owed or owing by the Company, (c) any accounts
payable or other liability to trade creditors arising in the ordinary course of
business, (d) any Indebtedness, guarantee or obligation of the Company which is
expressly subordinate or junior by its terms in any respect to any other
Indebtedness, guarantee or obligation of the Company, (e) Indebtedness with
respect to the Seller Notes, (f) that portion of any Indebtedness incurred in
violation of Section 4.12 or (g) Indebtedness of the Company which is classified
as nonrecourse in accordance with GAAP or any unsecured claim arising in respect
thereof by reason of the application of section 1111(b)(1) of the Bankruptcy
Law. Notwithstanding clause (f) of the foregoing proviso, any Indebtedness
incurred pursuant to the Senior Credit Facility in reliance on an Officers'
Certificate with respect to the amount of Indebtedness outstanding pursuant to
the Floor Plan Financing Facility shall be deemed Senior Indebtedness.
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"SIGNIFICANT GUARANTOR SENIOR INDEBTEDNESS" means any Indebtedness of a
Guarantor under or in respect of the Senior Credit Facility or Guarantor Senior
Indebtedness with principal amount due (or accreted value with respect to
Guarantor Senior Indebtedness issued at a discount) in excess of $5.0 million
upon initial issuance thereof.
"SIGNIFICANT SENIOR INDEBTEDNESS" means any Indebtedness under or in
respect of the Senior Credit Facility or Senior Indebtedness with principal
amount due (or accreted value with respect to Senior Indebtedness issued at a
discount) in excess of $5.0 million upon initial issuance thereof.
"SIGNIFICANT STOCKHOLDER" means, with respect to any person, any other
person who is the beneficial owner (within the meaning of Rule l3d-3 under the
Exchange Act) of more than 5% of any class of equity securities of such person
that are entitled to vote on a regular basis for the election of directors of
such person.
"SIGNIFICANT SUBSIDIARY" means each Restricted Subsidiary of the Company
that is a "significant subsidiary" as defined in Rule 1-02(v) of Regulation S-X
under the Securities Act and the Exchange Act (as such regulation is in effect
on the date hereof).
"SIMILAR BUSINESS" means an information technology business the majority of
whose revenues are derived from government contracting or value added reselling
of goods or services or any business or activity that is reasonably similar
thereto or a reasonable extension, development or expansion thereof or ancillary
thereto.
"SUBORDINATED OBLIGATIONS" means any Indebtedness of the Company which is
expressly subordinated or junior in right of payment to the Notes.
"SUBSIDIARY" of any person means (i) a corporation a majority of whose
Capital Stock with voting power, under ordinary circumstances, to elect
directors is, at the date of determination, directly or indirectly, owned by
such person, by one or more subsidiaries of such person or by such person and
one or more subsidiaries of such person, (ii) a partnership in which such person
or a subsidiary of such person is, at the date of determination, a general
partner of such partnership, but only if such person or its subsidiary is
entitled to receive more than fifty percent of the assets of such partnership
upon its dissolution or (iii) any other person (other than a corporation or a
partnership) in which such person, a subsidiary of such person or such person
and one or more subsidiaries of such person, directly or indirectly, at the date
of determination, has (x) at least a majority ownership interest or (y) the
power to elect or direct the election of a majority of the directors or other
governing body of such person.
"SUBSIDIARY" means any subsidiary of the Company.
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"SUBSIDIARY GUARANTEE" means the Guarantees executed and delivered by any
Subsidiary Guarantor with respect to the Company's obligations under the
Indenture and the Notes.
"SUBSIDIARY GUARANTOR" means (i) each of (a) FDCT Corp., (b) NYMA, Inc.,
(c) Sylvest Management Systems Corporation, (d) FDC Technologies Inc.,
(e) DoxSys, Inc. and (f) VAD International, Inc., (ii) each of the Company's
Subsidiaries which becomes a guarantor of the Notes pursuant to the provisions
of Section 4.20, and (iii) each of the Company's Subsidiaries executing a
supplemental indenture in which such Subsidiary agrees to be bound by the terms
of this Indenture; PROVIDED that any person constituting a Subsidiary Guarantor
as described above shall cease to constitute a Subsidiary Guarantor when its
respective Subsidiary Guarantee is released in accordance with the terms
thereof.
"SURVIVING PERSON" has the meaning provided in Section 5.01.
"TIA" means the Trust Indenture Act of 1939 (15 U.S.C.
Sections 77aaa-77bbbb), as amended, as in effect on the date of this Indenture,
except as otherwise provided in Section 9.04.
"TOTAL ASSETS" means the total consolidated assets of the Company and its
Restricted Subsidiaries, as shown on the most recent balance sheet of the
Company.
"TRANSACTIONS" means the acquisition by the Company of NYMA, Inc. in
May 1997 and of Sylvest Management Systems Corporation in June 1997, prepayment
of certain of the Seller Notes, entry into the Senior Credit Facility, the
offering of Initial Notes in an aggregate principal amount of $105,000,000 on
the Issue Date and the application of the proceeds of such offering.
"TREASURY RATE" means the yield to maturity at the time of computation of
United States Treasury securities with a constant maturity (as compiled and
published in the most recent Federal Reserve Statistical Release H.15 (519)
which has become publicly available at least two business days prior to the
Redemption Date (or, if such Statistical Release is no longer published, any
publicly available source or similar market data)) most nearly equal to the
period from the Redemption Date to August 1, 2001; PROVIDED, HOWEVER, that if
the period from the Redemption Date to August 1, 2001 is not equal to the
constant maturity of a United States Treasury security for which a weekly
average yield is given, the Treasury Rate shall be obtained by linear
interpolation (calculated to the nearest one-twelfth of a year) from the weekly
average yields of United States Treasury securities for which such yields are
given, except that if the period from the Redemption Date to August 1, 2001 is
less than one year, the weekly average yield on actually traded United States
Treasury securities adjusted to a constant maturity of one year shall be used.
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"TRUSTEE" means the party named as such in this Indenture until a successor
replaces it in accordance with the provisions of this Indenture and thereafter
means such successor.
"TRUST OFFICER" means any officer of the Trustee assigned by the Trustee to
administer this Indenture, or in the case of a successor trustee, an officer
assigned to the department, division or group performing the corporation trust
work of such successor and assigned to administer this Indenture.
"U.S. GOVERNMENT OBLIGATIONS" means non-callable direct obligations of, and
non-callable obligations guaranteed by, the United States of America for the
payment of which the full faith and credit of the United States of America is
pledged.
"U.S. LEGAL TENDER" means such coin or currency of the United States of
America as at the time of payment shall be legal tender for the payment of
public and private debts.
"U.S. PHYSICAL NOTES" has the meaning provided in Section 2.01.
"UNRESTRICTED NOTES" means one or more Notes that do not and are not
required to bear the private placement legend in the form set forth on Exhibit
A(1), including, without limitation, the Exchange Notes in the form set forth as
Exhibit A(2) hereto.
"UNRESTRICTED SUBSIDIARY" of any person means (i) any Subsidiary of such
person that at the time of determination shall be or continue to be designated
an Unrestricted Subsidiary by the Board of Directors of such person in the
manner provided below and (ii) any Subsidiary of an Unrestricted Subsidiary. The
Board of Directors may designate any Subsidiary (including any newly acquired or
newly formed Subsidiary) to be an Unrestricted Subsidiary unless such Subsidiary
owns any Capital Stock of, or owns or holds any Lien on any property of, the
Company or any other Subsidiary of the Company that is not a Subsidiary of the
Subsidiary to be so designated; PROVIDED that (x) the Company certifies to the
Trustee that such designation complies with Section 4.10 and (y) each Subsidiary
to be so designated and each of its Subsidiaries have not at the time of
designation, and do not thereafter, create, incur, issue, assume, guarantee or
otherwise become directly or indirectly liable with respect to any Indebtedness
pursuant to which the lender has recourse to any of the assets of the Company or
any of its Restricted Subsidiaries. The Board of Directors may designate any
Unrestricted Subsidiary to be a Restricted Subsidiary only if (x) immediately
after giving effect to such designation, the Company is able to incur at least
$1.00 of additional Indebtedness under the first paragraph of Section 4.12 and
(y) immediately before and immediately after giving effect to such designation,
no Default or Event of Default shall have occurred and be continuing. Any such
designation by the Board of Directors shall be evidenced to the Trustee by
promptly filing with the Trustee a copy of the resolution giving effect to such
designation and an Officers' Certificate certifying that such designation
complies with the foregoing provisions.
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"WEIGHTED AVERAGE LIFE TO MATURITY" means, when applied to any Indebtedness
at any date, the number of years obtained by dividing (a) the then outstanding
aggregate principal amount of such Indebtedness into (b) the sum of the total of
the products obtained by, multiplying (i) the amount of each then remaining
installment, sinking fund, serial maturity or other required payment of
principal, including payment at final maturity, in respect thereof by (ii) the
number of years (calculated to the nearest one-twelfth) which will elapse
between such date and the making of such payment.
"WHOLLY OWNED RESTRICTED SUBSIDIARY" means any Restricted Subsidiary of
which all of the outstanding voting securities (other than directors' qualifying
or similar shares required to be held by third parties in accordance with
applicable law, not in any event to exceed 5% of the total outstanding voting
securities) are owned by the Company or any wholly owned Restricted Subsidiary
of the Company.
SECTION 1.02. INCORPORATION BY REFERENCE OF TIA.
Whenever this Indenture refers to a provision of the TIA, such provision is
incorporated by reference in, and made a part of, this Indenture. The following
TIA terms used in this Indenture have the following meanings:
"Commission" means the SEC.
"indenture securities" means the Notes.
"indenture security holder" means a Holder or a Noteholder.
"indenture to be qualified" means this Indenture.
"indenture trustee" or "institutional trustee" means the Trustee.
"obligor" on the indenture securities means the Company, the Subsidiary
Guarantors, if any, or any other obligor on the Notes or the Guarantees, if any.
All other TIA terms used in this Indenture that are defined by the TIA,
defined by TIA reference to another statute or defined by SEC rule and not
otherwise defined herein have the meanings assigned to them therein.
SECTION 1.03. RULES OF CONSTRUCTION.
Unless the context otherwise requires:
(1) a term has the meaning assigned to it;
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(2) an accounting term not otherwise defined has the meaning assigned to
it in accordance with GAAP;
(3) "or" is not exclusive;
(4) words in the singular include the plural, and words in the plural
include the singular; and
(5) "herein," "hereof" and other words of similar import refer to this
Indenture as a whole and not to any particular Article, Section or other
subdivision.
ARTICLE TWO
THE NOTES
SECTION 2.01. FORM AND DATING.
The Initial Notes, the notation thereon relating to the Guarantees, if any,
and the Trustee's certificate of authentication shall be substantially in the
form of EXHIBIT A(1) hereto. The Exchange Notes, the notation thereon relating
to the Guarantees, if any, and the Trustee's certificate of authentication shall
be substantially in the form of EXHIBIT A(2) hereto. The Notes may have
notations, legends or endorsements required by law, stock exchange rule or
depository rule or usage. The Company and the Trustee shall approve the form of
the Notes and any notation, legend or endorsement on them. Each Note shall be
dated the date of its issuance.
The terms and provisions contained in the Notes and the Guarantees, if any,
annexed hereto as EXHIBITS A(1) and A(2), shall constitute, and are hereby
expressly made, a part of this Indenture and, to the extent applicable, the
Company, the Subsidiary Guarantors, if any, and the Trustee, by their execution
and delivery of this Indenture, expressly agree to such terms and provisions and
to be bound thereby.
Notes offered and sold in reliance on Rule 144A shall be issued initially
in the form of one or more permanent global Notes in registered form,
substantially in the form set forth in Exhibit A(1) (the "GLOBAL NOTE"),
deposited with the Trustee, as custodian for the Depository, and shall bear the
legend set forth in EXHIBIT B, duly executed by the Company and authenticated by
the Trustee as hereinafter provided. The aggregate principal amount of the
Global Note may from time to time be increased or decreased by adjustments made
on the records of the Trustee, as custodian for the Depository, as hereinafter
provided.
Notes offered and sold in offshore transactions in reliance on Regulation S
shall be issued in the form of permanent certificated Notes in registered form
in substantially the form
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set forth in EXHIBIT A(1) (the "OFFSHORE PHYSICAL NOTES"). Notes offered and
sold in reliance on any other exemption from registration under the Securities
Act other than as described in the preceding paragraph shall be issued, and
Notes offered and sold in reliance on Rule 144A may be issued, in the form of
permanent certificated Notes in registered form, in substantially the form set
forth in EXHIBIT A(1) (the "U.S. PHYSICAL NOTES"). The Offshore Physical Notes
and the U.S. Physical Notes are sometimes collectively herein referred to as the
"PHYSICAL NOTES."
SECTION 2.02. EXECUTION AND AUTHENTICATION;
AGGREGATE PRINCIPAL AMOUNT.
Two Officers, or an Officer and an Assistant Secretary, shall sign, or one
Officer shall sign and one Officer or an Assistant Secretary (each of whom
shall, in each case, have been duly authorized by all requisite corporate
actions) shall attest to, the Notes for the Company by manual or facsimile
signature. Each Subsidiary Guarantor, if any, shall execute the Guarantee in
the manner set forth in Section 11.09.
If an Officer or Assistant Secretary whose signature is on a Note was an
Officer or Assistant Secretary at the time of such execution but no longer holds
that office or position at the time the Trustee authenticates the Note, the
Note shall nevertheless be valid.
A Note shall not be valid until an authorized signatory of the Trustee
manually signs the certificate of authentication on the Note. The signature
shall be conclusive evidence that the Note has been authenticated under this
Indenture.
The Trustee shall authenticate (i) Initial Notes for original issue in the
aggregate principal amount not to exceed $175,000,000 in one or more series,
(ii) Private Exchange Notes from time to time only in exchange for a like
principal amount of Initial Notes and (iii) Unrestricted Notes from time to time
only (x) in exchange for a like principal amount of Initial Notes or (y) in an
aggregate principal amount of not more than the excess of $175,000,000 over the
sum of the aggregate principal amount of (A) Initial Notes then outstanding, (B)
Private Exchange Notes then outstanding and (C) Unrestricted Notes issued in
accordance with (iii)(x) above, in each case upon a written order of the Company
in the form of an Officers' Certificate of the Company. Each such written order
shall specify the amount of Notes to be authenticated and the date on which the
Notes are to be authenticated, whether the Notes are to be Initial Notes,
Private Exchange Notes or Unrestricted Notes and whether the Notes are to be
issued as Physical Notes or Global Notes or such other information as the
Trustee may reasonably request. In addition, with respect to authentication
pursuant to clauses (ii) or (iii) of the first sentence of this paragraph, the
first such written order from the Company shall be accompanied by an Opinion of
Counsel of the Company in a form reasonably satisfactory to the Trustee to the
effect that the issuance of the Private Exchange Notes or the Unrestricted
Notes, as the case may be, does not give rise to an Event of Default, complies
with this Indenture and has been duly authorized by the Company. The
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aggregate principal amount of Notes outstanding at any time may not exceed
$175,000,000, except as provided in Section 2.07.
In the event that the Company shall issue and the Trustee shall
authenticate any Notes issued under this Indenture subsequent to the Issue Date
pursuant to clauses (i) and (iii) of the first sentence of the immediately
preceding paragraph, the Company shall use its best efforts to obtain the same
"CUSIP" number for such Notes as is printed on the Notes outstanding at such
time; PROVIDED, HOWEVER, that if any series of Notes issued under this Indenture
subsequent to the Issue Date is determined, pursuant to an Opinion of Counsel of
the Company in a form reasonably satisfactory to the Trustee to be a different
class of security than the Notes outstanding at such time for federal income tax
purposes, the Company may obtain a "CUSIP" number for such Notes that is
different than the "CUSIP" number printed on the Notes then outstanding.
Notwithstanding the foregoing, all Notes issued under this Indenture shall vote
and consent together on all matters as one class and no series of Notes will
have the right to vote or consent as a separate class on any matter.
The Trustee may appoint an authenticating agent (the "AUTHENTICATING
AGENT") reasonably acceptable to the Company to authenticate Notes. Unless
otherwise provided in the appointment, an Authenticating Agent may authenticate
Notes whenever the Trustee may do so. Each reference in this Indenture to
authentication by the Trustee includes authentication by such Authenticating
Agent. An Authenticating Agent has the same rights as an Agent to deal with the
Company and Affiliates of the Company.
The Notes shall be issuable in fully registered form only, without coupons,
in denominations of $1,000 and any integral multiple thereof.
SECTION 2.03. REGISTRAR AND PAYING AGENT.
The Company shall maintain an office or agency (which shall be located in
the Borough of Manhattan in the City of New York, State of New York) where
(a) Notes may be presented or surrendered for registration of transfer or for
exchange ("REGISTRAR"), (b) Notes may be presented or surrendered for payment
("PAYING AGENT") and (c) notices and demands to or upon the Company in respect
of the Notes and this Indenture may be served. The Registrar shall keep a
register of the Notes and of their transfer and exchange. The Company, upon
prior written notice to the Trustee, may have one or more co-Registrars and one
or more additional paying agents reasonably acceptable to the Trustee. The term
"Paying Agent" includes any additional Paying Agent. Neither the Company nor
any Affiliate of the Company may act as Paying Agent.
The Company shall enter into an appropriate agency agreement with any Agent
not a party to this Indenture, which agreement shall incorporate the provisions
of the TIA and implement the provisions of this Indenture that relate to such
Agent. The Company shall notify the Trustee, in advance, of the name and
address of any such Agent. If the Company
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fails to maintain a Registrar or Paying Agent, or fails to give the foregoing
notice, the Trustee shall act as such and shall be entitled to appropriate
compensation in accordance with Section 7.07.
The Company initially appoints the Trustee as Registrar, Paying Agent and
agent for service of demands and notices in connection with the Notes, until
such time as the Trustee has resigned or a successor has been appointed. The
Paying Agent or Registrar may resign upon 30 days prior written notice to the
Company.
SECTION 2.04. PAYING AGENT TO HOLD ASSETS IN TRUST.
The Company shall require each Paying Agent other than the Trustee to agree
in writing that, subject to Articles Ten and Eleven, each Paying Agent shall
hold in trust for the benefit of the Holders or the Trustee all assets held by
the Paying Agent for the payment of principal of, or interest on, the Notes
(whether such assets have been distributed to it by the Company or any other
obligor on the Notes), and the Company and the Paying Agent shall notify the
Trustee in writing of any Default by the Company (or any other obligor on the
Notes) in making any such payment. The Company at any time may require a Paying
Agent to distribute all assets held by it to the Trustee and account for any
assets disbursed and the Trustee may at any time during the continuance of any
payment Default, upon written request to a Paying Agent, require such Paying
Agent to distribute all assets held by it to the Trustee and to account for any
assets distributed. Upon distribution to the Trustee of all assets that shall
have been delivered by the Company to the Paying Agent, the Paying Agent shall
have no further liability for such assets.
SECTION 2.05. NOTEHOLDER LISTS.
The Trustee shall preserve in as current a form as is reasonably
practicable the most recent list available to it of the names and addresses of
Noteholders. If the Trustee is not the Registrar, the Company shall furnish or
cause the Registrar to furnish to the Trustee as of each Record Date and before
each related Interest Payment Date and at such other times as the Trustee may
request in writing a list as of such date and in such form as the Trustee may
reasonably require of the names and addresses of Noteholders, which list may be
conclusively relied upon by the Trustee.
SECTION 2.06. TRANSFER AND EXCHANGE.
Subject to the provisions of Sections 2.15 and 2.16, when Notes are
presented to the Registrar or a co-Registrar with a request to register the
transfer of such Notes or to exchange such Notes for an equal principal amount
of Notes of other authorized denominations, the Registrar or co-Registrar shall
register the transfer or make the exchange as requested if its requirements for
such transaction are met; PROVIDED, HOWEVER, that the Notes presented or
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surrendered for registration of transfer or exchange shall be duly endorsed or
accompanied by a written instrument of transfer in form satisfactory to the
Company and the Registrar or co-Registrar, duly executed by the Holder thereof
or his attorney duly authorized in writing. To permit registrations of transfer
and exchanges, the Company shall issue and execute and the Trustee shall
authenticate Notes at the Registrar's or co-Registrar's request. No service
charge shall be made to a Noteholder for any registration of transfer or
exchange. The Company may require from such Noteholder payment of a sum
sufficient to cover any transfer tax or similar governmental charge payable in
connection therewith (other than any such transfer taxes or similar governmental
charge payable upon exchanges or transfers pursuant to Section 2.10, 3.06, 4.15,
4.16 or 9.06, in which event the Company shall be responsible for the payment of
such taxes).
The Registrar or co-Registrar shall not be required to register the
transfer of or exchange of any Note (i) during a period beginning at the opening
of business 15 days before the mailing of a notice of redemption of Notes and
ending at the close of business on the day of such mailing and (ii) selected for
redemption in whole or in part pursuant to Article Three, except the unredeemed
portion of any Note being redeemed in part.
Any Holder of the Global Note shall, by acceptance of such Global Note,
agree that transfers of beneficial interests in such Global Notes may be
effected only through a book entry system maintained by the Holder of such
Global Note (or its agent), and that ownership of a beneficial interest in the
Note shall be required to be reflected in a book entry.
SECTION 2.07. REPLACEMENT NOTES.
If a mutilated Note is surrendered to the Trustee or if the Holder of a
Note claims that the Note has been lost, destroyed or wrongfully taken, the
Company shall issue and execute and the Trustee shall authenticate a replacement
Note if the Trustee's requirements are met. If required by the Trustee or the
Company, such Holder must provide an affidavit of lost certificate and an
indemnity bond or other indemnity, sufficient in the judgment of both the
Company and the Trustee, to protect the Company, the Trustee or any Agent from
any loss which any of them may suffer if a Note is replaced. The Company may
charge such Holder for its reasonable out-of-pocket expenses in replacing a
Note, including reasonable fees and expenses of the Trustee and counsel and the
Trustee may charge the Company for the Trustee's reasonable out-of-pocket
expenses in replacing such Note. Every replacement Note shall constitute an
additional Obligation of the Company.
SECTION 2.08. OUTSTANDING NOTES.
Notes outstanding at any time are all the Notes that have been
authenticated by the Trustee except those cancelled by it, those delivered to it
for cancellation and those described in this Section as not outstanding.
Subject to the provisions of Section 2.09, a Note does not
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cease to be outstanding because the Company, any Subsidiary Guarantor or any of
their respective Affiliates holds the Note.
If a Note is replaced pursuant to Section 2.07 (other than a mutilated Note
surrendered for replacement), it ceases to be outstanding unless the Trustee
receives proof satisfactory to it that the replaced Note is held by a BONA FIDE
purchaser. A mutilated Note ceases to be outstanding upon surrender of such
Note and replacement thereof pursuant to Section 2.07.
If on a Redemption Date or the Maturity Date the Paying Agent holds U.S.
Legal Tender or U.S. Government Obligations sufficient to pay all of the
principal and interest due on the Notes payable on that date and is not
prohibited from paying such money to the Holders thereof pursuant to the terms
of this Indenture, then on and after that date such Notes cease to be
outstanding and interest on them ceases to accrue.
SECTION 2.09. TREASURY NOTES.
In determining whether the Holders of the required principal amount of
Notes have concurred in any direction, waiver, consent or notice, Notes owned by
the Company, any Subsidiary Guarantor or any of their respective Affiliates
shall be considered as though they are not outstanding, except that for the
purposes of determining whether the Trustee shall be protected in relying on any
such direction, waiver or consent, only Notes which a Trust Officer of the
Trustee actually knows are so owned shall be so considered. The Company shall
notify the Trustee, in writing, when it or any of its Affiliates repurchases or
otherwise acquires Notes, and of the aggregate principal amount of such Notes so
repurchased or otherwise acquired.
SECTION 2.10. TEMPORARY NOTES.
Until definitive Notes are ready for delivery, the Company may prepare and
the Trustee shall authenticate temporary Notes upon receipt of a written order
of the Company in the form of an Officers' Certificate. The Officers'
Certificate shall specify the amount of temporary Notes to be authenticated and
the date on which the temporary Notes are to be authenticated, and shall direct
the Trustee to authenticate such Notes and certify that all conditions precedent
to the issuance of such Notes contained herein have been complied with.
Temporary Notes shall be substantially in the form of definitive Notes but may
have variations that the Company and the Trustee consider appropriate for
temporary Notes. Without unreasonable delay, the Company shall prepare and the
Trustee shall authenticate upon receipt of a written order of the Company
pursuant to Section 2.02 definitive Notes in exchange for temporary Notes.
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SECTION 2.11. CANCELLATION.
The Company at any time may deliver Notes to the Trustee for cancellation.
The Registrar and the Paying Agent shall forward to the Trustee any Notes
surrendered to them for transfer, exchange or payment. The Trustee, or at the
direction of the Trustee, the Registrar or the Paying Agent, and no one else,
shall cancel and, at the written direction of the Company, shall (subject to the
record-retention requirements of the Exchange Act) dispose of all Notes
surrendered for registration of transfer, exchange, payment or cancellation.
Subject to Section 2.07, the Company may not issue new Notes to replace Notes
that it has paid or delivered to the Trustee for cancellation. If the Company
or any Subsidiary Guarantor shall acquire any of the Notes, such acquisition
shall not operate as a redemption or satisfaction of the Indebtedness
represented by such Notes unless and until the same are surrendered to the
Trustee for cancellation pursuant to this Section 2.11.
SECTION 2.12. DEFAULTED INTEREST.
If the Company defaults in a payment of interest on the Notes, it shall pay
the defaulted interest, plus (to the extent lawful) any interest payable on the
defaulted interest to the Persons who are Holders on a subsequent special record
date, which date shall be the fifteenth day next preceding the date fixed by the
Company for the payment of defaulted interest or the next succeeding Business
Day if such date is not a Business Day. At least 15 days before the subsequent
special record date, the Company shall mail to each Holder, with a copy to the
Trustee, a notice that states the subsequent special record date, the payment
date and the amount of defaulted interest, and interest payable on such
defaulted interest, if any, to be paid.
SECTION 2.13. CUSIP NUMBER.
The Company in issuing the Notes may use one or more "CUSIP" numbers, and
if so, the appropriate CUSIP number(s) shall be included in all notices of
redemption or exchange as a convenience to Holders; PROVIDED that any such
notice may state that no representation is made by the Trustee as to the
correctness or accuracy of any CUSIP number(s) printed in the notice or on the
Notes, and that reliance may be placed only on the other identification numbers
printed on the Notes. The Company shall promptly notify the Trustee of any
change in the CUSIP number.
SECTION 2.14. DEPOSIT OF MONEYS.
Prior to 10:00 a.m, New York City time, on each Interest Payment Date and
on the Maturity Date, the Company shall have deposited with the Paying Agent in
immediately available funds money sufficient to make cash payments, if any, due
on such Interest Payment Date or Maturity Date, as the case may be, in a timely
manner which permits the Paying
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Agent to remit payment to the Holders on such Interest Payment Date or Maturity
Date, as the case may be.
SECTION 2.15. BOOK-ENTRY PROVISIONS FOR
GLOBAL NOTE.
(a) The Global Note initially shall (i) be registered in the name of the
Depository or the nominee of such Depository, (ii) be delivered to the Trustee
as custodian for such Depository and (iii) bear legends as set forth in
Exhibit B.
Members of, or participants in, the Depository ("AGENT MEMBERS") shall
have no rights under this Indenture with respect to any Global Note held on
their behalf by the Depository, or the Trustee as its custodian, or under the
Global Note, and the Depository may be treated by the Company, the Trustee
and any agent of the Company or the Trustee as the absolute owner of the
Global Note for all purposes whatsoever. Notwithstanding the foregoing,
nothing herein shall prevent the Company, the Trustee or any agent of the
Company or the Trustee from giving effect to any written certification, proxy
or other authorization furnished by the Depository or impair, as between the
Depository and its Agent Members, the operation of customary practices
governing the exercise of the rights of a holder of any Note.
(b) Transfers of the Global Note shall be limited to transfers in
whole, but not in part, to the Depository, its successors or their respective
nominees. Interests of beneficial owners in the Global Note may be
transferred or exchanged for Physical Notes in accordance with the rules and
procedures of the Depository and the provisions of Section 2.16. In
addition, Physical Notes shall be transferred to all beneficial owners in
exchange for their beneficial interests in the Global Note if (i) the
Depository notifies the Company that it is unwilling or unable to continue as
Depository for the Global Note and a successor depositary is not appointed by
the Company within 90 days of such notice or (ii) an Event of Default has
occurred and is continuing and the Registrar has received a request from the
Depository to issue Physical Notes.
(c) In connection with any transfer or exchange of a portion of the
beneficial interest in the Global Note to beneficial owners pursuant to
paragraph (b), the Registrar shall (if one or more Physical Notes are to be
issued) reflect on its books and records the date and a decrease in the
principal amount of the Global Note in an amount equal to the principal
amount of the beneficial interest in the Global Note to be transferred, and
the Company shall execute, and the Trustee shall authenticate and deliver,
one or more Physical Notes of like tenor and amount.
(d) In connection with the transfer of the entire Global Note to
beneficial owners pursuant to paragraph (b), the Global Note shall be deemed to
be surrendered to the Trustee for cancellation, and the Company shall execute,
and the Trustee shall authenticate and deliver, to each beneficial owner
identified by the Depository in exchange for its beneficial
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interest in the Global Note, an equal aggregate principal amount of Physical
Notes of authorized denominations.
(e) Any Physical Note constituting a Restricted Security delivered in
exchange for an interest in the Global Note pursuant to paragraph (b) or (c)
shall, except as otherwise provided by paragraphs (a)(i)(x) and (c) of
Section 2.16, bear the legend regarding transfer restrictions applicable to
the Physical Notes set forth in Exhibit A.
(f) The Holder of the Global Note may grant proxies and otherwise
authorize any person, including Agent Members and persons that may hold
interests through Agent Members, to take any action which a Holder is entitled
to take under this Indenture or the Notes.
SECTION 2.16. SPECIAL TRANSFER PROVISIONS.
(a) TRANSFERS TO NON-QIB INSTITUTIONAL ACCREDITED INVESTORS AND NON-U.S.
PERSONS. The following provisions shall apply with respect to the registration
of any proposed transfer of a Note constituting a Restricted Security to any
Institutional Accredited Investor which is not a QIB or to any Non-U.S. Person:
(i) the Registrar shall register the transfer of any Note
constituting a Restricted Security, whether or not such Note bears the
Private Placement Legend, if (x) the requested transfer is after July 25,
1999 and the transferor certifies that the Restricted Security was not
acquired from the Company or Affiliate of the Company less than two years
prior to the date of the proposed transfer or (y) (1) in the case of a
transfer to an Institutional Accredited Investor which is not a QIB
(excluding Non-U.S. Persons), the proposed transferee has delivered to the
Registrar a certificate substantially in the form of Exhibit C hereto or
(2) in the case of a transfer to a Non-U.S. Person, the proposed transferor
has delivered to the Registrar a certificate substantially in the form of
Exhibit D hereto; and
(ii) if the proposed transferor is an Agent Member holding a
beneficial interest in the Global Note, upon receipt by the Registrar of
(x) the certificate, if any, required by paragraph (i) above and (y)
instructions given in accordance with the Depository's and the Registrar's
procedures,
whereupon (a) the Registrar shall reflect on its books and records the date
and (if the transfer does not involve a transfer of outstanding Physical Notes)
a decrease in the principal amount of the Global Note in an amount equal to the
principal amount of the beneficial interest in the Global Note to be
transferred, and (b) the Company shall execute and the Trustee shall
authenticate and deliver one or more Physical Notes of like tenor and amount.
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(b) TRANSFERS TO QIBs. The following provisions shall apply with respect
to the registration of any proposed transfer of a Note constituting a Restricted
Security to a QIB (excluding transfers to Non-U.S. Persons):
(i) the Registrar shall register the transfer if such transfer is
being made by a proposed transferor who has checked the box provided for on
the form of Note stating, or has otherwise advised the Company and the
Registrar in writing, that the sale has been made in compliance with the
provisions of Rule 144A to a transferee who has signed the certification
provided for on the form of Note stating, or has otherwise advised the
Company and the Registrar in writing, that it is purchasing the Note for
its own account or an account with respect to which it exercises sole
investment discretion and that it and any such account is a QIB within the
meaning of Rule 144A, and is aware that the sale to it is being made in
reliance on Rule 144A and acknowledges that it has received such
information regarding the Company as it has requested pursuant to Rule 144A
or has determined not to request such information and that it is aware that
the transferor is relying upon its foregoing representations in order to
claim the exemption from registration provided by Rule 144A; and
(ii) if the proposed transferee is an Agent Member, and the Notes to
be transferred consist of Physical Notes which after transfer are to be
evidenced by an interest in the Global Note, upon receipt by the Registrar
of instructions given in accordance with the Depository's and the
Registrar's procedures, the Registrar shall reflect on its books and
records the date and an increase in the principal amount of the Global Note
in an amount equal to the principal amount of the Physical Notes to be
transferred, and the Trustee shall cancel the Physical Notes so
transferred.
(c) PRIVATE PLACEMENT LEGEND. Upon the registration of transfer, exchange
or replacement of Notes not bearing the Private Placement Legend, the Registrar
shall deliver Notes that do not bear the Private Placement Legend. Upon the
registration of transfer, exchange or replacement of Notes bearing the Private
Placement Legend, the Registrar shall deliver only Notes that bear the Private
Placement Legend unless (i) the circumstance contemplated by paragraph (a)(i)(x)
of this Section 2.16 exist or (ii) there is delivered to the Registrar an
Opinion of Counsel reasonably satisfactory to the Company and the Trustee to the
effect that neither such legend nor the related restrictions on transfer are
required in order to maintain compliance with the provisions of the Securities
Act.
(d) GENERAL. By its acceptance of any Note bearing the Private Placement
Legend, each Holder of such a Note acknowledges the restrictions on transfer of
such Note set forth in this Indenture and in the Private Placement Legend and
agrees that it will transfer such Note only as provided in this Indenture.
The Registrar shall retain copies of all letters, notices and other written
communications received pursuant to Section 2.15 or this Section 2.16 for a
period of three
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years. The Company shall have the right to inspect and make copies of all such
letters, notices or other written communications at any reasonable time upon the
giving of reasonable written notice to the Registrar.
ARTICLE THREE
REDEMPTION
SECTION 3.01. NOTICES TO TRUSTEE.
If the Company elects to redeem Notes pursuant to Paragraph Six of the
Notes, it shall notify both the Trustee and the Paying Agent in writing of the
Redemption Date and the principal amount of the Notes to be redeemed.
The Company shall give each notice provided for in this Section 3.01 at
least 30 days before the Redemption Date (unless a shorter notice period shall
be satisfactory to the Trustee, as evidenced in a writing signed on behalf of
the Trustee), together with an Officers' Certificate and Opinion of Counsel
stating that such redemption shall comply with the conditions contained herein
and in the Notes.
SECTION 3.02. SELECTION OF NOTES TO BE REDEEMED.
If fewer than all of the Notes are to be redeemed, the Trustee shall select
the Notes to be redeemed on a PRO RATA basis, by lot or in such other fair and
appropriate manner chosen at the discretion of the Trustee and, if the Notes are
listed on any securities exchange, by a method that complies with the
requirements of such exchange; PROVIDED, HOWEVER, that if partial redemption is
made with the proceeds of a Public Equity Offering prior to August 1, 2000,
selection of the Notes or portions thereof for redemption shall be made by the
Trustee only on a PRO RATA basis unless such method is otherwise prohibited.
The Trustee shall make the selection from the Notes outstanding and not
previously called for redemption and shall promptly notify the Company in
writing of the Notes selected for redemption and, in the case of any Note
selected for partial redemption, the principal amount thereof to be redeemed.
Notes in denominations of $1,000 may be redeemed only in whole. The Trustee may
select for redemption portions (equal to $1,000 or any integral multiple
thereof) of the principal of Notes that have denominations larger than $1,000.
Provisions of this Indenture that apply to Notes called for redemption also
apply to portions of Notes called for redemption.
SECTION 3.03. NOTICE OF REDEMPTION.
At least 30 days but not more than 60 days before a Redemption Date, the
Company shall mail or cause to be mailed a notice of redemption by first class
mail, postage prepaid, to
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each Holder whose Notes are to be redeemed, with a copy to the Trustee and any
Paying Agent.
Each notice for redemption shall identify the Notes to be redeemed and
shall state:
(1) the Redemption Date;
(2) the Redemption Price and the amount of accrued interest, if any, to be
paid;
(3) the name and address of the Paying Agent;
(4) the subparagraph of the Notes pursuant to which such redemption is
being made;
(5) that Notes called for redemption must be surrendered to the Paying
Agent to collect the Redemption Price plus accrued interest, if any;
(6) that, unless (a) the Company defaults in making the redemption payment
or (b) such redemption payment is prohibited pursuant to Article Ten or Eleven
or otherwise, interest on Notes called for redemption ceases to accrue on and
after the Redemption Date, and the only remaining right of the Holders of such
Notes is to receive payment of the Redemption Price plus accrued interest, if
any, upon surrender to the Paying Agent of the Notes redeemed;
(7) if any Note is being redeemed in part, the portion of the principal
amount (equal to $1,000 or any integral multiple thereof) of such Note to be
redeemed and that, on or after the Redemption Date, and upon surrender of such
Note, a new Note or Notes in the aggregate principal amount equal to the
unredeemed portion thereof will be issued; and
(8) if fewer than all the Notes are to be redeemed, the identification of
the particular Notes (or portion thereof) to be redeemed, as well as the
aggregate principal amount of Notes to be redeemed and the aggregate principal
amount of Notes to be outstanding after such partial redemption.
SECTION 3.04. EFFECT OF NOTICE OF REDEMPTION.
Once notice of redemption is mailed in accordance with Section 3.03, Notes
called for redemption become due and payable on the Redemption Date and at the
Redemption Price plus accrued interest, if any. Upon surrender to the Trustee
or Paying Agent, such Notes called for redemption, unless prohibited pursuant
to Article Ten or Eleven or otherwise pursuant to this Indenture, shall be paid
at the Redemption Price (which shall include accrued interest thereon to the
Redemption Date), but installments of interest, the maturity of which is
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on or prior to the Redemption Date, shall be payable to Holders of record at the
close of business on the relevant record dates referred to in the Notes.
SECTION 3.05. DEPOSIT OF REDEMPTION PRICE.
On or before the Redemption Date, the Company shall deposit with the Paying
Agent in immediately available funds U.S. Legal Tender sufficient to pay the
Redemption Price plus accrued interest, if any, of all Notes or portions thereof
to be redeemed on that date. The Paying Agent shall promptly return to the
Company any U.S. Legal Tender so deposited which is not required for that
purpose, except with respect to monies owed as obligations to the Trustee
pursuant to Article Seven.
If the Company complies with the preceding paragraph and payment of the
Notes is not prohibited under Article Ten or Eleven or otherwise, then, unless
the Company defaults in the payment of such Redemption Price plus accrued
interest, if any, interest on the Notes to be redeemed will cease to accrue on
and after the applicable Redemption Date, whether or not such Notes are
presented for payment.
SECTION 3.06. NOTES REDEEMED IN PART.
Upon surrender of a Note that is to be redeemed in part, the Company shall
issue and execute, and the Trustee shall authenticate for the Holder, a new Note
or Notes equal in principal amount to the unredeemed portion of the Note
surrendered.
ARTICLE FOUR
COVENANTS
SECTION 4.01. PAYMENT OF NOTES.
The Company shall pay the principal of and interest on the Notes on the
dates and in the manner provided in the Notes and in this Indenture. An
installment of principal of or interest on the Notes shall be considered paid on
the date it is due if the Trustee or Paying Agent (other than the Company or an
Affiliate of the Company) holds on that date U.S. Legal Tender designated for
and sufficient to pay the installment in full and is not prohibited from paying
such money to the Holders pursuant to the terms of this Indenture.
The Company shall pay, to the extent such payments are lawful, interest on
overdue principal and on overdue installments of interest (without regard to any
applicable grace periods) from time to time on demand at the rate borne by the
Notes. Interest will be computed on the basis of a 360-day year comprised of
twelve 30-day months.
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SECTION 4.02. MAINTENANCE OF OFFICE OR AGENCY.
The Company shall maintain the office or agency required under Section
2.03. The Company shall give prior written notice to the Trustee of the
location, and any change in the location, of such office or agency. If at any
time the Company shall fail to maintain any such required office or agency or
shall fail to furnish the Trustee with the address thereof, such presentations,
surrenders, notices and demands may be made or served at the address of the
Trustee set forth in Section 12.02.
SECTION 4.03. CORPORATE EXISTENCE.
Except as otherwise permitted by Article Five, the Company shall do or
cause to be done, at its own cost and expense, all things necessary to preserve
and keep in full force and effect its corporate existence and the corporate
existence of each of the Restricted Subsidiaries in accordance with the
respective organizational documents of each such Restricted Subsidiary and the
material rights (charter and statutory) of the Company and each such Restricted
Subsidiary; PROVIDED, HOWEVER, that the Company shall not be required to
preserve, with respect to itself, any material right and, with respect to any of
its Subsidiaries, any such existence or material right, if the Board of
Directors of the Company shall determine in good faith that the preservation
thereof is no longer desirable in the conduct of the business of the Company and
its Subsidiaries, taken as a whole.
SECTION 4.04. PAYMENT OF TAXES AND OTHER CLAIMS.
The Company shall pay or discharge or cause to be paid or discharged,
before the same shall become delinquent, (i) all material taxes, assessments and
governmental charges (including withholding taxes and any penalties, interest
and additions to taxes) levied or imposed upon it or any of its Subsidiaries or
its Properties or any of its Subsidiaries' Properties and (ii) all material
lawful claims for labor, materials and supplies that, if unpaid, might by law
become a Lien upon its Properties or any of its Subsidiaries' Properties,
except, in each case, as would not be, in the aggregate, reasonably likely to
have a material adverse effect on the business and financial condition of the
Company and its Restricted Subsidiaries, taken as a whole; PROVIDED, HOWEVER,
that the Company shall not be required to pay or discharge or cause to be paid
or discharged any such tax, assessment, charge or claim whose amount,
applicability or validity is being contested in good faith by appropriate
proceedings properly instituted and diligently conducted for which adequate
reserves, to the extent required under GAAP, have been taken.
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SECTION 4.05. MAINTENANCE OF PROPERTIES
AND INSURANCE.
(a) The Company shall, and shall cause each of its Restricted Subsidiaries
to, maintain its Properties in good working order and condition (subject to
ordinary wear and tear) and make all necessary repairs, renewals, replacements,
additions, betterments and improvements thereto and actively conduct and carry
on its business, unless the failure to do so, in each case, would not be, in the
aggregate, reasonably likely to have a material adverse effect on the business
and financial condition of the Company and its Restricted Subsidiaries, taken as
a whole; PROVIDED, HOWEVER, that nothing in this Section 4.05 shall prevent the
Company or any of its Restricted Subsidiaries from discontinuing the operation
and maintenance of any of its Properties if such discontinuance is, in the good
faith judgment of the Board of Directors or other governing body of the Company
or the Restricted Subsidiary concerned, as the case may be, desirable in the
conduct of its businesses and is not disadvantageous in any material respect to
the Holders.
(b) The Company shall maintain insurance (including appropriate
self-insurance) against loss or damage of the kinds that, in the good faith
judgment of the Company, are adequate and appropriate for the conduct of the
business of the Company and its Restricted Subsidiaries in a prudent manner,
with reputable insurers or with the government of the United States of America
or an agency or instrumentality thereof, in such amounts, with such deductibles,
and by such methods as shall be customary, in the good faith judgment of the
Company, for companies similarly situated in the industry, except for any
omissions thereof which would not be, in the aggregate, reasonably likely to
have a material adverse effect on the business and financial condition of the
Company and its Restricted Subsidiaries, taken as a whole.
SECTION 4.06. COMPLIANCE CERTIFICATE;
NOTICE OF DEFAULT.
(a) The Company shall deliver to the Trustee, within 120 days after the
end of the Company's fiscal year, an Officers' Certificate which complies with
TIA Section 314(a)(4) stating that a review of its activities during the
preceding fiscal year has been made under the supervision of the signing
Officers with a view to determining whether it has kept, observed, performed and
fulfilled its Obligations under this Indenture and further stating, as to each
such Officer signing such certificate, that to the best of such Officer's
knowledge the Company during such preceding fiscal year has kept, observed,
performed and fulfilled each and every such covenant and the Obligations
contained in this Indenture and the Notes and no Default or Event of Default
occurred during such year and at the date of such certificate there is no
Default or Event of Default that has occurred and is continuing or, if such
signers do know of such Default or Event of Default, the certificate shall
describe the Default or Event of Default
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and its status with particularity. The Officers' Certificate shall also notify
the Trustee should the Company elect to change the manner in which it fixes its
fiscal year end.
(b) So long as not contrary to then current recommendations of the
American Institute of Certified Public Accountants, the annual financial
statements delivered pursuant to Section 4.08 shall be accompanied by a written
report of the Company's independent accountants (who shall be a firm of
established national reputation) that in conducting their audit of such
financial statements nothing has come to their attention that would lead them to
believe that the Company has violated any provisions of Article Four or Five or
Section 6.01 insofar as they relate to accounting matters or, if any such
violation has occurred, specifying the nature and period of existence thereof,
it being understood that such accountants shall not be liable directly or
indirectly to any person for any failure to obtain knowledge of any such
violation.
(c) (i) If any Default or Event of Default has occurred and is continuing
or (ii) if any Holder seeks to exercise any remedy hereunder with respect to a
claimed Default under this Indenture or the Notes, the Company shall deliver to
the Trustee, at its address set forth in Section 12.02 hereof, by registered or
certified mail or by telegram, telex or facsimile transmission followed by hard
copy by registered or certified mail an Officers' Certificate specifying such
event, notice or other action (including any action the Company is taking or
proposes to take in respect thereof) within thirty days of such occurrence.
SECTION 4.07. COMPLIANCE WITH LAWS.
The Company shall, and shall cause each of its Subsidiaries to, comply with
all applicable statutes, rules, regulations, orders and restrictions of the
United States of America, all states and municipalities thereof, and of any
governmental department, commission, board, regulatory authority, bureau, agency
and instrumentality of the foregoing, in respect of the conduct of its
businesses and the ownership of its properties, except for such noncompliances
as are not in the aggregate reasonably likely to have a material adverse effect
on the business or financial condition of the Company and its Subsidiaries,
taken as a whole.
SECTION 4.08. SEC REPORTS.
(a) The Company shall file with the SEC all information, documents and
reports to be filed with the SEC pursuant to Section 13 or 15(d) of the Exchange
Act, whether or not the Company is subject to such filing requirements so long
as the SEC will accept such filings. The Company (at its own expense) shall
file with the Trustee within 15 days after it files them with the SEC, copies of
the quarterly and annual reports and of the information, documents and other
reports (or copies of such portions of any of the foregoing as the SEC may by
rules and regulations prescribe) which the Company files with the SEC pursuant
to Section 13 or
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15(d) of the Exchange Act. Upon qualification of this Indenture under the TIA,
the Company shall also comply with the provisions of TIA Section 314(a).
(b) At the Company's expense, regardless of whether the Company is
required to furnish such reports and other information referred to in
paragraph (a) above to its stockholders pursuant to the Exchange Act, the
Company shall cause such reports and other information to be mailed to the
Holders at their addresses appearing in the register of Notes maintained by the
Registrar within 15 days after it files them with the SEC.
(c) The Company shall provide to any Holder any information reasonably
requested by such Holder concerning the Company (including financial statements)
necessary in order to permit such Holder to sell or transfer Notes in compliance
with Rule 144A under the Securities Act.
SECTION 4.09. WAIVER OF STAY, EXTENSION
OR USURY LAWS.
The Company and each Subsidiary Guarantor covenants (to the extent that it
may lawfully do so) that it shall not at any time insist upon, plead, or in any
manner whatsoever claim or take the benefit or advantage of, any stay or
extension law or any usury law or other law that would prohibit or forgive the
Company or any such Subsidiary Guarantor, as the case may be, from paying all or
any portion of the principal of or interest on the Notes or performing its
Guarantee, as the case may be and as contemplated herein, wherever enacted, now
or at any time hereafter in force, or which may affect the covenants or the
performance of this Indenture; and (to the extent that it may lawfully do so)
the Company and each Subsidiary Guarantor, if any, hereby expressly waives all
benefit or advantage of any such law, and covenants that it shall not hinder,
delay or impede the execution of any power herein granted to the Trustee, but
shall suffer and permit the execution of every such power as though no such law
had been enacted.
SECTION 4.10. LIMITATION ON RESTRICTED PAYMENTS.
The Company shall not, and shall not permit any Restricted Subsidiary to,
directly or indirectly (i) declare or pay any dividend or make any distribution
in either case on account of the Company's Capital Stock to the holders of the
Company's Capital Stock (except dividends or distributions payable in the
Company's Capital Stock), (ii) purchase, redeem or otherwise acquire or retire
for value any Capital Stock (including any option or warrant to purchase Capital
Stock) of the Company, (iii) purchase, repurchase, redeem, defease or otherwise
acquire or retire for value, prior to scheduled maturity, scheduled repayment or
scheduled sinking fund payment, any Subordinated Obligations or the Seller
Notes, or (iv) make any Investment other than a Permitted Investment (any such
dividend, distribution, payment, purchase, redemption, defeasance, other
acquisition or retirement or Investment being
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hereinafter referred to as a "RESTRICTED PAYMENT") if at the time the Company or
such Restricted Subsidiary makes such Restricted Payment: (a) a Default or Event
of Default has occurred and is continuing (or would result therefrom); (b) the
Company is not able to incur $1.00 of additional Indebtedness under the first
paragraph of Section 4.12; or (c) the aggregate amount of such Restricted
Payment and all other Restricted Payments subsequent to the Issue Date would
exceed the sum of (A) the aggregate Net Cash Proceeds received by the Company
from any offering of the Qualified Capital Stock of the Company, or of any
entity of which the Company is a direct or indirect Subsidiary, to the extent
the proceeds thereof shall have been contributed as common equity to the
Company, and the amount of any other capital contributions received by the
Company in cash subsequent to the Issue Date and on or prior to the date the
Restricted Payment occurs (the "REFERENCE DATE"), (B) 50% of the cumulative
Consolidated Net Income of the Company subsequent to the Issue Date and on or
prior to the Reference Date or minus 100% of any cumulative deficit in
Consolidated Net Income during such period, (C) to the extent that any
Investment (other than a Permitted Investment) that was made after the Issue
Date is sold for cash or otherwise liquidated or repaid for cash, or any
Unrestricted Subsidiary which is designated as an Unrestricted Subsidiary
subsequent to the Issue Date is sold or liquidated for cash, the lesser of
(1) the cash return of capital with respect to such Investment (less the cost of
disposition, if any) and (2) the initial amount of such Investment (in each case
to the extent not included in clause (B) above), and (D) $5.0 million.
Notwithstanding the foregoing, the provisions set forth in the immediately
preceding paragraph will not prevent (i) the declaration and payment of any
dividends paid within 60 days after the date of declaration thereof if, at such
date of declaration, such dividend would have complied with this covenant,
(ii) if no Default or Event of Default shall have occurred and be continuing as
a consequence thereof, any purchase or redemption of Capital Stock or any
Subordinated Obligations of the Company made by exchange for, or out of the
proceeds of the substantially concurrent sale of, Qualified Capital Stock of the
Company (other than Capital Stock issued or sold to a Restricted Subsidiary),
(iii) if no Default or Event of Default shall have occurred and be continuing as
a consequence thereof, the repurchase, redemption or other repayment of any
Subordinated Obligations in exchange for or solely out of the proceeds of the
substantially concurrent sale (other than to a Restricted Subsidiary) of
Subordinated Obligations with a Weighted Average Life to Maturity equal to or
greater than the then remaining Weighted Average Life to Maturity of the
Subordinated Obligations repurchased, redeemed or repaid, (iv) any payment by
the Company or any Restricted Subsidiary of the Company (a) in connection with
repurchases of Equity Interests or Subordinated Obligations of the Company
following the death, disability or termination of employment of members of
management, and (b) of amounts (to the extent such payments would otherwise
constitute Restricted Payments) required to be paid by the Company or any of its
Restricted Subsidiaries to participants in employee benefit plans upon
termination of employment by such participants, as provided in the documents
related thereto, in an aggregate amount (for both clauses (a) and (b)) not to
exceed $2.0 million in any fiscal year; PROVIDED that any unused amounts may be
carried over to any subsequent fiscal year subject to a maximum amount of
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$5.0 million in any fiscal year; PROVIDED, FURTHER, that such amount in any
fiscal year may be increased by an amount not to exceed (i) the cash proceeds
from the sale of Equity Interests of the Company to members of management,
directors or consultants of the Company and its Subsidiaries that occurs after
the Issue Date (to the extent the cash proceeds from the sale of such Equity
Interests have not otherwise been applied to the payment of Restricted Payments
by virtue of subclause (c) of the preceding paragraph) PLUS (ii) the cash
proceeds of key man life insurance policies received by the Company and its
Restricted Subsidiaries after the Issue Date LESS (iii) the amount of any
Restricted Payments previously made pursuant to clauses (i) and (ii); and
PROVIDED, FURTHER, that the cancellation of Indebtedness owing to the Company
from members of management of the Company or any of its Restricted Subsidiaries
in connection with a repurchase of Equity Interests of the Company will not be
deemed to constitute a Restricted Payment for purposes of this covenant or any
other provision of this Indenture, (v) Investments in securities not
constituting cash or Cash Equivalents and received in connection with an Asset
Sale made pursuant to the provisions of Section 4.16 or any other disposition of
assets not constituting an Asset Sale by reason of the $500,000 threshold
contained in the definition thereof, (vi) repurchases of Equity Interests deemed
to occur upon exercise of stock options if such Equity Interests represent a
portion of the exercise of such options, (vii) Investments in Unrestricted
Subsidiaries that are made with Excluded Contributions, (viii) if no Default or
Event of Default shall have occurred and be continuing as a consequence thereof,
the declaration and payment of dividends to holders of any class or series of
Designated Preferred Stock issued after the Issue Date; PROVIDED, HOWEVER, that
for the most recently ended four full fiscal quarters for which internal
financial statements are available immediately preceding the date of issuance of
such Designated Preferred Stock, after giving effect to such issuance on a pro
forma basis, the Company and its Restricted Subsidiaries would have had an
Operating Coverage Ratio greater than (x) 1.75 to 1.0, if the date of such
incurrence is on or prior to August 1, 1999, or (y) 2.00 to 1.0, if the date of
incurrence is after August 1, 1999, (ix) Investments in Unrestricted
Subsidiaries having an aggregate fair market value, taken together with all
other Investments made pursuant to this clause (ix) that are at that time
outstanding, not to exceed $5.0 million at the time of such Investment (with the
fair market value of each Investment being measured at the time made and without
giving effect to subsequent changes in value) and (x) prepayment of the Seller
Notes in an amount not to exceed $11.7 million in connection with the
Transactions and, after the Issue Date, additional prepayments of Seller Notes
in an amount not to exceed $2.0 million in any fiscal year; PROVIDED that any
unused amounts may be carried over to any subsequent fiscal year; PROVIDED,
FURTHER, that, for purposes of determining whether Restricted Payments can be
made pursuant to the previous paragraph, all payments made pursuant to clauses
(i), (iv), (viii) and (ix) shall be included and payments made pursuant to all
other clauses specified above shall not be so included.
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SECTION 4.11. LIMITATION ON TRANSACTIONS
WITH AFFILIATES.
The Company shall not, and shall not permit any Restricted Subsidiary to,
directly or indirectly, following the Issue Date, enter into or permit to exist
any transaction with any Affiliate of the Company or any Significant Stockholder
of the Company (an "AFFILIATE TRANSACTION") unless such transaction is on terms
that are fair and reasonable to the Company or such Subsidiary and no less
favorable to the Company or such Subsidiary than those that could be obtained in
a comparable arm's length transaction with an entity that is not an Affiliate of
the Company or a Significant Stockholder of the Company; PROVIDED that in the
event such transaction or series of related transactions involves aggregate
consideration in excess of $2.0 million, the foregoing determination as to
fairness shall be made by a majority of the Disinterested Directors of the Board
of Directors of the Company as evidenced by a Board Resolution; PROVIDED,
FURTHER, that in the event such transaction or series of related transactions
involves aggregate consideration in excess of $10.0 million, the Company shall,
in addition to obtaining the approval of a majority of the Disinterested
Directors of its Board of Directors, obtain a written opinion of an Independent
Financial Advisor stating that the terms of such transaction are fair and
reasonable to the Company or such Subsidiary from a financial point of view;
PROVIDED, HOWEVER, that (i) reasonable and customary directors' fees,
indemnification and similar arrangements and payments thereunder,
(ii) transactions between or among or for the benefit of the Company and its
Subsidiaries, which are not otherwise prohibited by this Indenture, (iii) any
employment agreement entered into by the Company or any of its Subsidiaries in
the ordinary course of business, (iv) Restricted Payments permitted by the
provisions of Section 4.10, (v) provision of administrative or management
services by the Company or its Subsidiaries or any of their officers to any of
their respective Subsidiaries in the ordinary course of business, (vi) arm's
length transactions entered into in the ordinary course of business between the
Company or any Restricted Subsidiary and any Affiliate of the Company or any
Significant Stockholder of the Company engaged in a Similar Business and (vii)
transactions contemplated by any agreement as in effect as of the Issue Date or
any amendment thereto so long as any such amendment is not disadvantageous to
the Holders of the Notes in any material respect and so long as the amounts paid
by the Company and the Restricted Subsidiaries under any such amended agreement
do not exceed the amounts payable by the Company and the Restricted Subsidiaries
on the Issue Date, in each case, shall not be deemed Affiliate Transactions.
SECTION 4.12. LIMITATION ON INDEBTEDNESS.
The Company shall not create, incur, issue, assume, guarantee or otherwise
become liable for, contingently or otherwise (collectively, "ISSUE"), directly
or indirectly, any Indebtedness, and shall not permit any Restricted Subsidiary
to issue, directly or indirectly, any Indebtedness; PROVIDED that the Company or
a Subsidiary Guarantor may issue Indebtedness if the Operating Coverage Ratio of
the Company is greater than (x) 1.75 to 1.0,
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if the date of such issuance is on or prior to August 1, 1999, or (y) 2.00 to
1.0, if the date of such issuance is after August 1, 1999.
The above limitation will not apply to the issuance of the following
Indebtedness: (a) (1) Indebtedness pursuant to the Senior Credit Facility, in an
aggregate principal amount at any time outstanding not to exceed the greater of
(x) $75.0 million and (y) the sum of 85% of Eligible Accounts Receivable and 60%
of Eligible Inventory, in each case, as defined in the Senior Credit Facility
(but including accounts and inventory in which the lenders under any Floor Plan
Financing Facility have a security interest), as in effect on the Issue Date
(the "BORROWING BASE") LESS, in either case, the aggregate principal amount of
Indebtedness then outstanding pursuant to clause (a)(2) below, permanently
reduced by repayments of term loans or revolving loans out of the Excess Net
Proceeds of Asset Sales actually made (other than temporary reductions of
revolving loan balances pending application as permitted by Section 4.16), and
(2) Indebtedness pursuant to any Floor Plan Financing Facility in an aggregate
principal amount not to exceed the greater of (x) $75.0 million and (y) the
Borrowing Base LESS, in either case, the aggregate principal amount of
Indebtedness then outstanding pursuant to the Senior Credit Facility; (b) the
Notes and the Subsidiary Guarantees issued pursuant to the Offering and the
Exchange Notes or Private Exchange Notes issued in exchange therefor pursuant to
the Registration Rights Agreement and any replacement Note therefor issued
pursuant to Section 2.07; (c) Indebtedness owed to the Company or a Restricted
Subsidiary by the Company or a Restricted Subsidiary; PROVIDED, HOWEVER, that
any transfer of such Indebtedness (excluding a pledge or other transfer thereof
intended to create a security interest therein, but including any enforcement
thereof other than an enforcement that results in the repayment of an obligation
permitted by the terms of this covenant) to a person other than the Company or a
Restricted Subsidiary will be deemed for the purposes of this Section 4.12 to
constitute, in each case, the issuance of such Indebtedness by the issuer
thereof; (d) Indebtedness of the Company or any Restricted Subsidiary (other
than Indebtedness described in clause (a), (b) or (c) above) outstanding as of
the Issue Date, which Indebtedness is not contemplated to be repaid with the
proceeds of the Offering; (e) Indebtedness of the Company or a Restricted
Subsidiary issued in exchange for, or the proceeds of which are used to
refinance, extend, renew, substitute, replace or refund or pay at maturity
(including any mandatory sinking fund payment), any Indebtedness issued pursuant
to the first paragraph of this Section 4.12 or clauses (b) and (d) above and (j)
below (the "REFINANCING INDEBTEDNESS"); PROVIDED that (l) the principal amount
of such Refinancing Indebtedness (or, if such Indebtedness is issued with
original issue discount, the amount equal to the original issue price of such
Indebtedness plus accretion, if any) shall not exceed the principal amount and
accrued interest of the Indebtedness so refinanced (plus the amount of any
premiums required to be paid under the terms of the instrument governing such
Indebtedness and plus the amount of reasonable expenses incurred by the Company
or such Restricted Subsidiary in connection therewith), (2) the Refinancing
Indebtedness shall have a Weighted Average Life to Maturity equal to or greater
than the Weighted Average Life to Maturity of the Indebtedness being refinanced,
(3) if the Indebtedness being refinanced is
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subordinate in right of payment to the Notes or any Guarantee, the Refinancing
Indebtedness shall be subordinated in right of payment to the Notes or any
Guarantee, on terms, considered as a whole, at least as favorable to the holders
of Notes as those contained in the documentation governing the Indebtedness
being refinanced, if any; and (4) if the Indebtedness to be refinanced is
Indebtedness of the Company, such Refinancing Indebtedness will only be
permitted by this clause (e) if it is Indebtedness of the Company;
(f) Indebtedness incurred by the Company or any Restricted Subsidiary under
Hedging Obligations; PROVIDED that (x) in the case of an Interest Rate
Agreement, the notional principal amount thereof does not exceed the principal
amount of the Indebtedness to which such Interest Rate Agreement relates and (y)
in the case of a Currency Agreement, such Currency Agreement does not increase
the Indebtedness of the Company and its Subsidiaries other than as a result of
fluctuations in foreign currency exchange or by reason of fees, indemnities and
compensation payable thereunder; (g) Indebtedness incurred by the Company or any
Restricted Subsidiary under performance bonds, letter of credit obligations to
provide security for worker's compensation claims, payment obligations in
connection with self-insurance or similar requirements and bank overdrafts
incurred in the ordinary course of business; provided that any Obligations
arising in connection with such bank overdraft Indebtedness is extinguished
within five business days; (h) Indebtedness incurred by the Company or any
Restricted Subsidiary and arising from agreements providing for indemnification,
adjustment of purchase price or similar obligations, from guarantees or letters
of credit, surety bonds or performance bonds securing any Obligations of the
Company or any Restricted Subsidiary pursuant to such agreements, in any case
incurred in connection with the disposition of any business, assets or
Restricted Subsidiary other than guarantees of Indebtedness incurred by any
person acquiring all or any portion of such business, assets or Restricted
Subsidiary for the purpose of financing such acquisition, in a principal amount
not to exceed the gross proceeds (with proceeds other than cash or Cash
Equivalents being valued at the fair market value thereof as determined by the
Board of Directors of the Company in good faith) actually received by the
Company or any Restricted Subsidiary in connection with such dispositions;
(i) Indebtedness of the Company in an aggregate principal amount not to exceed
$5.0 million at any time outstanding in connection with the purchase,
redemption, acquisition, cancellation or other retirement for value of shares of
Capital Stock of the Company or any corporation of which the Company is a
Subsidiary, options on any such shares or related stock appreciation rights or
similar securities held by officers or employees or former officers or employees
of the Company or any Subsidiary of the Company (or their estates or
beneficiaries under their estates) and which were issued pursuant to any stock
option or other equity incentive plan, upon death, disability, retirement,
termination of employment or pursuant to the terms of such stock option or other
equity incentive plan or any other agreement under which such shares of capital
stock, options, related rights or similarly securities were issued; PROVIDED
that (1) such Indebtedness, by its terms or by the terms of any agreement or
instrument pursuant to
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which such Indebtedness is issued, is expressly made subordinate in right of
payment to the Notes at least to the extent that the Notes are subordinated in
right of payment to Senior Indebtedness, and (2) such Indebtedness, by its terms
or by the terms of any agreement or instrument pursuant to which such
Indebtedness is issued, provides that no payments of principal of such
Indebtedness by way of sinking fund, mandatory redemption or otherwise
(including defeasance) may be made at any term prior to one year after the
stated maturity of the Notes; (j) Acquired Indebtedness that is without recourse
to the Company or any of its Restricted Subsidiaries or any of their respective
assets (other than the Subsidiary acquired subject to such Acquired Indebtedness
and its assets), and is not guaranteed by any such person; PROVIDED that, with
respect to the incurrence of more than $5.0 million of such Acquired
Indebtedness at any time outstanding, after giving pro forma effect to the
incurrence thereof, the Company could incur at least $1.00 of Indebtedness under
the first paragraph of this Section 4.12; (k) Indebtedness issued as pay-in-kind
interest in lieu of cash interest under the terms of and pursuant to the Seller
Notes or any other Indebtedness that is incurred in accordance with this
Indenture which is expressly subordinated in right of payment to the Notes to at
least the same extent as payment on the Notes is subordinated to payment on
Senior Indebtedness; (l) Indebtedness represented by Capitalized Lease
Obligations and Purchase Money Indebtedness of the Company and Restricted
Subsidiaries, in each case incurred for the purpose of financing all or any part
of the purchase price or cost of construction or improvement of property, plant
or equipment used in the business of the Company or such Restricted Subsidiary,
in aggregate principal amount not to exceed $5.0 million at any time
outstanding; (m) lease financings and notes payable of the Company or its
Restricted Subsidiaries which are classified as nonrecourse in accordance with
GAAP, in each case entered into in the ordinary course of business and
consistent with past practice and secured solely by the equipment, proceeds
therefrom and associated lease payments in an aggregate principal amount at any
time outstanding not to exceed 20% of the Total Assets at the time of issuance
of such Indebtedness; and (n) additional Indebtedness of the Company and
Restricted Subsidiaries, which may, but need not be incurred under the Senior
Credit Facility, in an aggregate principal amount not to exceed $7.5 million at
any time outstanding. Notwithstanding any other provision of this Section 4.12,
a guarantee by a Subsidiary Guarantor or the Company of Indebtedness incurred in
accordance with the terms of this Indenture at the time such Indebtedness was
incurred will not constitute a separate incurrence of Indebtedness.
For purposes of determining compliance with this Section 4.12, in the event
that an item of Indebtedness meets the criteria of more than one of the
categories described in clauses (a) through (n) in the second paragraph of this
Section 4.12 or is entitled to be incurred pursuant to the first paragraph of
this Section 4.12, the Company shall, in its sole discretion, classify such item
of Indebtedness in any manner that complies with this Section 4.12 and such item
of Indebtedness will be treated as having been incurred pursuant to only one of
such clauses or pursuant to the first paragraph hereof; PROVIDED that all
outstanding Indebtedness under the Senior Credit Facility or any Floor Plan
Financing Facility immediately following the Offering shall be deemed to have
been incurred pursuant to clause (a) of the second paragraph of this covenant.
Accrual of interest and the accretion of accreted value will not be deemed to be
an incurrence of Indebtedness for purposes of this Section 4.12.
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SECTION 4.13. LIMITATION ON PAYMENT RESTRICTIONS
AFFECTING SUBSIDIARIES.
The Company shall not, and shall not permit any Restricted Subsidiary to,
directly or indirectly, create or otherwise cause or suffer to exist or become
effective any consensual encumbrance or restriction on the ability of any
Restricted Subsidiary to: (i) pay dividends or make any other distributions on
its Capital Stock or pay any Indebtedness or other obligation owed to the
Company or a Restricted Subsidiary, (ii) make any loans or advances to the
Company or a Restricted Subsidiary or (iii) transfer any of its property or
assets to the Company, except any such encumbrance or restriction under or by
reason of (a) applicable law or any applicable rule, regulation or order,
(b) this Indenture and the Notes, (c) the Senior Credit Facility or any Floor
Plan Financing Facility, (d) secured Indebtedness otherwise permitted to be
incurred pursuant to the provisions of Section 4.18 that limit the right of the
debtor to dispose of the assets securing such Indebtedness, (e) customary net
worth provisions contained in leases and other agreements entered into in the
ordinary course of business, (f) customary restrictions with respect to a
Restricted Subsidiary pursuant to an agreement that has been entered into for
the sale or disposition of all or substantially all of the Capital Stock or
assets of such Restricted Subsidiary, (g) provisions with respect to the
disposition or distribution of assets or property in joint venture agreements
and other similar agreements, (h) any other instrument governing Indebtedness
incurred on or after the Issue Date or any refinancing thereof that is incurred
in accordance with this Indenture; PROVIDED that the encumbrance or restriction
contained in any such Indebtedness or any such refinancing thereof is no more
restrictive and no more unfavorable to the holders of the Notes than that
contained in the Senior Credit Facility or any Floor Plan Financing Facility as
in effect on the Issue Date, (i) customary provisions restricting subletting or
assignment of any lease governing a leasehold interest of a Restricted
Subsidiary, (j) Acquired Indebtedness; PROVIDED that (x) such restriction is not
applicable to any person, or the properties or assets of any person, other than
the person acquired, and (y) such Indebtedness is otherwise permitted to be
incurred pursuant to Section 4.12 and (k) restrictions on cash or other deposits
or net worth imposed by customers under contracts entered into in the ordinary
course of business.
SECTION 4.14. LIMITATION ON ADDITIONAL SENIOR
SUBORDINATED INDEBTEDNESS.
Neither the Company nor any Subsidiary Guarantor shall incur, create,
issue, assume, guarantee or otherwise become liable for any Indebtedness that is
expressly by its terms subordinate or junior in right of payment to any
Indebtedness of such person and senior in any respect of payment to the Notes or
the Guarantee of such Subsidiary Guarantor, as the case may be.
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SECTION 4.15. LIMITATION ON CHANGE OF CONTROL.
(a) Upon the occurrence of a Change of Control, each Holder shall have the
right to require the repurchase of such Holder's Notes pursuant to the offer
described in paragraph (b) below (the "CHANGE OF CONTROL OFFER"), at a purchase
price equal to 101% of the principal amount thereof plus accrued and unpaid
interest, if any, to the date of purchase (the "REPURCHASE DATE") (subject to
the rights of the holders of record on the relevant record date to receive
interest on the relevant interest payment date). Within 10 days after the date
upon which the Change of Control occurs (the "CHANGE OF CONTROL DATE") requiring
the Company to make a Change of Control Offer pursuant to this Section 4.15, the
Company shall so notify in writing the Trustee.
(b) Within 30 days following any Change of Control Date, if the Company
has not made a redemption offer pursuant to Paragraph 6 of the Notes, the
Company shall send, by first class mail, a notice to each Holder, with a copy to
the Trustee, which notice shall govern the terms of the Change of Control Offer.
The notice to the Holders shall contain all instructions and materials necessary
to enable such Holders to tender Notes pursuant to the Change of Control Offer.
Such notice shall state:
(1) that the Change of Control Offer is being made pursuant to this
Section 4.15 and that all Notes tendered will be accepted for payment;
(2) the purchase price (including the amount of accrued interest) and
the purchase date (which shall be no earlier than 30 days nor later than 60
days from the date such notice is mailed, other than as may be required by
law) (the "CHANGE OF CONTROL PAYMENT DATE");
(3) that any Note not tendered will continue to accrue interest if
interest is then accruing;
(4) that, unless the Company defaults in making payment therefor, any
Note accepted for payment pursuant to the Change of Control Offer shall
cease to accrue interest after the Change of Control Payment Date;
(5) that Holders electing to have a Note purchased pursuant to a
Change of Control Offer will be required to surrender the Note, with the
form entitled "Option of Holder to Elect Purchase" on the reverse of the
Note completed, to the Paying Agent at the address specified in the notice
prior to 5:00 p.m., New York City time, on the Business Day prior to the
Change of Control Payment Date;
(6) that Holders will be entitled to withdraw their election if the
Paying Agent receives, not later than 5:00 p.m., New York City time, on the
second Business Day preceding the Change of Control Payment Date, a
telegram, telex, facsimile
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transmission or letter setting forth the name of the Holder, the principal
amount of the Notes the Holder delivered for purchase and a statement that
such Holder is withdrawing his election to have such Note purchased; and
(7) the circumstances and relevant facts regarding such Change of
Control.
On or before the Change of Control Payment Date, the Company shall
(i) accept for payment Notes or portions thereof tendered pursuant to the Change
of Control Offer, (ii) deposit with the Paying Agent U.S. Legal Tender
sufficient to pay the purchase price plus accrued interest, if any, of all Notes
or portions thereof so tendered and accepted and (iii) deliver to the Trustee
Notes so accepted together with an Officers' Certificate stating the Notes or
portions thereof being purchased by the Company. The Paying Agent shall
promptly mail or deliver to the Holders of Notes so accepted payment in an
amount equal to the purchase price plus accrued interest, if any, and the
Company shall execute and issue, and the Trustee shall promptly authenticate and
mail or deliver to such Holders new Notes equal in principal amount to any
unpurchased portion of the Notes surrendered. Any Notes not so accepted shall
be promptly mailed or delivered by the Company to the Holder thereof. The
Company shall publicly announce the results of the Change of Control Offer on or
as soon as practicable after the Change of Control Payment Date. For purposes
of this Section 4.15, the Trustee shall act as the Paying Agent.
(c) If the Senior Credit Facility is in effect, or any amounts are owing
thereunder, at the time of the occurrence of a Change of Control, prior to the
mailing of the notice to Holders described in clause (b) above, but in any event
within 30 days following any Change of Control, the Company shall (i) repay in
full all Obligations under the Senior Credit Facility and or offer to repay in
full all Obligations under the Senior Credit Facility and repay the Obligations
under the Senior Credit Facility of each lender who has accepted such offer or
(ii) obtain the requisite consent under the Senior Credit Facility to permit the
repurchase of the Notes as described above. The Company shall first comply with
the covenant described in the preceding sentence before it shall be required to
purchase Notes in the event of a Change of Control; PROVIDED that the Company's
failure to comply with the covenant described in the preceding sentence will
constitute an Event of Default described in Section 6.01(3) if not cured within
30 days after the notice required by such Section.
The Company shall comply with all applicable securities laws in connection
with any Change of Control Offer, including Rule 14e-1 under the Exchange Act.
SECTION 4.16. LIMITATION ON ASSET SALES.
The Company shall not, and shall not permit any Restricted Subsidiary to,
consummate any Asset Sale unless (i) the Company (or the Restricted Subsidiary,
as the case may be) receives consideration at the time of each such Asset Sale
at least equal to the fair market value (as specified in an Officers'
Certificate with respect to any Asset Sale of less than
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$2.0 million and as determined by the Board of Directors of the Company in good
faith with respect to Asset Sales in excess of $2.0 million) of the assets sold;
(ii) not less than 75% (100% in the case of lease payments) of the consideration
received by the Company (or such Restricted Subsidiary, as the case may be) is
in the form of cash; PROVIDED that any note or other obligation received by the
Company (or such Restricted Subsidiary, as the case may be) that is converted
into cash within 30 days after receipt and any liabilities (as shown on the
Company's or such Restricted Subsidiarys' most recent balance sheet) of the
Company or any Restricted Subsidiary (other than Contingent Liabilities and
liabilities that are by their terms subordinated to the Notes or any guarantee
thereof) that are assumed by the transferee of any such assets shall be deemed
to be cash for purposes of this clause (ii); and (iii) the Company within 365
days of such Asset Sale (x) reinvests or causes a Restricted Subsidiary to
reinvest (including by way of acquisitions) the Net Cash Proceeds of any Asset
Sale into one or more of the then existing businesses of the Company and its
Subsidiaries or any Similar Business; or (y) applies or causes to be applied
such Net Cash Proceeds to the permanent reduction of outstanding Senior
Indebtedness or Guarantor Senior Indebtedness; or (z) after such time as the
accumulated Excess Net Proceeds equal or exceed $10.0 million, applies or causes
to be applied such Excess Net Proceeds to the purchase of Notes tendered to the
Company for purchase at a price equal to 100% of the principal amount thereof
plus accrued interest thereon to the date of purchase pursuant to an offer to
purchase by the Company (a "NET PROCEEDS OFFER") as set forth below; PROVIDED,
HOWEVER, that the Company shall have the right to exclude Asset Sales the net
proceeds of which in the aggregate do not exceed $2.0 million annually from the
calculation of accumulated Net Cash Proceeds; PROVIDED, FURTHER, to the extent
Net Cash Proceeds have not been applied pursuant to clause (x), (y) or (z) above
within 325 days of an Asset Sale, such Net Cash Proceeds shall be held in a
segrgated account pending such application. Pending the final application of any
such Net Cash Proceeds, the Company or Restricted Subsidiary, as the case may
be, may temporarily reduce Senior Indebtedness or Guarantor Senior Indebtedness,
as the case may be, or otherwise invest such Net Cash Proceeds in any manner not
prohibited by this Indenture.
Notice of a Net Proceeds Offer pursuant to this Section 4.16 shall be
mailed, by first class mail, by the Company to all Holders at their last
registered addresses not less than 365 nor more than 395 days after the relevant
Asset Sale, with a copy to the Trustee. The notice shall contain all
instructions and materials necessary to enable such Holders to tender Notes
pursuant to the Net Proceeds Offer and shall state the following terms:
(1) that the Net Proceeds Offer is being made pursuant to Section
4.16 and that all Notes tendered will be accepted for payment; PROVIDED,
HOWEVER, that if the aggregate principal amount of Notes tendered in a Net
Proceeds Offer plus accrued interest at the expiration of such offer
exceeds the aggregate amount of the Net Proceeds Offer, the Company shall
select the Notes to be purchased on a pro rata basis (based on amounts
tendered) (with such adjustments as may be deemed appropriate by
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the Company so that only Notes in denominations of $1,000 or multiples
thereof shall be purchased);
(2) the purchase price (including the amount of accrued interest) and
the purchase date (which shall be no earlier than 30 days nor later than 60
days from the date such notice is mailed, other than as may be required by
law) (the "PROCEEDS PURCHASE DATE");
(3) that any Note not tendered will continue to accrue interest if
interest is then accruing;
(4) that, unless the Company defaults in making payment therefor, any
Note accepted for payment pursuant to the Net Proceeds Offer shall cease to
accrue interest after the Proceeds Purchase Date;
(5) that Holders electing to have a Note purchased pursuant to a Net
Proceeds Offer will be required to surrender the Note, with the form
entitled "Option of Holder to Elect Purchase" on the reverse of the Note
completed, to the Paying Agent at the address specified in the notice prior
to 5:00 p.m., New York City time, on the second Business Day prior to the
Proceeds Purchase Date;
(6) that Holders will be entitled to withdraw their election if the
Paying Agent receives, not later than 5:00 p.m., New York City time, on the
second Business Day preceding the Proceeds Purchase Date, a telegram,
telex, facsimile transmission or letter setting forth the name of the
Holder, the principal amount of the Notes the Holder delivered for purchase
and a statement that such Holder is withdrawing his election to have such
Note purchased; and
(7) that Holders whose Notes were purchased only in part will be
issued new Notes equal to principal amount to the unpurchased portion of
the Notes surrendered.
On or before the Proceeds Purchase Date, the Company shall (i) accept for
payment Notes or portions thereof tendered pursuant to the Net Proceeds Offer
which are to be purchased in accordance with item (b)(1) above, (ii) deposit
with the Paying Agent U.S. Legal Tender sufficient to pay the purchase price of
all Notes to be purchased and (iii) deliver to the Trustee Notes so accepted
together with an Officers' Certificate stating the Notes or portions thereof
being purchased by the Company. The Paying Agent shall promptly mail to the
Holders of Notes so accepted payment in an amount equal to the purchase price
plus accrued interest, if any, and the Company shall execute and issue, and the
Trustee shall promptly authenticate and mail or deliver to such Holders new
Notes equal in principal amount to any unpurchased portion of the Notes
surrendered. The Company shall publicly announce the
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results of the Net Proceeds Offer on or as soon as practicable after the
Proceeds Purchase Date. For purposes of this Section 4.16, the Trustee shall
act as the Paying Agent.
If the aggregate purchase price of Notes tendered pursuant to the Net
Proceeds Offer is less than the Net Cash Proceeds allotted to the purchase of
the Notes, the Company may apply the remaining Net Cash Proceeds for general
corporate purposes.
The Company will comply with all applicable securities laws in connection
with any Net Proceeds Offer, including Rule l4e-1 under the Exchange Act.
SECTION 4.17. LIMITATION ON CAPITAL STOCK OF
RESTRICTED SUBSIDIARIES.
The Company shall not, if such action would cause a Subsidiary not to be a
Controlled Subsidiary, (i) sell, pledge, hypothecate or otherwise convey or
dispose of any Capital Stock of a Restricted Subsidiary (other than Liens on
such Capital Stock securing Obligations under Senior Indebtedness or Guarantor
Senior Indebtedness) or (ii) permit any of its Restricted Subsidiaries to issue
any Capital Stock, other, in any such case, than to the Company or a Controlled
Subsidiary. The foregoing restrictions shall not apply to an Asset Sale made in
compliance with Section 4.16 or the issuance of Preferred Stock in compliance
with Section 4.12.
SECTION 4.18. LIMITATION ON LIENS.
The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, create, incur or otherwise cause or suffer to exist or become
effective any Liens of any kind (other than Permitted Liens) upon any property
or asset of the Company or any Restricted Subsidiary or any shares of stock or
debt of any Restricted Subsidiary which owns property or assets, now owned or
hereafter acquired, unless (i) if such Lien secures Indebtedness which is PARI
PASSU with the Notes or a Guarantee, then the Notes or such Guarantee, as the
case may be, are secured on an equal and ratable basis with the obligations so
secured until such time as such obligation is no longer secured by a Lien or
(ii) if such Lien secures Indebtedness which is subordinated to the Notes or a
Guarantee, any such Lien shall be subordinated to the Lien granted to the
holders of the Notes or such Guarantee, as the case may be, to the same extent
as such Subordinated Obligations are subordinated to the Notes.
SECTION 4.19. LIMITATION ON TRANSFER OF ASSETS TO
CERTAIN SUBSIDIARIES.
The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, sell, convey, transfer, lease or otherwise dispose of any of
its assets or property to any Subsidiary
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that is not a Controlled Subsidiary of the Company, except as otherwise
permitted pursuant to Sections 4.10 and 4.16.
SECTION 4.20. GUARANTEES OF CERTAIN INDEBTEDNESS
The Company shall not permit any of its Subsidiaries, directly or
indirectly, to incur, guarantee or secure through the granting of Liens the
payment of any Indebtedness under the Senior Credit Facility or any refunding or
refinancing thereof in each case unless such Subsidiary, the Company and the
Trustee execute and deliver a supplemental indenture evidencing such
Subsidiary's Guarantee, such Guarantee to be a senior subordinated unsecured
obligation of such Subsidiary. Neither the Company nor any Subsidiary Guarantor
shall be required to make a notation on the Notes or the Guarantees to reflect
any such subsequent Guarantee. Nothing in this covenant shall be construed to
permit any Subsidiary of the Company to incur Indebtedness otherwise prohibited
by Section 4.12.
ARTICLE FIVE
SUCCESSOR CORPORATION
SECTION 5.01. WHEN COMPANY MAY MERGE, ETC.
(a) The Company, in a single transaction or through a series of related
transactions, shall not consolidate with or merge with or into any other person,
or transfer (by lease, assignment, sale or otherwise) all or substantially all
of its properties and assets unless (i) either the Company shall be the
continuing person, or the person (if other than the Company) formed by such
consolidation or into which the Company is merged or to which all or
substantially all of the properties and assets of the Company are transferred
(the Company or such other person hereinafter referred to as the "SURVIVING
PERSON") shall be a corporation organized and validly existing under the laws of
the United States, any state thereof or the District of Columbia, and if other
than the Company shall expressly assume, by an indenture supplement, all of the
obligations of the Company under the Notes and this Indenture; (ii) immediately
after and giving effect to such transaction and the assumption contemplated by
clause (i) above and the incurrence or anticipated incurrence of any
Indebtedness to be incurred in connection therewith, the Surviving person could
incur at least $1.00 of Indebtedness pursuant to the first paragraph of
Section 4.12; (iii) immediately before and immediately after and giving effect
to such transaction and the assumption of the obligations as set forth in clause
(i) above and the incurrence or anticipated incurrence of any Indebtedness to be
incurred in connection therewith, no Default or Event of Default shall have
occurred and be continuing; and (iv) the Surviving person shall have delivered
to the Trustee an officers' certificate stating that such consolidation, merger,
sale, assignment, transfer, lease, conveyance or other disposition and, if a
supplemental indenture is required in connection
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with such transaction, such supplemental indenture comply with this Article
Five and that all conditions precedent herein provided relating to such
transaction have been satisfied.
(b) For purposes of clause (a) above, the transfer (by lease, assignment,
sale or otherwise, in a single transaction or series of transactions) of all or
substantially all of the properties and assets of one or more Subsidiaries of
the Company the Capital Stock of which constitutes all or substantially all of
the properties and assets of the Company shall be deemed to be the transfer of
all or substantially all of the properties and assets of the Company.
Notwithstanding the foregoing clauses (a)(ii) and (a)(iii) of this Section 5.01,
(a) any Restricted Subsidiary of the Company may consolidate with, merge into or
transfer all or part of its properties and assets to the Company or a Subsidiary
Guarantor and (b) the Company may merge with an Affiliate incorporated solely
for the purpose of reincorporating the Company in another jurisdiction.
SECTION 5.02. SUCCESSOR CORPORATION SUBSTITUTED.
Upon any consolidation, combination or merger or any transfer of all or
substantially all of the assets of the Company in accordance with this Article
Five, the surviving entity shall succeed to, and be substituted for, and may
exercise every right and power of, the Company under this Indenture and the
Notes with the same effect as if such surviving entity had been named as such,
and thereafter the predecessor corporation shall be relieved of all Obligations
and covenants under this Indenture and the Notes; PROVIDED that solely for the
purpose of calculating amounts described in clause (c) of the first paragraph
of Section 4.10, any such Surviving Person shall only be deemed to have
succeeded to and be substituted for the Company with respect to the period
subsequent to the effective time of this transaction (and the Company shall be
deemed to be the "Company" for such purposes for all prior periods).
ARTICLE SIX
DEFAULT AND REMEDIES
SECTION 6.01. EVENTS OF DEFAULT.
An "Event of Default" occurs if:
(1) the Company defaults in the payment of any installment of
interest on any Notes as and when the same becomes due and payable and the
Default continues for a period of 30 days (whether or not prohibited by the
subordination provisions of this Indenture);
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(2) the Company defaults in payment of all or any part of the
principal on any Notes when the same becomes due and payable at maturity,
upon any redemption, by declaration or otherwise (whether or not prohibited
by the subordination provisions of this Indenture);
(3) the Company or any Subsidiary Guarantor fails duly to observe or
perform any of its other covenants or agreements contained in the Notes or
this Indenture and the Default continues for a 30-day period and after the
notice specified below;
(4) there shall be a default under any Indebtedness of the Company or
any of its Restricted Subsidiaries, whether such Indebtedness now exists or
shall hereafter be created, if both (A) such default either (i) results
from the failure to pay principal on Indebtedness at the final maturity of
the respective issue of Indebtedness, and such failure continues for a
period of 10 days or more, or (ii) results in the holder or holders of such
Indebtedness causing such Indebtedness to become due prior to its stated
maturity and such acceleration has not been rescinded, cancelled or
otherwise cured within 10 days after receipt of notice of acceleration by
the Company and (B) the principal amount of such Indebtedness, together
with the principal amount of any other such Indebtedness in default for
failure to pay principal at final maturity or the maturity of which has
been so accelerated, in each case with respect to which the 10-day period
described above has passed, aggregates in excess of $10,000,000 at any one
time;
(5) the Company or any of its Significant Subsidiaries (A) commences
a voluntary case or proceeding under any Bankruptcy Law with respect to
itself, (B) consents to the entry of a judgment, decree or order for relief
against it in an involuntary case or proceeding under any Bankruptcy Law,
(C) consents to the appointment of a Custodian of it or for substantially
all of its property, (D) consents to or acquiesces in the institution of a
bankruptcy or an insolvency proceeding against it, (E) makes a general
assignment for the benefit of its creditors, or (F) takes any corporate
action to authorize or effect any of the foregoing;
(6) a court of competent jurisdiction enters a judgment, decree or
order for relief in respect of the Company or any of its Significant
Subsidiaries in an involuntary case or proceeding under any Bankruptcy Law,
which shall (A) approve as properly filed a petition seeking
reorganization, arrangement, adjustment or composition in respect of the
Company or any of its Significant Subsidiaries, (B) appoint a Custodian of
the Company or any of its Significant Subsidiaries or for substantially all
of its property or (C) order the winding-up or liquidation of its affairs;
and such judgment, decree or order shall remain unstayed and in effect for
a period of 60 consecutive days;
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(7) any final judgment or order for the payment of money shall be
rendered against the Company or any Significant Subsidiary of the Company
by a court of competent jurisdiction in excess of $10,000,000 individually
or in the aggregate for all such judgments or orders against all such
persons that are not stayed, bonded or discharged and there is a period of
60 consecutive days, after written notice has been given by the Trustee or
the holders of at least 25% in aggregate principal amount of the Notes then
outstanding, during which a stay of enforcement of such judgment or order,
by reason of pending appeal or otherwise, shall not be in effect; or
(8) any Subsidiary Guarantee shall for any reason cease to be in
full force and effect or be declared null and void or any responsible
officer of the Company or any Guarantor denies that it has any further
liability under any Subsidiary Guarantee or gives notice to such effect
(other than by reason of the termination of this Indenture or the release
of any such Subsidiary Guarantee in accordance with this Indenture).
A Default under clause (3) above is not an Event of Default until the
Trustee notifies the Company, or the Holders of at least 25% in principal amount
of the then outstanding Notes notify the Company and the Trustee, of the
Default, and the Company does not cure the Default within 30 days after receipt
of the notice. The notice must specify the Default, demand that it be remedied
and state that the notice is a "Notice of Default." Such notice shall be given
by the Trustee if so requested by the Holders of at least 25% in principal
amount of the Notes then outstanding. Such notice shall be given by registered
or certified mail, return receipt requested.
SECTION 6.02. ACCELERATION.
If an Event of Default (other than an Event of Default specified in
Section 6.01(5) or (6) with respect to the Company) occurs and is continuing and
has not been waived pursuant to Section 6.04, either the Trustee or the holders
of at least 25% in aggregate principal amount of the Notes then outstanding, by
notice in writing to the Company and the Trustee specifying the respective Event
of Default and that it is a "notice of acceleration" (the "ACCELERATION
NOTICE"), may declare the entire principal amount of and accrued interest on the
Notes to be due and payable immediately, and the same (i) shall become
immediately due and payable or (ii) if there are any amounts outstanding under
the Senior Credit Facility, shall become due and payable upon the first to occur
of an acceleration under the Senior Credit Facility, or 5 business days after
receipt by the Company and the Representative under the Senior Credit Facility
of such Acceleration Notice, unless all Events of Default specified in such
Acceleration Notice (other than any Event of Default in respect of non-payment
of principal) shall have been cured or waived. In the event of a declaration
because an Event of Default set forth in Section 6.01(4) has occurred and is
continuing, such declaration of acceleration shall be automatically annulled if
the missed payments in respect of such Indebtedness have been paid or if the
holders of the Indebtedness that is subject to acceleration have rescinded their
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declaration of acceleration and the Trustee has received written notice of such
Indebtedness having been repaid in full, in each case within 60 days thereof and
if (i) the annulment of such acceleration would not conflict with any judgment
or decree of a court of competent jurisdiction, (ii) all existing Events of
Default, except non-payment of principal or interest which have become due
solely because of the acceleration, have been cured or waived and (iii) the
Company has delivered an Officer's Certificate to the Trustee to the effect of
clauses (i) and (ii) above. If an Event of Default specified in Section 6.01(5)
or (6) occurs with respect to the Company, the principal amount of and accrued
interest on the Notes shall become and be immediately due and payable without
any declaration or other act on the part of the Trustee or any holder.
The declaration of acceleration is subject to the condition that if, at any
time after the principal of the Notes shall have been so declared due and
payable, and before any judgment or decree for the payment of the moneys shall
have been obtained or entered as hereinafter provided, the Company shall pay or
shall deposit with the Trustee a sum sufficient to pay all matured installments
of interest upon all the Notes and the principal of any and all Notes which
shall have become due otherwise than by acceleration (with interest upon such
principal and, to the extent that payment of such interest is unenforceable
under applicable law, on overdue installments of interest, at the same rate as
the rate of interest specified in the Notes, to the date of such payment or
deposit) and such amount as shall be sufficient to cover reasonable compensation
to the Trustee and each predecessor Trustee, their respective agents, attorneys
and counsel, and all other expenses and liabilities incurred, and all advances
made, by the Trustee and each predecessor Trustee except as a result of
negligence or bad faith, and if any and all Events of Default under this
Indenture, other than the non-payment of the principal of Notes which shall have
become due by acceleration, shall have been cured, waived or otherwise remedied
as provided herein, then and in every such case the holders of a majority in
aggregate principal amount of the Notes then outstanding, by written notice to
the Company and to the Trustee, may waive all defaults and rescind and annul
such declaration and its consequences, but no such waiver or rescission and
annulment shall extend to or shall affect any subsequent default or shall impair
any right consequent thereon.
SECTION 6.03. OTHER REMEDIES.
If an Event of Default occurs and is continuing, the Trustee may pursue any
available remedy by proceeding at law or in equity to collect the payment of
principal of or interest on the Notes or to enforce the performance of any
provision of the Notes or this Indenture.
The Trustee may maintain a proceeding even if it does not possess any of
the Notes or does not produce any of them in the proceeding. A delay or
omission by the Trustee or any Holder in exercising any right or remedy accruing
upon an Event of Default shall not impair the right or remedy or constitute a
waiver of or acquiescence in the Event of Default. No
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remedy is exclusive of any other remedy. All available remedies are cumulative
to the extent permitted by law.
SECTION 6.04. WAIVER OF PAST DEFAULTS.
Subject to Sections 2.09, 6.07 and 9.02, the Holders of a majority in
principal amount of the outstanding Notes by notice to the Trustee may waive an
existing Default or Event of Default and its consequences, except a Default in
the payment of principal of or interest on any Note as specified in clauses (1)
and (2) of Section 6.01. When a Default or Event of Default is waived, it is
cured and ceases.
SECTION 6.05. CONTROL BY MAJORITY.
Subject to Section 2.09, the Holders of a majority in principal amount of
the outstanding Notes may direct the time, method and place of conducting any
proceeding for any remedy available to the Trustee or exercising any trust or
power conferred on it, including, without limitation, any remedies provided for
in Section 6.03. Subject to Section 7.01, however, the Trustee may refuse to
follow any direction that the Trustee reasonably believes conflicts with any law
or this Indenture, that the Trustee determines may be unduly prejudicial to the
rights of another Holder, or that may involve the Trustee in personal liability;
PROVIDED that the Trustee may take any other action deemed proper by the Trustee
which is not inconsistent with such direction.
SECTION 6.06. LIMITATION ON SUITS.
A Holder may not pursue any remedy with respect to this Indenture or the
Notes unless:
(1) the Holder gives to the Trustee written notice of a
continuing Event of Default;
(2) Holders of at least 25% in principal amount of the then
outstanding Notes make a written request to the Trustee to pursue the
remedy;
(3) such Holder or Holders offer to the Trustee indemnity reasonably
satisfactory to the Trustee against any loss, liability or expense to be
incurred in compliance with such request;
(4) the Trustee does not comply with the request within 30 days
after receipt of the request and the offer of satisfactory indemnity; and
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(5) during such 30-day period the Holders of a majority in principal
amount of the outstanding Notes do not give the Trustee a direction which,
in the opinion of the Trustee, is inconsistent with the request.
The foregoing limitations shall not apply to a suit instituted by a Holder
for the enforcement of the payment of principal and premium, if any, or interest
on such Note on or after the respective due dates set forth in such Note
(including upon acceleration thereof); PROVIDED that upon institution of any
proceeding or exercise of any remedy, such Holders provide the Trustee with
prompt written notice thereof.
A Holder may not use this Indenture to prejudice the rights of another
Holder or to obtain a preference or priority over such other Holder.
SECTION 6.07. RIGHTS OF HOLDERS TO RECEIVE PAYMENT.
Notwithstanding any other provision of this Indenture, the right of any
Holder to receive payment of principal of and interest on a Note, on or after
the respective due dates expressed in such Note, or to bring suit for the
enforcement of any such payment on or after such respective dates, shall not be
impaired or affected without the consent of such Holder.
SECTION 6.08. COLLECTION SUIT BY TRUSTEE.
If an Event of Default in payment of principal or interest specified in
clause (1) or (2) of Section 6.01 occurs and is continuing, the Trustee may
recover judgment in its own name and as trustee of an express trust against the
Company, any Subsidiary Guarantor, if any, or any other obligor on the Notes
for the whole amount of principal and accrued interest remaining unpaid,
together with interest on overdue principal and, to the extent that payment of
such interest is lawful, interest on overdue installments of interest, in each
case at the rate per annum borne by the Notes, and such further amount as shall
be sufficient to cover the costs and expenses of collection, including the
reasonable compensation, expenses, disbursements and advances of the Trustee,
its agents and counsel.
SECTION 6.09. TRUSTEE MAY FILE PROOFS OF CLAIM.
The Trustee may file such proofs of claim and other papers or documents as
may be necessary or advisable in order to have the claims of the Trustee
(including any claim for the reasonable compensation, expenses, taxes,
disbursements and advances of the Trustee, its agents and counsel) and the
Holders allowed in any judicial proceedings relating to the Company or any other
obligor upon the Notes, any of their respective creditors or any of their
respective property and shall be entitled and empowered to collect and receive
any monies or other property payable or deliverable on any such claims and to
distribute the same, and any Custodian in any such judicial proceedings is
hereby authorized by each Holder to make such
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payments to the Trustee and, in the event that the Trustee shall consent to the
making of such payments directly to the Holders, to pay to the Trustee any
amount due to it for the reasonable compensation, expenses, taxes, disbursements
and advances of the Trustee, its agent and counsel, and any other amounts due
the Trustee under Section 7.07. The Company's payment obligations under this
Section 6.09 shall be secured in accordance with the provisions of Section 7.07.
Nothing herein contained shall be deemed to authorize the Trustee to authorize
or consent to or accept or adopt on behalf of any Holder any plan of
reorganization, arrangement, adjustment or composition affecting the Notes or
the rights of any Holder thereof, or to authorize the Trustee to vote in respect
of the claim of any Holder in any such proceeding.
SECTION 6.10. PRIORITIES.
If the Trustee collects any money or property pursuant to this Article Six,
it shall pay out the money in the following order:
First: to the Trustee for amounts due under Section 7.07;
Second: subject to Articles Ten and Eleven, to Holders for amounts
due and unpaid on the Notes for interest and premium, ratably, without
preference or priority of any kind, according to the amounts due and
payable on the Notes for interest and premium, respectively;
Third: subject to Articles Ten and Eleven, to Holders for amounts due
and unpaid on the Notes for principal, ratably without preference or
priority of any kind, according to the amounts due and payable on the Notes
for principal; and
Fourth: subject to Articles Ten and Eleven, to the Company, the
Subsidiary Guarantors, if any, or any other obligor on the Notes, as their
interests may appear, or as a court of competent jurisdiction may direct.
The Trustee, upon prior notice to the Company, may fix a record date and
payment date for any payment to Holders pursuant to this Section 6.10.
SECTION 6.11. UNDERTAKING FOR COSTS.
In any suit for the enforcement of any right or remedy under this Indenture
or in any suit against the Trustee for any action taken or omitted by it as
Trustee, a court in its discretion may require the filing by any party litigant
in the suit of an undertaking to pay the costs of the suit, and the court in its
discretion may assess reasonable costs, including reasonable attorneys' fees,
against any party litigant in the suit, having due regard to the merits and good
faith of the claims or defenses made by the party litigant. This Section 6.11
does
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not apply to a suit by the Trustee, a suit by a Holder pursuant to Section 6.07,
or a suit by a Holder or Holders of more than 10% in principal amount of the
outstanding Notes.
SECTION 6.12. RESTORATION OF RIGHTS AND REMEDIES.
If the Trustee or any Holder has instituted any proceeding to enforce any
right or remedy under this Indenture or any Note and such proceeding has been
discontinued or abandoned for any reason, or has been determined adversely to
the Trustee or to such Holder, then and in every such case the Company, the
Trustee and the Holders shall, subject to any determination in such proceeding,
be restored severally and respectively to their former positions hereunder, and
thereafter all rights and remedies of the Trustee and the Holders shall continue
as though no such proceeding had been instituted.
ARTICLE SEVEN
TRUSTEE
SECTION 7.01. DUTIES OF TRUSTEE.
(a) If an Event of Default has occurred and is continuing, the Trustee
shall exercise such of the rights and powers vested in it by this Indenture and
use the same degree of care and skill in its exercise thereof as a prudent
person would exercise or use under the circumstances in the conduct of his own
affairs.
(b) Except during the continuance of an Event of Default:
(1) The Trustee need perform only those duties as are
specifically set forth in this Indenture and the TIA and no others and no
covenants or obligations shall be implied in this Indenture against the
Trustee. To the extent of any conflict between the duties of the Trustee
hereunder and under the TIA, the TIA shall control.
(2) In the absence of bad faith on its part, the Trustee may
conclusively rely, as to the truth of the statements and the correctness of
the opinions expressed therein, upon certificates or opinions furnished to
the Trustee and conforming to the requirements of this Indenture. However,
in the case of any such certificate or opinion which by any provision
hereof is specifically required to be furnished to the Trustee, the Trustee
shall examine the certificates and opinions to determine whether or not
they conform to the requirements of this Indenture.
(c) Notwithstanding anything to the contrary herein contained, the Trustee
may not be relieved from liability for its own negligent action, its own
negligent failure to act, or its own willful misconduct, except that:
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(1) This paragraph does not limit the effect of paragraph (b) of
this Section 7.01.
(2) The Trustee shall not be liable for any error of judgment
made in good faith by a Trust Officer, unless it is proved that the Trustee
was negligent in ascertaining the pertinent facts.
(3) The Trustee shall not be liable with respect to any action
it takes or omits to take in good faith in accordance with a direction
received by it pursuant to Section 6.02, 6.04 or 6.05.
(d) No provision of this Indenture shall require the Trustee to expend or
risk its own funds or otherwise incur any financial liability in the performance
of any of its duties hereunder or in the exercise of any of its rights or powers
if it shall have reasonable grounds for believing that repayment of such funds
or adequate indemnity against such risk or liability is not reasonably assured
to it.
(e) Every provision of this Indenture that in any way relates to the
Trustee is subject to paragraphs (a), (b), (c) and (d) of this Section 7.01.
(f) The Trustee shall not be liable for interest on any money or assets
received by it except as the Trustee may agree in writing with the Company.
Assets held in trust by the Trustee need not be segregated from other assets
except to the extent required by law.
SECTION 7.02. RIGHTS OF TRUSTEE.
Subject to Section 7.01:
(a) The Trustee may rely and shall be fully protected in acting or
refraining from acting upon any document believed by it to be genuine and
to have been signed or presented by the proper Person. The Trustee need
not investigate any fact or matter stated in the document.
(b) Before the Trustee acts or refrains from acting, it may consult
with counsel and may require an Officers' Certificate or an Opinion of
Counsel, or both, which shall conform to Sections 12.04 and 12.05. The
Trustee shall not be liable for any action it takes or omits to take in
good faith in reliance on such Officers' Certificate or Opinion of Counsel.
(c) The Trustee may act through its attorneys and agents and shall
not be responsible for the misconduct or negligence of any attorney or
agent appointed with due care.
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(d) The Trustee shall not be liable for any action that it takes or
omits to take in good faith which it reasonably believes to be authorized
or within its rights or powers.
(e) The Trustee shall not be bound to make any investigation into the
facts or matters stated in any resolution, certificate, statement,
instrument, opinion, notice, request, direction, consent, order, bond,
debenture, or other paper or document, but the Trustee, in its discretion,
may make such further inquiry or investigation into such facts or matters
as it may see fit.
(f) The Trustee shall be under no obligation to exercise any of the
rights or powers vested in it by this Indenture at the request, order or
direction of any of the Holders pursuant to the provisions of this
Indenture, unless such Holders shall have offered to the Trustee security
or indemnity reasonably satisfactory to the Trustee against the costs,
expenses and liabilities which may be incurred by it in compliance with
such request, order or direction.
(g) The Trustee may consult with counsel and the advice or opinion of
such counsel as to matters of law shall be full and complete authorization
and protection from liability in respect of any action taken, omitted or
suffered by it hereunder in good faith and in accordance with the advice or
opinion of such counsel.
(h) The Trustee shall not be charged with knowledge of any Defaults
or Events of Default unless either (1) a Trust Officer of the Trustee shall
have actual knowledge of such Default or Event of Default or (2) written
notice of such Default or Event of Default shall have been given to the
Trustee by any Holder or by the Company or any other obligor on the Notes
or any holder of Senior Indebtedness or Guarantor Senior Indebtedness or
any representative thereof.
SECTION 7.03. INDIVIDUAL RIGHTS OF TRUSTEE.
The Trustee in its individual or any other capacity may become the owner or
pledgee of Notes and may otherwise deal with the Company, any Subsidiary of the
Company, or their respective Affiliates with the same rights it would have if it
were not Trustee. Any Agent may do the same with like rights. However, the
Trustee must comply with Sections 7.10 and 7.11.
SECTION 7.04. TRUSTEE'S DISCLAIMER.
The Trustee makes no representation as to the validity or adequacy of this
Indenture or the Notes, and it shall not be accountable for the Company's use of
the proceeds from the Notes, and it shall not be responsible for any statement
of the Company in this Indenture or the Notes other than the Trustee's
certificate of authentication.
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SECTION 7.05. NOTICE OF DEFAULT.
If a Default or an Event of Default occurs and is continuing and if it is
known to the Trustee, the Trustee shall mail to each Holder notice of the
uncured Default or Event of Default within 90 days after such Default or Event
of Default becomes known to the Trustee. Except in the case of a Default or an
Event of Default in payment of principal of, or interest on, any Note, the
Trustee may withhold the notice if and so long as its Board of Directors, the
executive committee of its Board of Directors or a committee of its directors
and/or Trust Officers in good faith determines that withholding the notice is in
the interest of the Holders.
SECTION 7.06. REPORTS BY TRUSTEE TO HOLDERS.
Within 60 days after each May 15, the Trustee shall, to the extent that any
of the events described in TIA Section 313(a) occurred within the previous
twelve months, but not otherwise, mail to each Holder a brief report dated as of
such date that complies with TIA Section 313(a). The Trustee also shall comply
with TIA Sections 313(b) and (c).
A copy of each report at the time of its mailing to Holders shall be mailed
to the Company and filed with the SEC and each stock exchange, if any, on which
the Notes are listed.
The Company shall promptly notify the Trustee in writing if the Notes
become listed on any stock exchange and the Trustee shall comply with TIA
Section 313(d).
SECTION 7.07. COMPENSATION AND INDEMNITY.
The Company shall pay to the Trustee from time to time reasonable
compensation for its services. The Trustee's compensation shall not be limited
by any law on compensation of a trustee of an express trust. The Company shall
reimburse the Trustee upon request for all reasonable out-of-pocket expenses
incurred or made by it in connection with the performance of its duties under
this Indenture. Such expenses shall include the reasonable fees and expenses of
the Trustee's agents and counsel.
The Company shall indemnify the Trustee and its agents, employees,
officers, directors and shareholders for, and hold it harmless against, any
loss, liability or expense incurred by it except for such actions to the extent
caused by any negligence, bad faith or willful misconduct on its part, arising
out of or in connection with the administration of this trust including the
reasonable costs and expenses of defending itself against any claim or liability
in connection with the exercise or performance of any of its rights, powers or
duties hereunder. The Trustee shall notify the Company promptly of any claim
asserted against the Trustee for which it may seek indemnity. Failure by the
Trustee to so notify the Company shall not relieve the Company of its
obligations hereunder. At the Trustee's sole discretion, the Company shall
defend the claim and the Trustee shall provide reasonable cooperation and
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may participate at the Company's expense in the defense. Alternatively, the
Trustee may at its option have separate counsel of its own choosing and the
Company shall pay the reasonable fees and expenses of such counsel; PROVIDED
that the Company will not be required to pay such fees and expenses if it
assumes the Trustee's defense, there is no conflict of interest between the
Company and the Trustee in connection with such defense as reasonably determined
by the Trustee and no Default or Event of Default has occurred and is
continuing. The Company need not pay for any settlement made without its
written consent, which consent shall not be unreasonably withheld. The Company
need not reimburse any expense or indemnify against any loss or liability to the
extent incurred by the Trustee through its negligence, bad faith or willful
misconduct.
To secure the Company's payment obligations in this Section 7.07, the
Trustee shall have a lien prior to the Notes on all assets or money held or
collected by the Trustee, in its capacity as Trustee, except assets or money
held in trust to pay principal of or interest on particular Notes.
When the Trustee incurs expenses or renders services after an Event of
Default specified in Section 6.01(5) or (6) occurs, such expenses and the
compensation for such services are intended to constitute expenses of
administration under any Bankruptcy Law.
The obligations of the Company under this Section 7.07 and any lien arising
hereunder shall survive the resignation or removal of the Trustee, the discharge
of the Company's Obligations pursuant to Article Eight or the termination of
this Indenture.
SECTION 7.08. REPLACEMENT OF TRUSTEE.
The Trustee may resign by so notifying the Company in writing, such
resignation to be effective upon the appointment of a successor Trustee. The
Holders of a majority in principal amount of the outstanding Notes may remove
the Trustee by so notifying the Company and the Trustee in writing and may
appoint a successor Trustee with the Company's consent which consent shall not
be unreasonably withheld. The Company may remove the Trustee if:
(1) the Trustee fails to comply with Section 7.10;
(2) the Trustee is adjudged bankrupt or insolvent;
(3) a receiver or other public officer takes charge of the Trustee or
its property; or
(4) the Trustee becomes incapable of acting.
If the Trustee resigns or is removed or if a vacancy exists in the office
of Trustee for any reason, the Company shall notify each Holder of such event
and shall promptly appoint a
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successor Trustee. Within one year after the successor Trustee takes office,
the Holders of a majority in principal amount of the Notes may appoint a
successor Trustee to replace the successor Trustee appointed by the Company.
A successor Trustee shall deliver a written acceptance of its appointment
to the retiring Trustee and to the Company. Immediately after that, the
retiring Trustee shall transfer all property held by it as Trustee to the
successor Trustee, subject to the lien provided in Section 7.07, the resignation
or removal of the retiring Trustee shall become effective, and the successor
Trustee shall have all the rights, powers and duties of the Trustee under this
Indenture. A successor Trustee shall mail notice of its succession to each
Holder.
If a successor Trustee does not take office within 60 days after the
retiring Trustee resigns or is removed, the retiring Trustee, the Company or the
Holders of at least 10% in principal amount of the outstanding Notes may
petition any court of competent jurisdiction for the appointment of a successor
Trustee.
If the Trustee fails to comply with Section 7.10, any Holder may petition
any court of competent jurisdiction for the removal of the Trustee and the
appointment of a successor Trustee.
Notwithstanding replacement of the Trustee pursuant to this Section 7.08,
the Company's obligations under Section 7.07 shall continue for the benefit of
the retiring Trustee.
SECTION 7.09. SUCCESSOR TRUSTEE BY MERGER, ETC.
If the Trustee consolidates with, merges or converts into, or transfers all
or substantially all of its corporate trust business to, another corporation or
national banking association, the resulting, surviving or transferee
corporation without any further act shall, if such resulting, surviving or
transferee corporation is otherwise eligible hereunder, be the successor
Trustee; PROVIDED that such corporation shall be otherwise qualified and
eligible under this Article Seven.
SECTION 7.10. ELIGIBILITY; DISQUALIFICATION.
This Indenture shall always have a Trustee who satisfies the requirement of
TIA Sections 310(a)(1), (2) and (5). The Trustee (or, in the case of a
corporation included in a bank holding company system, the related bank holding
company) shall have a combined capital and surplus of at least $100 million as
set forth in its most recent published annual report of condition. In addition,
if the Trustee is a corporation included in a bank holding company system, the
Trustee, independently of such bank holding company, shall meet the capital
requirements of TIA Section 310(a)(2). The Trustee shall comply with TIA
Section 310(b); PROVIDED, HOWEVER, that there shall be excluded from the
operation of TIA Section 310(b)(1) any indenture or
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indentures under which other securities, or certificates of interest or
participation in other securities, of the Company are outstanding, if the
requirements for such exclusion set forth in TIA Section 310(b)(1) are met.
SECTION 7.11. PREFERENTIAL COLLECTION OF CLAIMS
AGAINST COMPANY.
The Trustee shall comply with TIA Section 311(a), excluding any creditor
relationship listed in TIA Section 311(b). A Trustee who has resigned or been
removed shall be subject to TIA Section 311(a) to the extent indicated therein.
ARTICLE EIGHT
DISCHARGE OF INDENTURE; DEFEASANCE
SECTION 8.01. TERMINATION OF THE
COMPANY'S OBLIGATIONS.
The Company may terminate its obligations under the Notes and this
Indenture, except those obligations referred to in the penultimate paragraph of
this Section 8.01, if all Notes previously authenticated and delivered (other
than destroyed, lost or stolen Notes which have been replaced or paid or Notes
for whose payment U.S. Legal Tender has theretofore been deposited with the
Trustee or the Paying Agent in trust or segregated and held in trust by the
Company and thereafter repaid to the Company, as provided in Section 8.05) have
been delivered to the Trustee for cancellation and the Company has paid all sums
payable by it hereunder, or if:
(a) either (i) pursuant to Article Three, the Company shall have
given notice to the Trustee and mailed a notice of redemption to each
Holder of the redemption of all of the Notes under arrangements
satisfactory to the Trustee for the giving of such notice or (ii) all Notes
have otherwise become due and payable hereunder;
(b) the Company shall have irrevocably deposited or caused to be
deposited with the Trustee or a trustee satisfactory to the Trustee, under
the terms of an irrevocable trust agreement in form and substance
satisfactory to the Trustee, as trust funds in trust solely for the benefit
of the Holders for that purpose, U.S. Legal Tender in such amount as is
sufficient without consideration of reinvestment of such interest, to pay
principal of, premium, if any, and interest on the outstanding Notes to
maturity or redemption; PROVIDED that the Trustee shall have been
irrevocably instructed to apply such U.S. Legal Tender to the payment of
said principal, premium, if any, and interest with respect to the Notes;
and PROVIDED, FURTHER, that from and after the time of
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deposit, the money deposited shall not be subject to the rights of holders
of Senior Debt pursuant to the provisions of Article Ten or Eleven;
(c) no Default or Event of Default with respect to this Indenture or
the Notes shall have occurred and be continuing on the date of such deposit
or shall occur as a result of such deposit and such deposit will not result
in a breach or violation of, or constitute a default under, any other
instrument to which the Company is a party or by which it is bound;
(d) the Company shall have paid all other sums payable by it
hereunder; and
(e) the Company shall have delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that all conditions
precedent providing for the termination of the Company's obligations under
the Notes and this Indenture have been complied with. Such Opinion of
Counsel shall also state that such satisfaction and discharge does not
result in a default under the Senior Credit Facility (if then in effect) or
any other agreement or instrument then known to such counsel that binds or
affects the Company.
Notwithstanding the foregoing paragraph, the Company's obligations in
Sections 2.05, 2.06, 2.07, 2.08, 4.01, 4.02, 7.07, 8.05 and 8.06 shall survive
until the Notes are no longer outstanding pursuant to the last paragraph of
Section 2.08. After the Notes are no longer outstanding, the Company's
obligations in Sections 7.07, 8.05 and 8.06 shall survive.
After such delivery or irrevocable deposit, the Trustee upon request shall
acknowledge in writing the discharge of the Company's and the Subsidiary
Guarantors' obligations under the Notes, the Guarantees and this Indenture
except for those surviving obligations specified above.
SECTION 8.02. LEGAL DEFEASANCE AND
COVENANT DEFEASANCE.
(a) The Company may, at its option by Board Resolution of the Board of
Directors of the Company, at any time, elect to have either paragraph (b) or (c)
below be applied to all outstanding Notes upon compliance with the conditions
set forth in Section 8.03.
(b) Upon the Company's exercise under paragraph (a) hereof of the option
applicable to this paragraph (b), the Company and the Subsidiary Guarantors
shall, subject to the satisfaction of the conditions set forth in Section 8.03,
be deemed to have been discharged from its obligations with respect to all
outstanding Notes on the date the conditions set forth below are satisfied
(hereinafter, "LEGAL DEFEASANCE"). For this purpose, Legal Defeasance means
that the Company shall be deemed to have paid and discharged the entire
Indebtedness
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represented by the outstanding Notes, which shall thereafter be deemed to be
"outstanding" only for the purposes of Section 8.04 and the other Sections of
this Indenture referred to in (i) and (ii) below, and to have satisfied all its
other obligations under such Notes and this Indenture (and the Trustee, on
demand of and at the expense of the Company, shall execute proper instruments
acknowledging the same), and Holders of the Notes and any amounts deposited
under Section 8.03 shall cease to be subject to any obligations to, or the
rights of, any holder of Senior Indebtedness or Guarantor Senior Indebtedness
under Article Ten or Eleven, as the case may be, or otherwise, except for the
following provisions, which shall survive until otherwise terminated or
discharged hereunder: (i) the rights of Holders of outstanding Notes to receive
solely from the trust fund described in Section 8.04, and as more fully set
forth in such Section, payments in respect of the principal of and interest on
such Notes when such payments are due, (ii) the Company's obligations with
respect to such Notes under Article Two and Section 4.02, (iii) the rights,
powers, trusts, duties and immunities of the Trustee hereunder and the Company's
obligations in connection therewith and (iv) this Article Eight. Subject to
compliance with this Article Eight, the Company may exercise its option under
this paragraph (b) notwithstanding the prior exercise of its option under
paragraph (c) hereof.
(c) Upon the Company's exercise under paragraph (a) hereof of the option
applicable to this paragraph (c), the Company shall, subject to the satisfaction
of the conditions set forth in Section 8.03, be released from its obligations
under the covenants contained in Sections 4.03 through 4.08 and 4.10 through
4.20 and Article Five with respect to the outstanding Notes on and after the
date the conditions set forth below are satisfied (hereinafter, "COVENANT
DEFEASANCE"), and the Notes shall thereafter be deemed not "outstanding" for the
purposes of any direction, waiver, consent or declaration or act of Holders (and
the consequences of any thereof) in connection with such covenants, but shall
continue to be deemed "outstanding" for all other purposes hereunder (it being
understood that such Notes shall not be deemed outstanding for accounting
purposes) and Holders of the Notes and any amounts deposited under Section 8.03
shall cease to be subject to any obligations to, or the rights of, any holder of
Senior Indebtedness or Guarantor Senior Indebtedness under Article Ten or Eleven
or otherwise. For this purpose, such Covenant Defeasance means that, with
respect to the outstanding Notes, the Company may omit to comply with and shall
have no liability in respect of any term, condition or limitation set forth in
any such covenant, whether directly or indirectly, by reason of any reference
elsewhere herein to any such covenant or by reason of any reference in any such
covenant to any other provision herein or in any other document and such
omission to comply shall not constitute a Default or an Event or Default under
Section 6.01(3), but, except as specified above, the remainder of this Indenture
and such Notes shall be unaffected thereby. In addition, upon the Company's
exercise under paragraph (a) hereof of the option applicable to this paragraph
(c), subject to the satisfaction of the conditions set forth in Section 8.03,
those events described in Section 6.01 (except those events described in Section
6.01(1), (2), (5) and (6)) shall not constitute Events of Default.
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SECTION 8.03. CONDITIONS TO LEGAL DEFEASANCE
OR COVENANT DEFEASANCE.
The following shall be the conditions to the application of either Section
8.02(b) or 8.02(c) to the outstanding Notes:
In order to exercise either Legal Defeasance or Covenant Defeasance:
(a) the Company must irrevocably deposit with the Trustee, in trust,
for the benefit of the Holders, U.S. Legal Tender or U.S. Government
Obligations, or a combination thereof, in such amounts as will be
sufficient, in the opinion of a nationally recognized firm of independent
public accountants, to pay the principal of and interest on the Notes on
the stated date for payment thereof or on the applicable redemption date,
as the case may be, of such principal or installment of principal of or
interest on the Notes; PROVIDED that the Trustee shall have received an
irrevocable written order from the Company instructing the Trustee to apply
such U.S. Legal Tender or the proceeds of such U.S. Government Obligations
to said payments with respect to the Notes;
(b) in the case of an election under Section 8.02(b), the Company
shall have delivered to the Trustee an Opinion of Counsel in the United
States reasonably acceptable to the Trustee confirming that (A) the Company
has received from, or there has been published by, the Internal Revenue
Service a ruling or (B) since the date of this Indenture, there has been a
change in the applicable federal income tax law, in either case to the
effect that, and based thereon such Opinion of Counsel shall confirm that,
the Holders of the Notes will not recognize income, gain or loss for
federal income tax purposes as a result of such Legal Defeasance and will
be subject to federal income tax on the same amounts, in the same manner
and at the same times as would have been the case if such Legal Defeasance
had not occurred;
(c) in the case of an election under Section 8.02(c), the Company
shall have delivered to the Trustee an Opinion of Counsel in the United
States reasonably acceptable to the Trustee confirming that the Holders of
the Notes will not recognize income, gain or loss for federal income tax
purposes as a result of such Covenant Defeasance and will be subject to
federal income tax on the same amounts, in the same manner and at the same
times as would have been the case if such Covenant Defeasance had not
occurred;
(d) no Default or Event of Default or event which with notice or
lapse of time or both would become a Default or an Event of Default with
respect to the Notes shall have occurred and be continuing on the date of
such deposit (other than a Default or Event of Default resulting from the
incurrence of Indebtedness all or a portion of the proceeds of which will
be used to defease the Notes pursuant to this Article Eight
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concurrently with such incurrence) or insofar as Sections 6.01(5) and
6.01(6) are concerned, at any time in the period ending on the 91st day
after the date of such deposit;
(e) such Legal Defeasance or Covenant Defeasance shall not result in
a breach or violation of or constitute a default under this Indenture or
any other material agreement or instrument to which the Company or any of
its Subsidiaries is a party or by which the Company or any of its
Subsidiaries is bound;
(f) the Company shall have delivered to the Trustee an Officers'
Certificate stating that the deposit was not made by the Company with the
intent of preferring the Holders over any other creditors of the Company or
with the intent of defeating, hindering, delaying or defrauding any other
creditors of the Company;
(g) the Company shall have delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that all conditions
precedent provided for or relating to the Legal Defeasance or the Covenant
Defeasance have been complied with; and
(h) the Company shall have delivered to the Trustee an Opinion of
Counsel to the effect that (i) the trust funds will not be subject to any
rights of any holders of Indebtedness of the Company other than the Notes,
and (ii) assuming no intervening bankruptcy or insolvency of the Company
between the date of deposit and the 91st day following the deposit and that
no Holder is an insider of the Company, after the 91st day following the
deposit, the trust funds will not be subject to the effect of any
applicable Bankruptcy Law.
SECTION 8.04. APPLICATION OF TRUST MONEY.
The Trustee or Paying Agent shall hold in trust U.S. Legal Tender or U.S.
Government Obligations deposited with it pursuant to Article Eight, and shall
apply the deposited U.S. Legal Tender and the money from U.S. Government
Obligations in accordance with this Indenture to the payment of principal of and
interest on the Notes. The Trustee shall be under no obligation to invest said
U.S. Legal Tender or U.S. Government Obligations except as it may agree with the
Company.
The Company shall pay and indemnify the Trustee against any tax, fee or
other charge imposed on or assessed against the U.S. Legal Tender or U.S.
Government Obligations deposited pursuant to Section 8.03 or the principal and
interest received in respect thereof other than any such tax, fee or other
charge which by law is for the account of the Holders of the outstanding Notes.
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Anything in this Article Eight to the contrary not withstanding, the
Trustee shall deliver or pay to the Company from time to time upon the Company's
request any U.S. Legal Tender or U. S. Government Obligations held by it as
provided in Section 8.03 hereof which, in the opinion of a nationally recognized
firm of independent public accountants expressed in a written certification
thereof delivered to the Trustee, are in excess of the amount thereof that would
then be required to be deposited to effect an equivalent Legal Defeasance or
Covenant Defeasance.
SECTION 8.05. REPAYMENT TO THE COMPANY OR THE
SUBSIDIARY GUARANTORS.
Subject to Article Eight, the Trustee and the Paying Agent shall promptly
pay to the Company, or if deposited with the Trustee by any Subsidiary
Guarantor, to such Subsidiary Guarantor, upon request any excess U.S. Legal
Tender or U.S. Government Obligations held by them at any time and thereupon
shall be relieved from all liability with respect to such money. The Trustee
and the Paying Agent shall pay to the Company, or if deposited with the Trustee
by any Subsidiary Guarantor, to such Subsidiary Guarantor, upon request any
money held by them for the payment of principal or interest that remains
unclaimed for two years; PROVIDED that the Trustee or such Paying Agent, before
being required to make any payment, may at the expense of the Company cause to
be published once in a newspaper of general circulation in the City of New York
or mail to each Holder entitled to such money notice that such money remains
unclaimed and that after a date specified therein which shall be at least 30
days from the date of such publication or mailing any unclaimed balance of such
money then remaining will be repaid to the Company or a Subsidiary Guarantor.
After payment to the Company or a Subsidiary Guarantor, as the case may be,
Noteholders entitled to such money must look to the Company for payment as
general creditors unless an applicable law designates another Person.
SECTION 8.06. SATISFACTION AND DISCHARGE.
This Indenture will be discharged and will cease to be of further effect
(except as to surviving rights of registration of transfer or exchange of the
Notes, as expressly provided for in this Indenture) as to all outstanding Notes
when (i) either (a) all the Notes theretofore authenticated and delivered
(except lost, stolen or destroyed Notes which have been replaced or paid and
Notes for whose payment money has theretofore been deposited in trust or
segregated and held in trust by the Company and thereafter repaid to the Company
or discharged from such trust) have been delivered to the Trustee for
cancellation or (b) all Notes not theretofore delivered to the Trustee for
cancellation have become due and payable, or are by their terms to become due
and payable within one year or are to be called for redemption within one year
upon delivery of notice under arrangements satisfactory to the Trustee, and the
Company has irrevocably deposited or caused to be deposited with the Trustee
funds in an amount sufficient to pay and discharge the entire Indebtedness on
the Notes not theretofore
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delivered to the Trustee for cancellation, for principal of, premium, if any,
and interest on the Notes to the date of deposit together with irrevocable
instructions from the Company directing the Trustee to apply such funds to the
payment thereof at maturity or redemption, as the case may be; (ii) the Company
has paid all other sums payable under the Indenture by the Company; and (iii)
the Company has delivered to the Trustee an officers' certificate and an opinion
of counsel stating that all conditions precedent under the Indenture relating to
the satisfaction and discharge of the Indenture have been complied with.
SECTION 8.07. REINSTATEMENT.
If the Trustee or Paying Agent is unable to apply any U.S. Legal Tender or
U.S. Government Obligations in accordance with Article Eight by reason of any
legal proceeding or by reason of any order or judgment of any court or
governmental authority enjoining, restraining or otherwise prohibiting such
application, the Company's and each Subsidiary Guarantor's obligations under
this Indenture and the Notes shall be revived and reinstated as though no
deposit had occurred pursuant to Article Eight until such time as the Trustee or
Paying Agent is permitted to apply all such U.S. Legal Tender or U.S. Government
Obligations in accordance with Article Eight; PROVIDED that if the Company or
any Subsidiary Guarantor, as the case may be, has made any payment of interest
on or principal of any Notes because of the reinstatement of its obligations,
the Company or any Subsidiary Guarantor, as the case may be, shall be subrogated
to the rights of the Holders of such Notes to receive such payment from the U.S.
Legal Tender or U.S. Government Obligations held by the Trustee or Paying Agent.
ARTICLE NINE
AMENDMENTS, SUPPLEMENTS AND WAIVERS
SECTION 9.01. WITHOUT CONSENT OF HOLDERS.
The Company, when authorized by a Board Resolution, and the Trustee,
together, may amend or supplement this Indenture, the Notes or any Guarantee
without notice to or consent of any Holder:
(1) to cure any ambiguity, defect or inconsistency; PROVIDED that
such amendment or supplement does not adversely affect the rights of any
Holder;
(2) to comply with Article Five;
(3) to provide for uncertificated Notes in addition to or in place of
certificated Notes;
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(4) to comply with any requirements of the SEC in order to effect or
maintain the qualification of this Indenture under the TIA; or
(5) to make any change that would provide any additional benefit or
rights to the Holders or that does not adversely affect the rights of any
Holder;
PROVIDED that the Company has delivered to the Trustee an Opinion of Counsel and
an Officers' Certificate stating that such amendment or supplement complies with
the provisions of this Section 9.01.
SECTION 9.02. WITH CONSENT OF HOLDERS.
Subject to Section 6.07, the Company, when authorized by a Board
Resolution, and the Trustee, together, with the written consent of the Holder or
Holders of at least a majority in aggregate principal amount of the outstanding
Notes, may amend or supplement this Indenture, the Notes or any Guarantee
without notice to any other Holders. Subject to Section 6.07, the Holder or
Holders of a majority in aggregate principal amount of the outstanding Notes may
waive compliance by the Company with any provision of this Indenture or the
Notes without notice to any other Holder. No amendment, supplement or waiver,
including a waiver pursuant to Section 6.04, shall, without the consent of each
Holder of each Note affected thereby:
(1) change the principal amount of Notes whose Holders must consent
to an amendment, supplement or waiver of any provision of this Indenture,
the Notes or any Guarantee;
(2) reduce the rate of or change or have the effect of changing the
time for payment of interest, including defaulted interest, on any Notes;
(3) reduce the principal amount of any Note;
(4) change the Maturity Date of any Note, or alter the redemption
provisions contained in Article Three or in Paragraph 6 of the Notes in a
manner adverse to any Holder (except that provisions affecting the
requirement to repurchase the Notes following a Change of Control or
certain asset sales may be amended by the Company, the Trustee and the
Holders of not less than a majority in aggregate principal amount of Notes
then outstanding);
(5) make any changes in provisions concerning waivers of Defaults or
Events of Default by Holders of the Notes or the rights of Holders to
recover the principal of, interest on, premium, if any, or redemption
payment with respect to, any Note;
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(6) make the principal of, or the interest on any Note payable with
anything or in any manner other than as provided for in this Indenture and
the Notes as in effect on the date hereof; or
(7) make any change to the subordination provisions of this Indenture
and the Note in a manner that adversely affects the Holders.
It shall not be necessary for the consent of the Holders under this Section
to approve the particular form of any proposed amendment, supplement or waiver,
but it shall be sufficient if such consent approves the substance thereof.
After an amendment, supplement or waiver under this Section 9.02 becomes
effective, the Company shall mail to the Holders affected thereby a notice
briefly describing the amendment, supplement or waiver. Any failure of the
Company to mail such notice, or any defect therein, shall not, however, in any
way impair or affect the validity of any such supplemental indenture.
SECTION 9.03. EFFECT ON SENIOR INDEBTEDNESS.
No amendment, supplement or waiver of this Indenture shall adversely affect
the rights of any holder of Senior Indebtedness or Guarantor Senior
Indebtedness, if any (including their rights under Article Ten or Eleven),
without the consent of such holder.
SECTION 9.04. COMPLIANCE WITH TIA.
Every amendment, waiver or supplement of this Indenture or the Notes shall
comply with the TIA as then in effect.
SECTION 9.05. REVOCATION AND EFFECT OF CONSENTS.
Until an amendment, waiver or supplement becomes effective, a consent to it
by a Holder is a continuing consent by the Holder and every subsequent Holder
of a Note or portion of a Note that evidences the same debt as the consenting
Holder's Note, even if notation of the consent is not made on any Note. Subject
to the following paragraph, any such Holder or subsequent Holder may revoke the
consent as to such Holder's Note or portion of such Note by written notice to
the Trustee or the Company received before the date on which the Trustee
receives an Officers' Certificate certifying that the Holders of the requisite
principal amount of Notes have consented (and not theretofore revoked such
consent) to the amendment, supplement or waiver.
The Company may, but shall not be obligated to, fix a record date for the
purpose of determining the Holders entitled to consent to any amendment,
supplement or waiver, which record date shall be at least 30 days prior to the
first solicitation of such consent. If a record
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date is fixed, then notwithstanding the last sentence of the immediately
preceding paragraph, those Persons who were Holders at such record date (or
their duly designated proxies), and only those Persons, shall be entitled to
revoke any consent previously given, whether or not such Persons continue to be
Holders after such record date. No such consent shall be valid or effective for
more than 90 days after such record date.
After an amendment, supplement or waiver becomes effective, it shall bind
every Holder, unless it makes a change described in any of clauses (1) through
(7) of Section 9.02, in which case, the amendment, supplement or waiver shall
bind only each Holder of a Note who has consented to it and every subsequent
Holder of a Note or portion of a Note that evidences the same debt as the
consenting Holder's Note; PROVIDED that any such waiver shall not impair or
affect the right of any Holder to receive payment of principal of and interest
on a Note, on or after the respective due dates expressed in such Note, or to
bring suit for the enforcement of any such payment on or after such respective
dates without the consent of such Holder.
SECTION 9.06. NOTATION ON OR EXCHANGE OF NOTES.
If an amendment, supplement or waiver changes the terms of a Note, the
Trustee may, at the written direction of the Company, require the Holder of the
Note to deliver it to the Trustee. The Trustee at the written direction of the
Company may place an appropriate notation on the Note about the changed terms
and return it to the Holder. Alternatively, if the Company or the Trustee so
determines, the Company in exchange for the Note shall issue and the Trustee
shall authenticate a new Note that reflects the changed terms. Any such
notation or exchange shall be made at the sole cost and expense of the Company.
Failure to make the appropriate notation or issue a new Note shall not affect
the validity and effect of such amendment, supplement or waiver.
SECTION 9.07. TRUSTEE TO SIGN AMENDMENTS, ETC.
The Trustee shall execute any amendment, supplement or waiver authorized
pursuant to this Article Nine; PROVIDED that the Trustee may, but shall not be
obligated to, execute any such amendment, supplement or waiver which affects the
Trustee's own rights, duties or immunities under this Indenture. The Trustee
shall be entitled to receive, if requested, an indemnity reasonably satisfactory
to it and to receive, and shall be fully protected in relying upon, an Opinion
of Counsel and an Officers' Certificate each stating that the execution of any
amendment, supplement or waiver authorized pursuant to this Article Nine is
authorized or permitted by this Indenture. Such Opinion of Counsel shall not be
an expense of the Trustee.
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ARTICLE TEN
SUBORDINATION
SECTION 10.01. NOTES SUBORDINATED TO SENIOR
INDEBTEDNESS.
The Company covenants and agrees and the Trustee and each Holder of the
Notes, by its acceptance thereof, likewise covenants and agrees, that all Notes
shall be issued subject to the provisions of this Article Ten; and the Trustee
and each person holding any Note, whether upon original issue or upon transfer,
assignment or exchange thereof, accepts and agrees that the payment of all
Obligations on the Notes by the Company shall, to the extent and in the manner
herein set forth, be subordinated and junior in right of payment to the prior
payment in full in cash or Cash Equivalents of all Obligations on the Senior
Indebtedness; that the subordination is for the benefit of, and shall be
enforceable directly by, the holders of Senior Indebtedness, and that each
holder of Senior Indebtedness whether now outstanding or hereinafter created,
incurred, assumed or guaranteed shall be deemed to have acquired Senior
Indebtedness in reliance upon the covenants and provisions contained in this
Indenture and the Notes.
SECTION 10.02. NO PAYMENT ON NOTES IN CERTAIN
CIRCUMSTANCES.
(a) If (i) any default occurs and is continuing in the payment when due,
whether at maturity, upon any redemption, by declaration or otherwise, of any
principal of, interest on, or other amounts due and owing on, any Significant
Senior Indebtedness or (ii) any default occurs and is continuing with respect to
any Significant Senior Indebtedness resulting in the acceleration of the
maturity of all or any portion of any Significant Senior Indebtedness, no
payment shall be made by or on behalf of the Company or any of its Subsidiaries
or any other person on its or their behalf with respect to any Obligations on
the Notes or to acquire any of the Notes for cash or property or otherwise,
except out of a trust theretofore established pursuant to the provisions of
Article Eight (PROVIDED that payment into such trust was not made during any
period in which payment on the Notes is blocked pursuant to the subordination
provisions of this Indenture) and except by issuance of Junior Securities. In
addition, if any other event of default occurs and is continuing (or if such an
event of default would occur upon any payment with respect to the Notes) with
respect to the Designated Senior Indebtedness, as such event of default is
defined in the instrument creating or evidencing such Designated Senior
Indebtedness permitting the holders of such Designated Senior Indebtedness then
outstanding, or their Representative, to accelerate the maturity thereof and if
the Representative for the Designated Senior Indebtedness gives written notice
of the event of default to the Trustee (a "DEFAULT NOTICE"), then, unless and
until the date, if any, on which all Designated Senior Indebtedness to which
such event of default relates is
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discharged or the Representative for the Designated Senior Indebtedness gives
notice that all events of default have been cured or waived or have ceased to
exist or the Trustee receives written notice from the Representative for the
Designated Senior Indebtedness terminating the Blockage Period (as defined
below), during the 179 days after the delivery of such Default Notice (the
"BLOCKAGE PERIOD"), none of the Company or any of its Subsidiaries or any other
person on its or their behaf shall (x) make any payment with respect to any
Obligations on the Notes or (y) acquire any of the Notes for cash or property or
otherwise. Notwithstanding anything herein to the contrary, in no event will a
Blockage Period extend beyond 179 days from the date the payment on the Notes
was due. Only one such Blockage Period may be commenced within any 360
consecutive days. For all purposes of this Section 10.02(a), no event of default
which existed or was continuing (it being acknowledged that any action of the
Company or its Subsidiaries occurring subsequent to delivery of a Default Notice
that would give rise to any event of default pursuant to any provision under
which an event of default previously existed (or was continuing at the time of
delivery of such Default Notice) shall constitute a new event of default for
this purpose) on the date of the commencement of any Blockage Period with
respect to the Designated Senior Indebtedness shall be, or be made, the basis
for the commencement of a second Blockage Period by the Representative of the
Designated Senior Indebtedness whether or not within a period of 360 consecutive
days, unless such event of default shall have been cured or waived for a period
of not less than 90 consecutive days.
(b) In the event that, notwithstanding the foregoing, any payment shall be
received by the Trustee or any Holder when such payment is prohibited by Section
10.02(a), such payment shall be held in trust for the benefit of, and shall be
paid over or delivered to, the holders of Senior Indebtedness (PRO RATA to such
holders on the basis of the respective amount of Senior Indebtedness held by
such holders) or their respective Representatives, as their respective interests
may appear. The Trustee shall be entitled to rely on information regarding
amounts then due and owing on the Senior Indebtedness, if any, received from the
holders of Senior Indebtedness (or their Representatives) or, if such
information is not received from such holders or their Representatives, from the
Company and only amounts included in the information provided to the Trustee
shall be paid to the holders of Senior Indebtedness.
Nothing contained in this Article Ten shall limit the right of the Trustee
or the Holders of Notes to take any action to accelerate the maturity of the
Notes pursuant to Section 6.02 or to pursue any rights or remedies hereunder;
PROVIDED that all Senior Indebtedness thereafter due or declared to be due shall
first be paid in full in cash or Cash Equivalents before the Holders are
entitled to receive any payment of any kind or character with respect to the
Obligations on the Notes.
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SECTION 10.03. PAYMENT OVER OF PROCEEDS UPON
DISSOLUTION, ETC.
(a) Upon any payment or distribution of assets of the Company of any kind
or character, whether in cash, property or securities, to creditors upon any
liquidation, dissolution, winding-up, reorganization, assignment for the benefit
of creditors or marshalling of assets of the Company, or in a bankruptcy,
reorganization, insolvency, receivership or similar proceeding relating to the
Company or its property, whether voluntary or involuntary, all Obligations with
respect to all Senior Indebtedness shall first be paid in full, in cash or Cash
Equivalents, before any payment or distribution of any kind or character is made
on account of any Obligations on the Notes, or for the acquisition of any of the
Notes for cash or property or otherwise; and until all such Obligations with
respect to all Senior Indebtedness are paid in full in cash or Cash Equivalents,
any distribution to which the Holders of the Notes would be entitled but for the
subordination provisions will be made to the holders of Senior Indebtedness as
their interests may appear. Upon any such dissolution, winding-up, liquidation,
reorganization, bankruptcy, insolvency, receivership or similar proceeding or
assignment for the benefit of creditors or marshalling of assets, any payment or
distribution of assets of the Company of any kind or character, whether in cash,
property or securities, to which the Holders of the Notes or the Trustee under
this Indenture would be entitled, except for the provisions hereof, shall be
paid by the Company or by any receiver, trustee in bankruptcy, liquidating
trustee, agent or other person making such payment or distribution, or by the
Holders of the Notes or by the Trustee under this Indenture if received by them,
directly to the holders of Senior Indebtedness (PRO RATA to such holders on the
basis of the respective amounts of Senior Indebtedness held by such holders) or
their respective Representatives, or to the trustee or trustees under any
indenture pursuant to which any of such Senior Indebtedness may have been
issued, as their respective interests may appear, for application to the payment
of Senior Indebtedness remaining unpaid until all such Senior Indebtedness has
been paid in full in cash or Cash Equivalents after giving effect to any
concurrent payment, distribution or provision therefor to or for the holders of
Senior Indebtedness.
(b) To the extent any payment of Senior Indebtedness (whether by or on
behalf of the Company, as proceeds of security or enforcement of any right of
setoff or otherwise) is declared to be fraudulent or preferential, set aside or
required to be paid to any receiver, trustee in bankruptcy, liquidating trustee,
agent or other similar person under any bankruptcy, insolvency, receivership,
fraudulent conveyance or similar law, then, if such payment is recovered by, or
paid over to, such receiver, trustee in bankruptcy, liquidating trustee, agent
or other similar person, the Senior Indebtedness or part thereof originally
intended to be satisfied shall be deemed to be reinstated and outstanding as if
such payment had not occurred.
(c) In the event that, notwithstanding the foregoing, any payment or
distribution of assets of the Company of any kind or character, whether in cash,
property or securities, shall be received by any Holder when such payment or
distribution is prohibited by Section
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10.03(a), such payment or distribution shall be held in trust for the benefit
of, and shall be paid over or delivered to, the holders of Senior Indebtedness
(PRO RATA to such holders on the basis of the respective amount of Senior
Indebtedness held by such holders) or their respective Representatives, or to
the trustee or trustees under any indenture pursuant to which any of such Senior
Indebtedness may have been issued, as their respective interests may appear, for
application to the payment of Senior Indebtedness remaining unpaid until all
such Senior Indebtedness has been paid in full in cash or Cash Equivalents,
after giving effect to any concurrent payment, distribution or provision
therefor to or for the holders of such Senior Indebtedness.
SECTION 10.04. PAYMENTS MAY BE PAID PRIOR TO
DISSOLUTION.
Nothing contained in this Article Ten or elsewhere in this Indenture shall
prevent (i) the Company, except under the conditions described in Sections 10.02
and 10.03, from making payments at any time for the purpose of making payments
of principal of and interest on the Notes, or from depositing with the Trustee
any moneys for such payments, or (ii) in the absence of actual knowledge of the
Trustee that a given payment would be prohibited by Section 10.02 or 10.03, the
application by the Trustee of any moneys deposited with it for the purpose of
making such payments of principal of and interest on the Notes to the Holders
entitled thereto unless at least one Business Day prior to the date upon which
such payment would otherwise become due and payable, the Trustee shall have
received the written notice provided for in Section 10.02(a) or in Section 10.07
(PROVIDED that, notwithstanding the foregoing, such application shall otherwise
be subject to the provisions of the first sentence of Section 10.02(a) and
Section 10.03). The Company shall give prompt written notice to the Trustee of
any dissolution, winding-up, liquidation or reorganization of the Company.
SECTION 10.05. SUBROGATION.
Subject to the payment in full in cash or Cash Equivalents of all Senior
Indebtedness, the Holders of the Notes shall be subrogated to the rights of the
holders of Senior Indebtedness to receive payments or distributions of cash,
property or securities of the Company applicable to the Senior Indebtedness
until the Notes shall be paid in full; and, for the purposes of such
subrogation, no such payments or distributions to the holders of the Senior
Indebtedness by or on behalf of the Company or by or on behalf of the Holders by
virtue of this Article Ten which otherwise would have been made to the Holders
shall, as between the Company and the Holders of the Notes, be deemed to be a
payment by the Company to or on account of the Senior Indebtedness, it being
understood that the provisions of this Article Ten are and are intended solely
for the purpose of defining the relative rights of the Holders of the Notes, on
the one hand, and the holders of the Senior Indebtedness, on the other hand.
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If any payment or distribution to which the Holders would otherwise have
been entitled but for the provisions of this Article Ten shall have been
applied, pursuant to the provisions of this Article Ten, to the payment of
amounts payable under the Senior Indebtedness, then the Holders shall be
entitled to receive from the holders of such Senior Indebtedness any payments or
distributions received by such holders of Senior Indebtedness in excess of the
amount sufficient to pay all amounts payable under or in respect of the Senior
Indebtedness in full in cash or Cash Equivalents.
SECTION 10.06. OBLIGATIONS OF THE COMPANY
UNCONDITIONAL.
Nothing any contained in this Article Ten or elsewhere in this Indenture or
in the Notes is intended to or shall impair, as among the Company, its creditors
other than the holders of Senior Indebtedness, and the Holders of the Notes, the
obligation of the Company, which is absolute and unconditional, to pay to the
Holders of the Notes the principal of and any interest on the Notes as and when
the same shall become due and payable in accordance with their terms, or is
intended to or shall affect the relative rights of the Holders of the Notes and
creditors of the Company other than the holders of the Senior Indebtedness, nor
shall anything herein or therein prevent the Holder of any Note or the Trustee
on its behalf from exercising all remedies otherwise permitted by applicable law
upon default under this Indenture, subject to the rights, if any, in respect of
cash, property or securities of the Company received upon the exercise of any
such remedy.
SECTION 10.07. NOTICE TO TRUSTEE.
The Company shall give prompt written notice to the Trustee of any fact
known to the Company which would prohibit the making of any payment to or by the
Trustee in respect of the Notes pursuant to the provisions of this Article Ten.
Regardless of anything to the contrary contained in this Article Ten or
elsewhere in this Indenture, the Trustee shall not be charged with knowledge of
the existence of any default or event of default with respect to any Senior
Indebtedness or of any other facts which would prohibit the making of any
payment to or by the Trustee unless and until the Trustee shall have received
notice in writing from the Company, or from a holder of Senior Indebtedness or a
Representative therefor, and, prior to the receipt of any such written notice,
the Trustee shall be entitled to assume (in the absence of actual knowledge to
the contrary) that no such facts exist.
In the event that the Trustee determines in good faith that any evidence is
required with respect to the right of any person as a holder of Senior
Indebtedness to participate in any payment or distribution pursuant to this
Article Ten, the Trustee may request such person to furnish evidence to the
reasonable satisfaction of the Trustee as to the amounts of Senior Indebtedness
held by such person, the extent to which such person is entitled to participate
in such payment or distribution and any other facts pertinent to the rights of
such person under
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this Article Ten and, if such evidence is not furnished, the Trustee may defer
any payment to such person pending judicial determination as to the right of
such person to receive such payment.
SECTION 10.08. RELIANCE ON JUDICIAL ORDER OR
CERTIFICATE OF LIQUIDATING AGENT.
Upon any payment or distribution of assets of the Company referred to in
this Article Ten, the Trustee, subject to the provisions of Article Seven
hereof, and the Holders of the Notes shall be entitled to rely upon any order or
decree made by any court of competent jurisdiction in which bankruptcy,
dissolution, winding-up, liquidation or reorganization proceedings are pending,
or upon certificate of the receiver, trustee in bankruptcy, liquidating trustee,
agent or other person making such payment or distribution, delivered to the
Trustee or the holders of the Notes, for the purpose of ascertaining the Persons
entitled to participate in such distribution, the holders of the Senior
Indebtedness and other Indebtedness of the Company, the amount thereof or
payable thereon, the amount or amounts paid or distributed thereon and all other
facts pertinent thereto or to this Article Ten.
SECTION 10.09. TRUSTEE'S RELATION TO SENIOR
INDEBTEDNESS.
The Trustee and any agent of the Company or the Trustee shall be entitled
to all the rights set forth in this Article Ten with respect to any Senior
Indebtedness which may at any time be held by it in its individual or any other
capacity to the same extent as any other holder of Senior Indebtedness and
nothing in this Indenture shall deprive the Trustee or any such agent of any of
its rights as such holder.
With respect to the holders of Senior Indebtedness, the Trustee undertakes
to perform or to observe only such of its covenants and obligations as are
specifically set forth in this Article Ten, and no implied covenants or
obligations with respect to the holders of Senior Indebtedness shall be read
into this Indenture against the Trustee. The Trustee shall not be deemed to owe
any fiduciary duty to the holders of Senior Indebtedness and shall not be liable
to any such holders if the Trustee shall pay over or distribute to or on behalf
of Holders or the Company or any other person money or assets to which any
holders of Senior Indebtedness shall be entitled by virtue of this Article,
except if such payment is made as a result of willful misconduct or gross
negligence of the Trustee.
Whenever a distribution is to be made or a notice given to holders or
owners of Senior Indebtedness, the distribution may be made and the notice given
to their Representatives, if any.
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SECTION 10.10. SUBORDINATION RIGHTS NOT IMPAIRED BY
ACTS OR OMISSIONS OF THE COMPANY OR
HOLDERS OF SENIOR INDEBTEDNESS.
No right of any present or future holders of any Senior Indebtedness to
enforce subordination as provided herein shall at any time in any way be
prejudiced or impaired by any act or failure to act on the part of the Company
or by any act or failure to act, in good faith, by any such holder, or by any
noncompliance by the Company with the terms of this Indenture, regardless of any
knowledge thereof which any such holder may have or otherwise be charged with.
Without in any way limiting the generality of the foregoing paragraph, the
holders of Senior Indebtedness may, at any time and from time to time, without
the consent of or notice to the Trustee, without incurring responsibility to the
Trustee or the Holders of the Notes and without impairing or releasing the
subordination provided in this Article Ten or the obligations hereunder of the
Holders of the Notes to the holders of the Senior Indebtedness, do any one or
more of the following: (i) change the manner, place or terms of payment or
extend the time of payment of, or renew or alter, Senior Indebtedness, or
otherwise amend or supplement in any manner Senior Indebtedness, or any
instrument evidencing the same or any agreement under which Senior Indebtedness
is outstanding; (ii) sell, exchange, release or otherwise deal with any property
pledged, mortgaged or otherwise securing Senior Indebtedness; (iii) release any
Person liable in any manner for the payment or collection of Senior
Indebtedness; and (iv) exercise or refrain from exercising any rights against
the Company and any other Person.
SECTION 10.11. NOTEHOLDERS AUTHORIZE TRUSTEE TO
EFFECTUATE SUBORDINATION OF NOTES.
Each Holder of Notes by its acceptance of them authorizes and expressly
directs the Trustee on its behalf to take such action as may be necessary or
appropriate to effectuate, as between the holders of Senior Indebtedness and the
Holders of Notes, the subordination provided in this Article Ten, and appoints
the Trustee its attorney-in-fact for such purposes, including, in the event of
any dissolution, winding-up, liquidation or reorganization of the Company
(whether in bankruptcy, insolvency, receivership, reorganization or similar
proceedings or upon an assignment for the benefit of creditors or otherwise)
tending towards liquidation of the business as assets of the Company, the filing
of a claim for the unpaid balance of its or his Notes and accrued interest in
the form required in those proceedings.
If the Trustee does not file a proper claim or proof of debt in the form
required in such proceeding prior to 30 days before the expiration of the time
to file such claim or claims, then the holders of the Senior Indebtedness or
their Representative are or is hereby authorized to have the right to file and
are or is hereby authorized to file an appropriate claim for and on behalf of
the Holders of said Notes. Nothing herein contained shall be deemed to
authorize
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the Trustee or the holders of Senior Indebtedness or their Representative to
authorize or consent to or accept or adopt on behalf of any Holders any plan of
reorganization, arrangement, adjustment or composition affecting the Notes or
the rights of any Holder thereof, or to authorize the Trustee or the holders of
Senior Indebtedness or their Representative to vote in respect of the claim of
any Holder in any such proceeding.
SECTION 10.12. THIS ARTICLE TEN NOT TO PREVENT
EVENTS OF DEFAULT.
The failure to make a payment on account of principal of or interest on the
Notes by reason of any provision of this Article Ten will not be construed as
preventing the occurrence of an Event of Default.
SECTION 10.13. TRUSTEE'S COMPENSATION NOT PREJUDICED.
Nothing in this Article Ten will apply to amounts due to the Trustee
pursuant to other sections in this Indenture.
ARTICLE ELEVEN
GUARANTEES
SECTION 11.01. UNCONDITIONAL GUARANTEE.
Each Subsidiary Guarantor hereby unconditionally, jointly and severally,
guarantees (such guarantee to be referred to herein as the "GUARANTEE") to each
Holder of a Note authenticated and delivered by the Trustee and to the Trustee
and its successors and assigns, the Notes or the obligations of the Company
hereunder or thereunder, that: (i) the principal of and interest on the Notes
will be promptly paid in full when due, subject to any applicable grace period,
whether at maturity, by acceleration or otherwise and interest on the overdue
principal, if any, and interest on any interest, to the extent lawful, of the
Notes and all other obligations of the Company to the Holders or the Trustee
hereunder or thereunder will be promptly paid in full, all in accordance with
the terms hereof and thereof; and (ii) in case of any extension of time of
payment or renewal of any Notes or of any such other obligations, the same will
be promptly paid in full when due in accordance with the terms of the extension
or renewal, subject to any applicable grace period, whether at stated maturity,
by acceleration or otherwise, subject, however, in the case of clauses (i) and
(ii) above, to the limitations set forth in Section 11.05. Each Subsidiary
Guarantor hereby agrees that its Obligations hereunder shall be unconditional,
irrespective of the validity, regularity or enforceability of the Notes or this
Indenture, the absence of any action to enforce the same, any waiver or consent
by any Holder of the Notes with respect to any provisions hereof or thereof, the
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recovery of any judgment against the Company, any action to enforce the same or
any other circumstances which might otherwise constitute a legal or equitable
discharge or defense of a guarantor. Each Subsidiary Guarantor hereby waives
diligence, presentment, demand of payment, filing of claims with a court in the
event of insolvency or bankruptcy of the Company, any right to require a
proceeding first against the Company, protest, notice and all demands whatsoever
and covenants that this Guarantee will not be discharged except by complete
performance of the obligations contained in the Notes, this Indenture and in
this Guarantee. If any Noteholder or the Trustee is required by any court or
otherwise to return to the Company, any Subsidiary Guarantor, or any custodian,
trustee, liquidator or other similar official acting in relation to the Company
or any Subsidiary Guarantor, any amount paid by the Company or any Subsidiary
Guarantor to the Trustee or such Noteholder, this Guarantee, to the extent
theretofore discharged, shall be reinstated in full force and effect as to such
amount only. Each Subsidiary Guarantor further agrees that, as between each
Subsidiary Guarantor, on the one hand, and the Holders and the Trustee, on the
other hand, (x) the maturity of the Obligations guaranteed hereby may be
accelerated as provided in Article Six for the purposes of this Guarantee,
notwithstanding any stay, injunction or other prohibition preventing such
acceleration in respect of the Obligations guaranteed hereby, and (y) in the
event of any acceleration of such obligations as provided in Article Six, such
Obligations (whether or not due and payable) shall forthwith become due and
payable by each Subsidiary Guarantor for the purpose of this Guarantee.
SECTION 11.02. SUBORDINATION OF GUARANTEE.
Each Subsidiary Guarantor agrees, and each Holder by accepting a Guarantee
agrees, that all Obligations owed under and in respect of such Guarantees are
subordinated in right of payment, to the extent and in the manner provided in
this Article Eleven, to the prior indefeasible payment in full in cash or Cash
Equivalents, of all Guarantor Senior Indebtedness of such Subsidiary Guarantor,
and that the subordination of the Guarantees pursuant to this Article Eleven is
for the benefit of all holders of all Guarantor Senior Indebtedness of such
Subsidiary Guarantor, whether outstanding on the Issue Date or issued
thereafter.
SECTION 11.03. SEVERABILITY.
In case any provision of this Guarantee 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.
SECTION 11.04. RELEASE OF A SUBSIDIARY GUARANTOR.
Upon (i) the release by the lenders under the Senior Credit Facility,
related documents and future refinancings thereof of all guarantees of a
Subsidiary Guarantor and all Liens on the property and assets of such Subsidiary
Guarantor relating to such Indebtedness, or (ii) the
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sale or disposition of a Subsidiary Guarantor (or all or substantially all of
its assets) to an entity which is not a Subsidiary of the Company or (iii) the
designation of a Subsidiary Guarantor as an Unrestricted Subsidiary which, in
each case, is otherwise in compliance with this Indenture, such Subsidiary
Guarantor shall be deemed released from all its obligations under this Article
Eleven and its Guarantee; PROVIDED, HOWEVER, that any such termination shall
occur only to the extent that all Obligations of such Subsidiary Guarantor under
the Senior Credit Facility and all of its guarantees of, and under all of its
pledges of assets or other security interests which secure, Indebtedness of the
Company shall also terminate upon such release, sale or transfer. The Trustee
shall deliver an appropriate instrument evidencing such release upon receipt of
a written request by the Company accompanied by an Officers' Certificate
certifying as to the compliance with this Section 11.04 and the other provisions
of this Indenture. Any Subsidiary Guarantor not so released remains liable for
the full amount of principal of and interest on the Notes as provided in this
Article Eleven.
SECTION 11.05. LIMITATION OF SUBSIDIARY GUARANTOR'S
LIABILITY.
Each Subsidiary Guarantor and by its acceptance hereof each Holder hereby
confirms that it is the intention of all such parties that the guarantee by such
Subsidiary Guarantor pursuant to its Guarantee not constitute a fraudulent
transfer or conveyance for purposes of the Bankruptcy Law, the Uniform
Fraudulent Conveyance Act, the Uniform Fraudulent Transfer Act or any similar
Federal or state law. To effectuate the foregoing intention, the Holders and
such Subsidiary Guarantor hereby irrevocably agree that the Obligations of such
Subsidiary Guarantor under its Guarantee shall be limited to the maximum amount
as will, after giving effect to all other contingent and fixed liabilities of
such Subsidiary Guarantor and after giving effect to any collections from or
payments made by or on behalf of any other Subsidiary Guarantor in respect of
the obligations of such other Subsidiary Guarantor under its Guarantee or
pursuant to Section 11.07, result in the Obligations of such Subsidiary
Guarantor under its Guarantee not constituting such fraudulent transfer or
conveyance.
SECTION 11.06. SUBSIDIARY GUARANTORS MAY CONSOLIDATE,
ETC., ON CERTAIN TERMS.
(a) Nothing contained in this Indenture or in any of the Notes shall
prevent any consolidation or merger of a Subsidiary Guarantor with or into the
Company or another Subsidiary Guarantor or shall prevent any sale or conveyance
of the assets of a Subsidiary Guarantor to the Company or another Subsidiary
Guarantor. Upon any such consolidation, merger, sale or conveyance, the
Guarantee given by such Subsidiary Guarantor shall no longer have any force or
effect.
(b) Except as set forth in Article Four, nothing contained in this
Indenture or in any of the Notes shall prevent any consolidation or merger of a
Subsidiary Guarantor with or into
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a corporation or corporations other than the Company or another Subsidiary
Guarantor (whether or not affiliated with the Subsidiary Guarantor), or
successive consolidations or mergers in which a Subsidiary Guarantor or its
successor or successors shall be a party or parties, or shall prevent any sale
or conveyance of all or substantially all of the assets of a Subsidiary
Guarantor to a corporation other than the Company or another Subsidiary
Guarantor (whether or not affiliated with the Subsidiary Guarantor); PROVIDED,
HOWEVER, that, subject to Sections 11.04 and 11.06(a), either (x) the
transaction is an Asset Sale consummated in accordance with Section 4.16, or
(y) (i) immediately after such transaction, and giving effect thereto, no
Default or Event of Default shall have occurred as a result of such transaction
and be continuing, and (ii) each Subsidiary Guarantor hereby covenants and
agrees that, upon any such consolidation, merger, sale or conveyance, the
Guarantee of such Subsidiary Guarantor set forth in this Article Eleven, and the
due and punctual performance and observance of all of the covenants and
conditions of this Indenture to be performed by such Subsidiary Guarantor, shall
be expressly assumed (in the event that the Subsidiary Guarantor is not the
surviving corporation in such transaction), by supplemental indenture
satisfactory in form to the Trustee, executed and delivered to the Trustee,
together with an Officers' Certificate of the Company and an Opinion of Counsel
stating that the transaction and such supplemental indenture comply with this
Indenture, by the corporation formed by such consolidation, or into which the
Subsidiary Guarantor shall have merged, or by the corporation that shall have
acquired such property. In the case of any such consolidation, merger, sale or
conveyance that is not an Asset Sale consummated in accordance with Section
4.16, upon the assumption by the successor corporation, by supplemental
indenture executed and delivered to the Trustee and satisfactory in form to the
Trustee of the due and punctual performance of all of the covenants and
conditions of this Indenture to be performed by the Subsidiary Guarantor, such
successor corporation shall succeed to and be substituted for the Subsidiary
Guarantor with the same effect as if it had been named herein as a Subsidiary
Guarantor.
SECTION 11.07. CONTRIBUTION.
In order to provide for just and equitable contribution among the
Subsidiary Guarantors, the Subsidiary Guarantors agree, INTER SE, that in the
event any payment or distribution is made by any Subsidiary Guarantor (a
"FUNDING GUARANTOR") under this Guarantee, such Funding Guarantor shall be
entitled to a contribution from all other Subsidiary Guarantors in a PRO RATA
amount based on the Adjusted Net Assets of each Subsidiary Guarantor (including
the Funding Guarantor) for all payments, damages and expenses incurred by that
Funding Guarantor in discharging the Company's obligations with respect to the
Notes or any other Subsidiary Guarantor's Obligations with respect to this
Guarantee.
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SECTION 11.08. WAIVER OF SUBROGATION.
Each Subsidiary Guarantor hereby irrevocably waives any claim or other
rights which it may now or hereafter acquire against the Company that arise from
the existence, payment, performance or enforcement of such Subsidiary
Guarantor's Obligations under this Guarantee and this Indenture, including,
without limitation, any right of subrogation, reimbursement, exoneration,
indemnification, and any right to participate in any claim or remedy of any
Holder of Notes against the Company, whether or not such claim, remedy or right
arises in equity, or under contract, statute or common law, including, without
limitation, the right to take or receive from the Company, directly or
indirectly, in cash or other property or by set-off or in any other manner,
payment or security on account of such claim or other rights. If any amount
shall be paid to any Subsidiary Guarantor in violation of the preceding sentence
and the Notes shall not have been paid in full, such amount shall have been
deemed to have been paid to such Subsidiary Guarantor for the benefit of, and
held in trust for the benefit of, the Holders of the Notes, and shall forthwith
be paid to the Trustee for the benefit of such Holders to be credited and
applied upon the Notes, whether matured or unmatured, in accordance with the
terms of this Indenture. Each Subsidiary Guarantor acknowledges that it will
receive direct and indirect benefits from the financing arrangements
contemplated by this Indenture and that the waiver set forth in this Section
11.08 is knowingly made in contemplation of such benefits.
SECTION 11.09. EXECUTION OF GUARANTEE.
To evidence their guarantee to the Noteholders specified in Section 11.01,
the Subsidiary Guarantors hereby agree to execute the Guarantee in substantially
the form of Exhibit A recited to be endorsed on each Note ordered to be
authenticated and delivered by the Trustee. Each Subsidiary Guarantor hereby
agrees that its Guarantee set forth in Section 11.01 shall remain in full force
and effect notwithstanding any failure to endorse on each Note a notation of
such Guarantee. Each such Guarantee shall be signed on behalf of each
Subsidiary Guarantor by one Officer (each of whom shall, in each case, have been
duly authorized by all requisite corporate actions) prior to the authentication
of the Note on which it is endorsed, and the delivery of such Note by the
Trustee, after the authentication thereof hereunder, shall constitute due
delivery of such Guarantee on behalf of such Subsidiary Guarantor. Such
signatures upon the Guarantee may be by manual or facsimile signature of such
officers and may be imprinted or otherwise reproduced on the Guarantee, and in
case any such officer who shall have signed the Guarantee shall cease to be such
officer before the Note on which such Guarantee is endorsed shall have been
authenticated and delivered by the Trustee or disposed of by the Company, such
Note nevertheless may be authenticated and delivered or disposed of as though
the person who signed the Guarantee had not ceased to be such officer of the
Subsidiary Guarantor.
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SECTION 11.10. NO PAYMENT ON GUARANTEES IN CERTAIN CIRCUMSTANCES.
(a) If (i) any default occurs and is continuing in the payment when due,
whether at maturity, upon any redemption, by declaration or otherwise, of any
principal of, interest on, or other amounts due and owing on, any Significant
Guarantor Senior Indebtedness or any Significant Senior Indebtedness guaranteed
by a Subsidiary Guarantor (which Guarantee constitutes Guarantor Senior
Indebtedness of such Subsidiary Guarantor), or (ii) any default occurs and is
continuing with respect to any Significant Guarantor Senior Indebtedness or any
Significant Senior Indebtedness resulting in the acceleration of the maturity of
all or any portion of such Significant Guarantor Senior Indebtedness or any
Significant Senior Indebtedness, no payment shall be made by or on behalf of the
Subsidiary Guarantor or any other person on its behalf with respect to any
Obligations on the Notes or any of the Obligations of such Subsidiary Guarantor
on its Guarantee, or to acquire any of the Notes for cash or property or
otherwise, except out of a trust theretofore established pursuant to the
provisions of Article Eight (PROVIDED that payment into such trust was not made
during any period in which payment on the Notes is blocked pursuant to the
subordination provisions of this Indenture) and except by issuance of Junior
Securities. In addition, if any other event of default occurs and is continuing
(or if such an event of default would occur upon any payment with respect to the
Notes) with respect to the Designated Senior Indebtedness guaranteed by a
Subsidiary Guarantor (which guarantee constitutes Guarantor Senior Indebtedness
of such Subsidiary Guarantor), as such event of default is defined in the
instrument creating or evidencing such Designated Senior Indebtedness permitting
the holders of such Designated Senior Indebtedness then outstanding, or their
Representative, to accelerate the maturity thereof and if the Representative for
the Designated Senior Indebtedness gives written notice of the event of default
to the Trustee (a "GUARANTOR DEFAULT NOTICE"), then, unless and until the date,
if any, on which all Designated Senior Indebtedness to which such event of
default relates is discharged or the Representative for the Designated Senior
Indebtedness gives notice that all events of default have been cured or waived
or have ceased to exist or the Trustee receives written notice from the
Representative for the Designated Senior Indebtedness terminating the Guarantor
Blockage Period (as defined below), during the 179 days after the delivery of
such Guarantor Default Notice (the "GUARANTOR BLOCKAGE PERIOD"), no Subsidiary
Guarantor or any other Person on its behalf shall (x) make any payment with
respect to any Obligations on the Notes or under its Guarantee or (y) acquire
any of the Notes for cash or property or otherwise. Notwithstanding anything
herein to the contrary, in no event will a Guarantor Blockage Period extend
beyond 179 days from the date the payment on the Notes was due. Only one such
Guarantor Blockage Period may be commenced within any 360 consecutive days. For
all purposes of this Section 11.10(a), no event of default which existed or was
continuing (it being acknowledged that any action of the Company or its
Subsidiaries occurring subsequent to delivery of a Default Notice that would
give rise to any event of default pursuant to any provision under which an event
of default previously existed (or was continuing at the time of delivery of such
Default Notice) shall constitute a new event
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of default for this purpose) on the date of the commencement of any Guarantor
Blockage Period with respect to the Designated Senior Indebtedness shall be, or
be made, the basis for the commencement of a second Guarantor Blockage Period by
the Representative of the Designated Senior Indebtedness whether or not within a
period of 360 consecutive days, unless such event of default shall have been
cured or waived for a period of not less than 90 consecutive days.
(b) In the event that, notwithstanding the foregoing, any payment shall be
received by the Trustee or any Holder when such payment is prohibited by Section
11.10(a), such payment shall be held in trust for the benefit of, shall be paid
over or delivered to, the holders of Guarantor Senior Indebtedness (PRO RATA to
such holders on the basis of the respective amount of Guarantor Senior
Indebtedness held by such holders) or their respective Representatives, as their
respective interests may appear. The Trustee shall be entitled to rely on
information regarding amounts then due and owing on the Guarantor Senior
Indebtedness, if any, received from the holders of Guarantor Senior Indebtedness
(or their Representatives) or, if such information is not received from such
holders or their Representatives, from such Subsidiary Guarantor and only
amounts included in the information provided to the Trustee shall be paid to the
holders of Guarantor Senior Indebtedness.
Nothing contained in this Article Eleven shall limit the right of the
Trustee or the Holders of Notes to take any action to accelerate the maturity of
the Notes pursuant to Section 6.02 or to pursue any rights or remedies
hereunder; PROVIDED that all Guarantor Senior Indebtedness thereafter due or
declared to be due shall first be paid in full in cash or Cash Equivalents
before the Holders are entitled to receive any payment of any kind or character
with respect to the Obligations on the Notes or on account of any Subsidiary
Guarantor's Guarantee.
SECTION 11.11. PAYMENT OVER OF PROCEEDS UPON DISSOLUTION, ETC.
(a) Upon any payment or distribution of assets of any Subsidiary Guarantor
of any kind or character, whether in cash, property or securities, to creditors
upon any liquidation, dissolution, winding-up, reorganization, assignment for
the benefit of creditors or marshalling of assets of such Subsidiary Guarantor,
or in a bankruptcy, reorganization, insolvency, receivership or similar
proceeding relating to any Subsidiary Guarantor or its property, whether
voluntary or involuntary, all Obligations with respect to all Guarantor Senior
Indebtedness shall first be paid in full, in cash or Cash Equivalents, before
any payment or distribution of any kind or character is made on account of any
Obligations on the Notes or any of the Obligations of such Subsidiary Guarantor
on its Guarantee, or for the acquisition of any of the Notes for cash or
property or otherwise; and until all such Obligations with respect to all
Guarantor Senior Indebtedness are paid in full in cash or Cash Equivalents, any
distribution to which the Holders of the Notes would be entitled but for the
subordination
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provisions will be made to the holders of Guarantor Senior Indebtedness as their
interests may appear. Upon any such dissolution, winding-up, liquidation,
reorganization, bankruptcy, insolvency, receivership or similar proceeding or
assignment for the benefit of creditors or marshalling of assets, any payment or
distribution of assets of any Subsidiary Guarantor of any kind or character,
whether in cash, property or securities, to which the Holders of the Notes or
the Trustee under this Indenture would be entitled, except for the provisions
hereof, shall be paid by such Subsidiary Guarantor or by any receiver, trustee
in bankruptcy, liquidating trustee, agent or other person making such payment or
distribution, or by the Holders of the Notes or by the Trustee under this
Indenture if received by them, directly to the holders of Guarantor Senior
Indebtedness (PRO RATA to such holders on the basis of the respective amounts of
Guarantor Senior Indebtedness held by such holders) or their respective
Representatives, or to the trustee or trustees under any indenture pursuant to
which any of such Guarantor Senior Indebtedness may have been issued, as their
respective interests may appear, for application to the payment of Guarantor
Senior Indebtedness remaining unpaid until all such Guarantor Senior
Indebtedness has been paid in full in cash or Cash Equivalents after giving
effect to any concurrent payment, distribution or provision therefor to or for
the holders of Guarantor Senior Indebtedness.
(b) To the extent any payment of Guarantor Senior Indebtedness (whether by
or on behalf of such Subsidiary Guarantor, as proceeds of security or
enforcement of any right of setoff or otherwise) is declared to be fraudulent or
preferential, set aside or required to be paid to any receiver, trustee in
bankruptcy, liquidating trustee, agent or other similar person under any
bankruptcy, insolvency, receivership, fraudulent conveyance or similar law,
then, if such payment is recovered by, or paid over to, such receiver, trustee
in bankruptcy, liquidating trustee, agent or other similar person, the Guarantor
Senior Indebtedness or part thereof originally intended to be satisfied shall be
deemed to be reinstated and outstanding as if such payment had not occurred.
(c) In the event that, notwithstanding the foregoing, any payment or
distribution of assets of a Subsidiary Guarantor of any kind or character,
whether in cash, property or securities, shall be received by any Holder when
such payment or distribution is prohibited by Section 11.11(a), such payment or
distribution shall be held in trust for the benefit of, and shall be paid over
or delivered to, the holders of Guarantor Senior Indebtedness (PRO RATA to such
holders on the basis of the respective amount of Guarantor Senior Indebtedness
held by such holders) or their respective Representatives, or to the trustee or
trustees under any indenture pursuant to which any of such Guarantor Senior
Indebtedness may have been issued, as their respective interests may appear, for
application to the payment of Guarantor Senior Indebtedness remaining unpaid
until all such Guarantor Senior Indebtedness has been paid in full in cash or
Cash Equivalents, after giving effect to any concurrent payment, distribution or
provision therefor to or for the holders of such Guarantor Senior Indebtedness.
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SECTION 11.12. PAYMENTS MAY BE PAID PRIOR TO DISSOLUTION.
Nothing contained in this Article Eleven or elsewhere in this Indenture
shall prevent (i) any Subsidiary Guarantor, except under the conditions
described in Sections 11.10 and 11.11, from making payments at any time for the
purpose of making payments of principal of and interest on the Notes, or from
depositing with the Trustee any moneys for such payments, or (ii) in the absence
of actual knowledge by the Trustee that a given payment would be prohibited by
Section 11.10 or 11.11, the application by the Trustee of any moneys deposited
with it for the purpose of making such payments of principal of and interest on
the Notes to the Holders entitled thereto unless at least one Business Day prior
to the date upon which such payment would otherwise become due and payable, the
Trustee shall have received the written notice provided for in Section 11.10(a)
or in Section 11.15 (PROVIDED that, notwithstanding the foregoing, such
application shall otherwise be subject to the provisions of the first sentence
of Section 11.10(a) and Section 11.11). Each Subsidiary Guarantor shall give
prompt written notice to the Trustee of any dissolution, winding-up, liquidation
or reorganization of any Subsidiary Guarantor.
SECTION 11.13. SUBROGATION.
Subject to the payment in full in cash or Cash Equivalents of all Guarantor
Senior Indebtedness, the Holders of the Notes shall be subrogated to the rights
of the holders of Guarantor Senior Indebtedness to receive payments or
distributions of cash, property or securities of such Subsidiary Guarantor
applicable to the Guarantor Senior Indebtedness of such Subsidiary Guarantor
until the Notes shall be paid in full; and, for the purposes of such
subrogation, no such payments or distributions to the holders of the Guarantor
Senior Indebtedness by or on behalf of such Subsidiary Guarantor or by or on
behalf of the Holders by virtue of this Article Eleven which otherwise would
have been made to the Holders shall, as between the Subsidiary Guarantors and
the Holders of the Notes, be deemed to be a payment by such Subsidiary Guarantor
to or on account of the Guarantor Senior Indebtedness, it being understood that
the provisions of this Article Eleven are and are intended solely for the
purpose of defining the relative rights of the Holders of the Notes, on the one
hand, and the holders of the Guarantor Senior Indebtedness, on the other hand.
If any payment or distribution to which the Holders would otherwise have
been entitled but for the provisions of this Article Eleven shall have been
applied, pursuant to the provisions of this Article Eleven, to the payment of
amounts payable under the Guarantor Senior Indebtedness, then the Holders shall
be entitled to receive from the holders of such Guarantor Senior Indebtedness
any payments or distributions received by such holders of Guarantor Senior
Indebtedness in excess of the amount sufficient to pay all amounts payable under
or in respect of the Guarantor Senior Indebtedness in full in cash or Cash
Equivalents.
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SECTION 11.14. OBLIGATIONS OF EACH GUARANTOR UNCONDITIONAL.
Nothing contained in this Article Eleven or elsewhere in this Indenture or
in the Notes or the Guarantees is intended to or shall impair, as among any
Subsidiary Guarantor, its creditors other than the holders of Guarantor Senior
Indebtedness, and the Holders of the Notes, the obligation of such Subsidiary
Guarantor, which is absolute and unconditional, to pay to the Holders of the
Notes the principal of and any interest on the Notes as and when the same shall
become due and payable in accordance with the terms of the Guarantees, or is
intended to or shall affect the relative rights of the Holders of the Notes and
creditors of any Subsidiary Guarantor other than the holders of Guarantor Senior
Indebtedness, nor shall anything herein or therein prevent the Holder of any
Note or the Trustee on its behalf from exercising all remedies otherwise
permitted by applicable law upon default under this Indenture, subject to the
rights, if any, in respect of cash, property or securities of any Subsidiary
Guarantor received upon the exercise of any such remedy.
SECTION 11.15. NOTICE TO TRUSTEE.
The Company or any Subsidiary Guarantor shall give prompt written notice to
the Trustee of any fact known to the Company or any such Subsidiary Guarantor
which would prohibit the making of any payment to or by the Trustee in respect
of the Guarantees pursuant to the provisions of this Article Eleven. Regardless
of anything to the contrary contained in this Article Eleven or elsewhere in
this Indenture, the Trustee shall not be charged with knowledge of the
existence of any default or event of default with respect to any Guarantor
Senior Indebtedness or of any other facts which would prohibit the making of any
payment to or by the Trustee unless and until the Trustee shall have received
notice in writing from the Company or a Subsidiary Guarantor, or from a holder
of Guarantor Senior Indebtedness or a Representative therefor, and, prior to the
receipt of any such written notice, the Trustee shall be entitled to assume (in
the absence of actual knowledge to the contrary) that no such facts exist.
In the event that the Trustee determines in good faith that any evidence is
required with respect to the right of any person as a holder of Guarantor Senior
Indebtedness to participate in any payment or distribution pursuant to this
Article Eleven, the Trustee may request such person to furnish evidence to the
reasonable satisfaction of the Trustee as to the amounts of Guarantor Senior
Indebtedness held by such person, the extent to which such person is entitled to
participate in such payment or distribution and any other facts pertinent to the
rights of such person under this Article Eleven, and if such evidence is not
furnished the Trustee may defer any payment to such person pending judicial
determination as to the right of such person to receive such payment.
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SECTION 11.16. RELIANCE ON JUDICIAL ORDER OR CERTIFICATE OF LIQUIDATING
AGENT.
Upon any payment or distribution of assets of any Subsidiary Guarantor
referred to in this Article Eleven, the Trustee, subject to the provisions of
Article Seven hereof, and the Holders of the Notes shall be entitled to rely
upon any order or decree made by any court of competent jurisdiction in which
bankruptcy, dissolution, winding-up, liquidation or reorganization proceedings
are pending, or upon certificate of the receiver, trustee in bankruptcy,
liquidating trustee, agent or other person making such payment or distribution,
delivered to the Trustee or the holders of the Notes, for the purpose of
ascertaining the persons entitled to participate in such distribution, the
holders of the Guarantor Senior Indebtedness and other Indebtedness of such
Subsidiary Guarantor, the amount thereof or payable thereon, the amount or
amounts paid or distributed thereon and all other facts pertinent thereto or to
this Article Eleven.
SECTION 11.17. TRUSTEE'S RELATION TO GUARANTOR SENIOR INDEBTEDNESS.
The Trustee and any agent of any Subsidiary Guarantor or the Trustee shall
be entitled to all the rights set forth in this Article Eleven with respect to
any Guarantor Senior Indebtedness which may at any time be held by it in its
individual or any other capacity to the same extent as any other holder of
Guarantor Senior Indebtedness and nothing in this Indenture shall deprive the
Trustee or any such agent of any of its rights as such holder.
With respect to the holders of Guarantor Senior Indebtedness, the Trustee
undertakes to perform or to observe only such of its covenants and obligations
as are specifically set forth in this Article Eleven, and no implied covenants
or obligations with respect to the holders of Guarantor Senior Indebtedness
shall be read into this Indenture against the Trustee. The Trustee shall not be
deemed to owe any fiduciary duty to the holders of Guarantor Senior Indebtedness
and shall not be liable to any such holders if the Trustee shall pay over or
distribute to or on behalf of Holders or any such Subsidiary Guarantor or any
other person money or assets to which any holders of Guarantor Senior
Indebtedness shall be entitled by virtue of this Article, except if such payment
is made as a result of willful misconduct or gross negligence of the Trustee.
Whenever a distribution is to be made or a notice given to holders or
owners of Guarantor Senior Indebtedness, the distribution may be made and the
notice given to their Representatives, if any.
<PAGE>
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SECTION 11.18. SUBORDINATION RIGHTS NOT IMPAIRED BY ACTS OR OMISSIONS OF A
SUBSIDIARY GUARANTOR OR HOLDERS OF GUARANTOR SENIOR
INDEBTEDNESS.
No right of any present or future holders of any Guarantor Senior
Indebtedness to enforce subordination as provided herein shall at any time in
any way be prejudiced or impaired by any act or failure to act on the part of
any Subsidiary Guarantor or by any act or failure to act, in good faith, by any
such holder, or by any noncompliance by such Subsidiary Guarantor with the terms
of this Indenture, regardless of any knowledge thereof which any such holder may
have or otherwise be charged with.
Without in any way limiting the generality of the foregoing paragraph, the
holders of Guarantor Senior Indebtedness may, at any time and from time to time,
without the consent of or notice to the Trustee, without incurring
responsibility to the Trustee or the Holders of the Notes and without impairing
or releasing the subordination provided in this Article Eleven or the
obligations hereunder of the Holders of the Notes to the holders of the
Guarantor Senior Indebtedness, do any one or more of the following: (i) change
the manner, place or terms of payment or extend the time of payment of, or renew
or alter, Guarantor Senior Indebtedness, or otherwise amend or supplement in any
manner Guarantor Senior Indebtedness, or any instrument evidencing the same or
any agreement under which Guarantor Senior Indebtedness is outstanding;
(ii) sell, exchange, release or otherwise deal with any property pledged,
mortgaged or otherwise securing Guarantor Senior Indebtedness; (iii) release any
person liable in any manner for the payment or collection of Guarantor Senior
Indebtedness; and (iv) exercise or refrain from exercising any rights against
such Subsidiary Guarantor and any other person.
SECTION 11.19. NOTEHOLDERS AUTHORIZE TRUSTEE TO EFFECTUATE SUBORDINATION OF
GUARANTEES.
Each Holder of Notes by its acceptance of them authorizes and expressly
directs the Trustee on its behalf to take such action as may be necessary or
appropriate to effectuate, as between the holders of Guarantor Senior
Indebtedness and the Holders of Notes, the subordination provided in this
Article Eleven, and appoints the Trustee its attorney-in-fact for such purposes,
including, in the event of any dissolution, winding-up, liquidation or
reorganization of any Subsidiary Guarantor (whether in bankruptcy, insolvency,
receivership, reorganization or similar proceedings or upon an assignment for
the benefit of creditors or otherwise) tending towards liquidation of the
business as assets of such Subsidiary Guarantor, the filing of a claim for the
unpaid balance of its or his Notes and accrued interest in the form required in
those proceedings.
If the Trustee does not file a proper claim or proof of debt in the form
required in such proceeding prior to 30 days before the expiration of the time
to file such claim or claims, then the holders of the Guarantor Senior
Indebtedness or their Representative are or is hereby
<PAGE>
-97-
authorized to have the right to file and are or is hereby authorized to file an
appropriate claim for and on behalf of the Holders of said Notes. Nothing
herein contained shall be deemed to authorize the Trustee or the holders of
Guarantor Senior Indebtedness or their Representative to authorize or consent to
or accept or adopt on behalf of any Holders any plan of reorganization,
arrangement, adjustment or composition affecting the Notes or the rights of any
Holder thereof, or to authorize the Trustee or the holders of Guarantor Senior
Indebtedness or their Representative to vote in respect of the claim of any
Holder in any such proceeding.
SECTION 11.20. THIS ARTICLE ELEVEN NOT TO PREVENT EVENTS OF DEFAULT.
The failure to make a payment on account of principal of or interest on the
Notes by reason of any provision of this Article Eleven will not be construed as
preventing the occurrence of an Event of Default.
SECTION 11.21. TRUSTEE'S COMPENSATION NOT PREJUDICED.
Nothing in this Article Eleven will apply to amounts due to the Trustee
pursuant to other sections in this Indenture.
ARTICLE TWELVE
MISCELLANEOUS
SECTION 12.01. TIA CONTROLS.
If any provision of this Indenture limits, qualifies, or conflicts with
another provision which is required to be included in this Indenture by the TIA,
the required provision shall control.
SECTION 12.02. NOTICES.
Any notices or other communications required or permitted hereunder shall
be in writing, and shall be sufficiently given if made by hand delivery, by
private courier service guaranteeing next day delivery, by telex, by telecopier
or registered or certified mail, postage prepaid, return receipt requested,
addressed as follows:
<PAGE>
-98-
if to the Company or the Subsidiary Guarantors, if any:
Federal Data Corporation
4800 Hampden Lane
Bethesda, Maryland 20814
Attention: Chief Financial Officer
Telecopy: (301) 961-3892
if to the Trustee:
Norwest Bank, Minnesota, N.A.
Corporate Trust Services
6th and Marquette
Minneapolis, MN 55479-0069
Attention: Corporate Trust
Telecopy: (612) 667-9825
with a copy to:
Norwest Bank, Minnesota, N.A.
c/o The Depository Trust Company
55 Water Street
New York, NY 10041
Attention: Norwest Window
Telecopy: (212) 558-2619
Each of the Company, the Subsidiary Guarantors, if any, and the Trustee by
written notice to each other such Person may designate additional or different
addresses for notices to such Person. Any notice or communication to the
Company, the Guarantors, if any, or the Trustee shall be deemed to have been
given or made as of the date so delivered if personally delivered or delivered
by private courier service guaranteeing next day delivery; when answered back,
if telexed; when receipt is acknowledged, if faxed; and five (5) calendar days
after mailing if sent by registered or certified mail, postage prepaid (except
that a notice of change of address shall not be deemed to have been given until
actually received by the addressee).
Any notice or communication mailed to a Holder shall be mailed to such
Holder by first class mail or other equivalent means at such Holder's address as
it appears on the registration books of the Registrar and shall be sufficiently
given to such Holder if so mailed within the time prescribed.
Failure to mail a notice or communication to a Holder or any defect in it
shall not affect its sufficiency with respect to other Holders. If a notice or
communication is mailed in the manner provided above, it is duly given, whether
or not the addressee receives it.
<PAGE>
-99-
SECTION 12.03. COMMUNICATIONS BY HOLDERS WITH OTHER HOLDERS.
Holders may communicate pursuant to TIA Section 312(b) with other Holders
with respect to their rights under this Indenture or the Notes. The Company,
the Guarantors, if any, the Trustee, the Registrar and any other Person shall
have the protection of TIA Section 312(c).
SECTION 12.04. CERTIFICATE AND OPINION AS TO CONDITIONS PRECEDENT.
Upon any request or application by the Company to the Trustee to take any
action under this Indenture, the Company shall furnish to the Trustee upon
request:
(1) an Officers' Certificate, in form and substance reasonably
satisfactory to the Trustee, stating that, in the opinion of the signers,
all conditions precedent, if any, provided for in this Indenture relating
to the proposed action have been complied with;
(2) an Opinion of Counsel in form and substance reasonably
satisfactory to the Trustee stating that, in the opinion of such counsel,
all such conditions precedent, if any, provided for in this Indenture
relating to the proposed action have been complied with; and
(3) where applicable, a certificate or opinion by an independent
certified public accountant reasonably satisfactory to the Trustee that
complies with TIA Section 314(c).
SECTION 12.05. STATEMENTS REQUIRED IN CERTIFICATE OR OPINION.
Each certificate or opinion with respect to compliance with a condition or
covenant provided for in this Indenture, other than the Officers' Certificate
required by Section 4.06, shall include:
(1) a statement that the Person making such certificate or opinion
has read such covenant or condition;
(2) a brief statement as to the nature and scope of the examination
or investigation upon which the statements or opinions contained in such
certificate or opinion are based;
(3) a statement that, in the opinion of such Person, he has made such
examination or investigation as is reasonably necessary to enable him to
express an
<PAGE>
-100-
informed opinion as to whether or not such covenant or condition has been
complied with; and
(4) a statement as to whether or not, in the opinion of each such
Person, such condition or covenant has been complied with.
SECTION 12.06. RULES BY TRUSTEE, PAYING AGENT, REGISTRAR.
The Trustee may make reasonable rules in accordance with the Trustee's
customary practices for action by or at a meeting of Holders. The Paying Agent
or Registrar may make reasonable rules for its functions.
SECTION 12.07. LEGAL HOLIDAYS.
A "Legal Holiday" used with respect to a particular place of payment is a
Saturday, a Sunday or a day on which banking institutions in New York, New York
or at such place of payment are not required to be open. If a payment date is a
Legal Holiday at such place, payment may be made at such place on the next
succeeding day that is not a Legal Holiday, and no interest shall accrue for the
intervening period.
SECTION 12.08. GOVERNING LAW.
THIS INDENTURE, THE NOTES AND THE GUARANTEES SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, AS APPLIED TO
CONTRACTS MADE AND PERFORMED WITHIN THE STATE OF NEW YORK, WITHOUT REGARD TO
PRINCIPLES OF CONFLICT OF LAWS. EACH OF THE PARTIES HERETO AGREES TO SUBMIT TO
THE JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK IN ANY ACTION OR
PROCEEDING ARISING OUT OF OR RELATING TO THIS INDENTURE.
SECTION 12.09. NO AdVERSE INTERPRETATION OF OTHER AGREEMENTS.
This Indenture may not be used to interpret another indenture, loan or debt
agreement of the Company or any of its Subsidiaries. Any such indenture, loan
or debt agreement may not be used to interpret this Indenture.
<PAGE>
-101-
SECTION 12.10. NO RECOURSE AGAINST OTHERS.
A director, officer, employee, stockholder or incorporator, as such, of the
Company, the Subsidiary Guarantors, if any, or of the Trustee shall not have any
liability for any obligations of the Company under the Notes or this Indenture.
Each Holder by accepting a Note waives and releases all such liability. Such
waiver and release are part of the consideration for the issuance of the Notes.
This provision does not affect any possible claims under federal securities
laws.
SECTION 12.11. SUCCESSORS.
All agreements of the Company and the Subsidiary Guarantors, if any, in
this Indenture, the Notes and the Guarantees, if any, shall bind their
successors. All agreements of the Trustee in this Indenture shall bind its
successors.
SECTION 12.12. DUPLICATE ORIGINALS.
All parties may sign any number of copies of this Indenture. Each signed
copy shall be an original, but all of them together shall represent the same
agreement.
SECTION 12.13. SEVERABILITY.
In case any one or more of the provisions in this Indenture or in the Notes
or in the Guarantees, if any, shall be held invalid, illegal or unenforceable,
in any respect for any reason, the validity, legality and enforceability of any
such provision in every other respect and of the remaining provisions shall not
in any way be affected or impaired thereby, it being intended that all of the
provisions hereof shall be enforceable to the full extent permitted by law.
<PAGE>
-102-
SIGNATURES
IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be
duly executed, all as of the date first written above.
FEDERAL DATA CORPORATION
By: /s/ James M. Dean
-------------------------------------
Name: James M. Dean
Title: Vice President
FDCT CORP.
By: /s/ James M. Dean
-------------------------------------
Name: James M. Dean
Title: Vice President
NYMA, INC.
By: /s/ James M. Dean
-------------------------------------
Name: James M. Dean
Title: Vice President
SYLVEST MANAGEMENT SYSTEMS CORPORATION
By: /s/ James M. Dean
-------------------------------------
Name: James M. Dean
Title: Vice President
FDC TECHNOLOGIES INC.
By: /s/ James M. Dean
-------------------------------------
Name: James M. Dean
Title: Vice President
<PAGE>
-103-
DOXSYS, INC.
By: /s/ James M. Dean
-------------------------------------
Name: James M. Dean
Title: Vice President
VAD INTERNATIONAL, INC.
By: /s/ James M. Dean
-------------------------------------
Name: James M. Dean
Title: Vice President
NORWEST BANK, MINNESOTA, N.A.,
as Trustee
By: /s/ Curtis D. Schwegman
-------------------------------------
Name: Curtis D. Schwegman
Title: Assistant Vice President
<PAGE>
EXHIBIT A(1)
[FORM OF INITIAL NOTE]
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF
1933, AS AMENDED (THE "ACT"), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD
WITHIN THE UNITED STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, U.S.
PERSONS EXCEPT AS SET FORTH BELOW. BY ITS ACQUISITION HEREOF, THE HOLDER (1)
REPRESENTS THAT (A) IT IS A "QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN
RULE 144A UNDER THE ACT) OR (B) IT IS AN "ACCREDITED INVESTOR" (AS DEFINED IN
RULE 501 (A)(1), (2), (3) OR (7) UNDER THE ACT) (AN "ACCREDITED INVESTOR") OR
(C) IT IS NOT A U.S. PERSON AND IS ACQUIRING THIS SECURITY IN AN OFFSHORE
TRANSACTION, (2) AGREES THAT IT WILL NOT WITHIN TWO YEARS AFTER THE ORIGINAL
ISSUANCE OF THE SECURITY RESELL OR OTHERWISE TRANSFER THIS SECURITY EXCEPT
(A) TO THE ISSUER OR ANY SUBSIDIARY THEREOF, (B) INSIDE THE UNITED STATES TO
A QUALIFIED INSTITUTIONAL BUYER IN COMPLIANCE WITH RULE 144A UNDER THE ACT,
(C) INSIDE THE UNITED STATES TO AN ACCREDITED INVESTOR THAT, PRIOR TO SUCH
TRANSFER, FURNISHES (OR HAS FURNISHED ON ITS BEHALF BY A U.S. BROKER-DEALER)
TO THE TRUSTEE A SIGNED LETTER CONTAINING CERTAIN REPRESENTATIONS AND
AGREEMENTS RELATING TO THE RESTRICTIONS ON TRANSFER OF THIS SECURITY (THE
FORM OF WHICH LETTER CAN BE OBTAINED FROM THE TRUSTEE FOR THIS SECURITY), (D)
OUTSIDE THE UNITED STATES IN AN OFFSHORE TRANSACTION IN COMPLIANCE WITH RULE
904 UNDER THE ACT, (E) PURSUANT TO THE EXEMPTION FROM REGISTRATION PROVIDED
BY RULE 144 UNDER THE ACT (IF AVAILABLE), OR (F) PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE ACT AND (3) AGREES THAT IT WILL GIVE TO EACH
PERSON TO WHOM THIS SECURITY IS TRANSFERRED A NOTICE SUBSTANTIALLY TO THE
EFFECT OF THIS LEGEND. IN CONNECTION WITH ANY TRANSFER OF THIS SECURITY
WITHIN TWO YEARS AFTER THE ORIGINAL ISSUANCE OF THIS SECURITY, IF THE
PROPOSED TRANSFEREE IS AN ACCREDITED INVESTOR, THE HOLDER MUST, PRIOR TO SUCH
TRANSFER, FURNISH TO THE TRUSTEE AND THE ISSUER SUCH CERTIFICATIONS, LEGAL
OPINIONS OR OTHER INFORMATION AS EITHER OF THEM MAY REASONABLY REQUIRE TO
CONFIRM THAT SUCH TRANSFER IS BEING MADE PURSUANT TO AN EXEMPTION FROM, OR IN
A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE ACT. AS
USED HEREIN, THE TERMS "OFFSHORE TRANSACTION," "UNITED STATES" AND "U.S.
PERSON" HAVE THE MEANING GIVEN TO THEM BY REGULATION S UNDER THE ACT.
<PAGE>
CUSIP No.: [ ]
FEDERAL DATA CORPORATION
10 1/8% SENIOR SUBORDINATED NOTE DUE 2005
No. [ ] $[ ]
FEDERAL DATA CORPORATION, a Delaware corporation (the "Company," which term
includes any successor entity), for value received promises to pay to [ ]
or registered assigns, the principal sum of [ ] Dollars, on August 1, 2005.
Interest Payment Dates: February 1 and August 1
Record Dates: January 15 and July 15
Reference is made to the further provisions of this Note contained herein,
which will for all purposes have the same effect as if set forth at this place.
IN WITNESS WHEREOF, the Company has caused this Note to be signed manually
or by facsimile by its duly authorized officers.
FEDERAL DATA CORPORATION
By:
-------------------------------------
Name:
Title:
By:
-------------------------------------
Name:
Dated: [ ], 1997 Title:
Certificate of Authentication
This is one of the 10 1/8% Senior Subordinated Notes due 2005 referred to
in the within-mentioned Indenture.
NORWEST BANK, MINNESOTA, N.A.,
as Trustee
By:
---------------------------------------
Authorized Signatory
A.1-2
<PAGE>
(REVERSE OF SECURITY)
10 1/8% SENIOR SUBORDINATED NOTE DUE 2005
1. INTEREST. FEDERAL DATA CORPORATION, a Delaware corporation (the
"Company"), promises to pay interest on the principal amount of this Note at the
rate per annum shown above. Interest on the Notes will accrue from the most
recent date on which interest has been paid or, if no interest has been paid,
from July 25, 1997. The Company will pay interest semi-annually in arrears on
each Interest Payment Date, commencing February 1, 1998. Interest will be
computed on the basis of a 360-day year of twelve 30-day months.
The Company shall pay interest on overdue principal and on overdue
installments of interest from time to time on demand at the rate borne by the
Notes and on overdue installments of interest (without regard to any applicable
grace periods) to the extent lawful.
2. METHOD OF PAYMENT. The Company shall pay interest on the Notes (except
defaulted interest) to the Persons who are the registered Holders at the close
of business on the Record Date immediately preceding the Interest Payment Date
even if the Notes are canceled on registration of transfer or registration of
exchange after such Record Date. Holders must surrender Notes to a Paying Agent
to collect principal payments. The Company shall pay principal and interest in
money of the United States that at the time of payment is legal tender for
payment of public and private debts ("U.S. Legal Tender"). However, the Company
may pay principal and interest by its check payable in such U.S. Legal Tender.
The Company may deliver any such interest payment to the Paying Agent or to a
Holder at the Holder's registered address.
3. PAYING AGENT AND REGISTRAR. Initially, Norwest Bank, Minnesota, N.A.
(the "Trustee") will act as Paying Agent and Registrar. The Company may change
any Paying Agent, Registrar or co-Registrar without notice to the Holders.
4. INDENTURE. The Company issued the Notes under an Indenture, dated as
of July 15, 1997 (the "Indenture"), between the Company and the Trustee.
Capitalized terms herein are used as defined in the Indenture unless otherwise
defined herein. This Note is one of a duly authorized issue of Initial Notes of
the Company designated as its 10 1/8% Senior Subordinated Notes due 2005 (the
"Initial Notes"). The Notes include the Initial Notes, the Private Exchange
Notes and the Unrestricted Notes issued in exchange for the Initial Notes
pursuant to the Registration Rights Agreement or, with respect to Initial Notes
issued under the Indenture subsequent to the Issue Date, a registration rights
agreement substantially identical to the Registration Rights Agreement. The
Initial Notes and the Unrestricted Notes are treated as a single class of
securities under the Indenture. The terms of the Notes include those stated in
this Indenture and those made part of the Indenture by reference to the Trust
Indenture Act of 1939 (15 U.S. Code Sections 77aaa-77bbbb) (the "TIA"), as in
effect on the date of the Indenture. Notwithstanding anything to the contrary
herein, the Notes are subject to all such terms, and Holders of Notes are
referred to the Indenture and said Act for a statement of
A.1-3
<PAGE>
them. The Notes are general unsecured obligations of the Company limited in
aggregate principal amount to $175,000,000. Under certain circumstances as
provided for in Article Eleven of the Indenture, the payment on each Note may be
guaranteed on a senior subordinated basis by the Subsidiary Guarantors. Each
Holder, by accepting a Note, agrees to be bound by all of the terms and
provisions of the Indenture, as the same may be amended from time to time.
5. SUBORDINATION. The Notes are subordinated in right of payment, in the
manner and to the extent set forth in the Indenture, to the prior payment in
full in cash or Cash Equivalents of all Senior Indebtedness of the Company,
whether outstanding on the date of the Indenture or thereafter created,
incurred, assumed or guaranteed. The Guarantees in respect of the Notes will be
subordinated in right of payment, in the manner and to the extent set forth in
the Indenture, to the prior payment in full in cash or Cash Equivalents of all
Guarantor Senior Indebtedness of each Subsidiary Guarantor, whether outstanding
on the date of the Indenture or thereafter created, incurred, assumed or
guaranteed. Each Holder by its acceptance hereof agrees to be bound by such
provisions and authorizes and expressly directs the Trustee, on its behalf, to
take such action as may be necessary or appropriate to effectuate the
subordination provided for in the Indenture and appoints the Trustee its
attorney-in-fact for such purposes.
6. REDEMPTION PROVISIONS. Except as provided below, the Notes may not be
redeemed prior to August 1, 2001.
(a) OPTIONAL REDEMPTION. On or after such date, the Notes may be redeemed
at the option of the Company, at any time as a whole, or from time to time in
part, on not less than 30 nor more than 60 days' notice, at the following
redemption prices (expressed as percentages of principal amount), plus accrued
and unpaid interest (if any) to the date of redemption (subject to the rights of
holders of record on the relevant record date to receive interest due on the
relevant interest payment date), if redeemed during the 12-month period
commencing August 1:
REDEMPTION
PRICE
-----
2001 . . . . . . . . . . . . . . . . . . . . 105.063%
2002 . . . . . . . . . . . . . . . . . . . . 103.375%
2003 . . . . . . . . . . . . . . . . . . . . 101.688%
2004 and thereafter. . . . . . . . . . . . . 100.000%
A.1-4
<PAGE>
(b) Notwithstanding the foregoing, at any time prior to August 1, 2000,
the Company may redeem, in part and from time to time, with the net proceeds of
one or more Public Equity Offerings, up to 35% aggregate principal amount of the
Notes originally issued in the Offering at a redemption price equal to 110.125%
of the aggregate principal amount thereof plus accrued and unpaid interest
thereon, if any, to the redemption date; PROVIDED that at least 65% of the
aggregate principal amount of the Notes originally issued in the Offering remain
outstanding immediately after the occurrence of any such redemption and that any
such redemption occurs within 90 days following the closing of any such Public
Equity Offering.
(c) At any time on or prior to August 1, 2001, the Notes may also be
redeemed as a whole at the option of the Company upon the occurrence of a Change
of Control, upon not less than 30 nor more than 60 days prior notice (but in no
event more than 90 days after the occurrence of such Change of Control), at a
redemption price equal to 100% of the principal amount thereof plus the
Applicable Premium as of, and accrued and unpaid interest, if any, to, the date
of redemption (the "REDEMPTION DATE") (subject to the right of holders of record
on the relevant record date to receive interest due on the relevant interest
payment date). The Company may not redeem Notes pursuant to this paragraph if it
has made a Change of Control Offer (as defined) pursuant to Section 4.15 of the
Indenture with respect to such Change of Control.
7. NOTICE OF REDEMPTION. Notice of redemption will be mailed at least 30
days but not more than 60 days before the Redemption Date. Notes in
denominations larger than $1,000 may be redeemed in part.
Except as set forth in the Indenture, if monies for the redemption of the
Notes called for redemption shall have been deposited with the Paying Agent for
redemption on such Redemption Date, then, unless the Company defaults in the
payment of such Redemption Price plus accrued interest, if any, the Notes called
for redemption will cease to bear interest from and after such Redemption Date
and the only right of the Holders of such Notes will be to receive payment of
the Redemption Price plus accrued interest, if any.
8. OFFERS TO PURCHASE. Section 4.15 of the Indenture provides that, upon
a Change of Control if the Company does not redeem the Notes, each holder will
have the right, subject to certain conditions set forth in the Indenture, to
require the Company to repurchase such holder's Notes at a price equal to 101%
of the principal amount thereof plus accrued interest to the date of repurchase.
Section 4.16 of the Indenture provides that, after certain Asset Sales, and
subject to further limitations contained therein, the Company will make an offer
to purchase certain amounts of the Notes in accordance with the procedures set
forth in the Indenture.
9. DENOMINATIONS; TRANSFER; EXCHANGE. The Notes are in registered form,
without coupons, in denominations of $1,000 and integral multiples of $1,000. A
Holder shall register the transfer of or exchange Notes in accordance with the
Indenture. The Registrar may require a Holder, among other things, to furnish
appropriate endorsements and transfer
A.1-5
<PAGE>
documents and to pay certain transfer taxes or similar governmental charges
payable in connection therewith as permitted by the Indenture. The Registrar
need not register the transfer of or exchange of any Notes or portions thereof
selected for redemption.
10. PERSONS DEEMED OWNERS. The registered Holder of a Note shall be
treated as the owner of it for all purposes.
11. UNCLAIMED MONEY. If money for the payment of principal or interest
remains unclaimed for two years, the Trustee and the Paying Agent will pay the
money back to the Company. After that, all liability of the Trustee and such
Paying Agent with respect to such money shall cease.
12. DISCHARGE PRIOR TO REDEMPTION OR MATURITY. If the Company at any time
deposits with the Trustee U.S. Legal Tender or U.S. Government Obligations
sufficient to pay the principal of and interest on the Notes to redemption or
maturity and complies with the other provisions of the Indenture relating
thereto, the Company will be discharged from certain provisions of the Indenture
and the Notes (including certain covenants, but excluding its obligation to pay
the principal of and interest on the Notes).
13. AMENDMENT; SUPPLEMENT; WAIVER. Subject to certain exceptions, the
Indenture, the Notes or the Guarantee, if any, may be amended or supplemented
with the written consent of the Holders of at least a majority in aggregate
principal amount of the Notes then outstanding, and any existing Default or
Event of Default or noncompliance with any provision may be waived with the
written consent of the Holders of a majority in aggregate principal amount of
the Notes then outstanding. Without notice to or consent of any Holder, the
parties thereto may amend or supplement the Indenture or the Notes to, among
other things, cure any ambiguity, defect or inconsistency, provide for
uncertificated Notes in addition to or in place of certificated Notes, or comply
with Article Five of the Indenture or make any other change that does not
adversely affect in any material respect the rights of any Holder of a Note.
14. RESTRICTIVE COVENANTS. The Indenture imposes certain limitations on
the ability of the Company and its Restricted Subsidiaries to, among other
things, incur additional Indebtedness or Liens, make payments in respect of its
Capital Stock or Subordinated Obligations, enter into transactions with
Affiliates, create dividend or other payment restrictions affecting
Subsidiaries, incur Indebtedness that is, by its terms, subordinated or junior
to any other Indebtedness and senior to the Notes, merge or consolidate with any
other Person, sell, assign, transfer, lease, convey or otherwise dispose of all
or substantially all of its assets or adopt a plan of liquidation and sell
Capital Stock of a Restricted Subsidiary. Such limitations are subject to a
number of important qualifications and exceptions. The Company must annually
report to the Trustee on compliance with such limitations.
15. SUCCESSORS. When a successor assumes, in accordance with the
Indenture, all the obligations of its predecessor under the Notes and the
Indenture, the predecessor will be released from those obligations.
A.1-6
<PAGE>
16. DEFAULTS AND REMEDIES. If an Event of Default occurs and is
continuing, the Trustee or the Holders of at least 25% in aggregate principal
amount of Notes then outstanding may declare all the Notes to be due and payable
in the manner, at the time and with the effect provided in the Indenture.
Holders of Notes may not enforce the Indenture or the Notes except as provided
in the Indenture. The Trustee is not obligated to enforce the Indenture or the
Notes unless it has received indemnity reasonably satisfactory to it. The
Indenture permits, subject to certain limitations therein provided, Holders of a
majority in aggregate principal amount of the Notes then outstanding to direct
the Trustee in its exercise of any trust or power. The Trustee may withhold
from Holders of Notes notice of any continuing Default or Event of Default
(except a Default in payment of principal or interest) if it determines that
withholding notice is in their interest.
17. TRUSTEE DEALINGS WITH COMPANY. The Trustee under the Indenture, in
its individual or any other capacity, may become the owner or pledgee of Notes
and may otherwise deal with the Company, its Subsidiaries or their respective
Affiliates as if it were not the Trustee.
18. NO RECOURSE AGAINST OTHERS. No stockholder, director, officer,
employee or incorporator, as such, of the Company shall have any liability for
any obligation of the Company under the Notes or the Indenture. Each Holder of
a Note by accepting a Note waives and releases all such liability. The waiver
and release are part of the consideration for the issuance of the Notes.
19. AUTHENTICATION. This Note shall not be valid until the Trustee or
Authenticating Agent manually signs the certificate of authentication on this
Note.
20. GOVERNING LAW. The laws of the State of New York shall govern this
Note and the Indenture, without regard to principles of conflict of laws.
21. ABBREVIATIONS AND DEFINED TERMS. Customary abbreviations may be used
in the name of a Holder of a Note or an assignee, such as: TEN COM (= tenants
in common), TEN ENT (= tenants by the entireties), JT TEN (= joint tenants with
right of survivorship and not as tenants in common), CUST (= Custodian), and
U/G/M/A (= Uniform Gifts to Minors Act).
22. CUSIP NUMBERS. Pursuant to a recommendation promulgated by the
Committee on Uniform Security Identification Procedures, the Company has caused
CUSIP numbers to be printed on the Notes as a convenience to the Holders of the
Notes. No representation is made as to the accuracy of such numbers as printed
on the Notes and reliance may be placed only on the other identification numbers
printed hereon.
23. INDENTURE. Each Holder, by accepting a Note, agrees to be bound by
all of the terms and provisions of the Indenture, as the same may be amended
from time to time.
The Company will furnish to any Holder of a Note upon written request and
without charge a copy of the Indenture, which has the text of this Note in
larger type. Requests may
A.1-7
<PAGE>
be made to: Federal Data Corporation, 4800 Hampden Lane, Bethesda, Maryland
20814, Attn: Chief Financial Officer.
A.1-8
<PAGE>
SENIOR SUBORDINATED GUARANTEE
FDCT Corp., NYMA, Inc., Sylvest Management Systems Corporation, FDC
Technologies Inc., DoxSys, Inc. and VAD International, Inc. (the "Subsidiary
Guarantors") have unconditionally guaranteed on a senior subordinated basis
(such guarantee by each Guarantor being referred to herein as the "Guarantee")
(i) the due and punctual payment of the principal of and interest on the Notes,
whether at maturity, by acceleration or otherwise and the due and punctual
payment of interest on the overdue principal and interest, if any, on the Notes,
to the extent lawful, all in accordance with the terms set forth in Article
Eleven of the Indenture and (ii) in case of any extension of time of payment or
renewal of any Notes or any of such other obligations, that the same will be
promptly paid in full when due or performed in accordance with the terms of the
extension or renewal, whether at stated maturity, by acceleration or otherwise.
The obligations of each Subsidiary Guarantor to the Holders and to the
Trustee pursuant to the Guarantee and the Indenture are expressly set forth and
are expressly subordinated and subject in right of payment to the prior payment
in full in cash or Cash Equivalents of all Guarantor Senior Indebtedness of such
Subsidiary Guarantor, to the extent and in the manner provided, in Article
Eleven of the Indenture, and reference is hereby made to such Indenture for the
precise terms of the Guarantee therein made. This Guarantee is limited under
the Indenture to the extent necessary not to constitute a fraudulent conveyance.
No past, present or future stockholder, officer, director, employee or
incorporator, as such, of any of the Subsidiary Guarantors shall have any
liability under the Guarantee by reason of such person's status as stockholder,
officer, director, employee or incorporator. Each holder of a Note by accepting
a Note waives and releases all such liability. The waiver and release are part
of the consideration for the issuance of the Guarantees.
A.1-9
<PAGE>
The Guarantee shall not be valid or obligatory for any purpose until the
certificate of authentication on the Notes upon which the Guarantee is noted
shall have been executed by the Trustee under the Indenture by the manual
signature of one of its authorized officers.
FDCT CORP.
By:
-------------------------------------
Name:
Title:
NYMA, INC.
By:
-------------------------------------
Name:
Title:
SYLVEST MANAGEMENT SYSTEMS CORPORATION
By:
-------------------------------------
Name:
Title:
FDC TECHNOLOGIES INC.
By:
-------------------------------------
Name:
Title:
DOXSYS, INC.
By:
-------------------------------------
Name:
Title:
A.1-10
<PAGE>
VAD INTERNATIONAL, INC.
By:
-------------------------------------
Name:
Title:
A.1-11
<PAGE>
ASSIGNMENT FORM
If you the Holder want to assign this Note, fill in the form below and have
your signature guaranteed:
I or we assign and transfer this Note to:
_______________________________________________________________
_______________________________________________________________
_______________________________________________________________
(Print or type name, address and zip code and
social security or tax ID number of assignee)
and irrevocably appoint ___________________________ agent to transfer this Note
on the books of the Company. The agent may substitute another to act for him.
Date: _______________________ Signed: ____________________________
(Sign exactly as your name
appears on the other side of
this Note)
Signature Guarantee:_____________________________________________
In connection with any transfer of this Note occurring prior to the date
which is the earlier of (i) the date of the declaration by the SEC of the
effectiveness of a registration statement under the Securities Act of 1933, as
amended (the "Securities Act") covering resales of this Note (which
effectiveness shall not have been suspended or terminated at the date of the
transfer) and (ii) July 25, 1999, the undersigned confirms that it has not
utilized any general solicitation or general advertising in connection with the
transfer and that this Note is being transferred:
[Check One]
(1) _____ to the Company or a subsidiary thereof; or
(2) _____ pursuant to and in compliance with Rule 144A under the Securities
Act; or
(3) _____ to an institutional "accredited investor" (as defined in Rule
501(a)(1), (2), (3) or (7) under the Securities Act) that has
furnished to the Trustee a signed letter containing certain
representations and agreements (the form of which letter can be
obtained from the Trustee); or
(4) _____ outside the United states to a "foreign person" in compliance
with Rule 904 of Regulation S under the Securities Act; or
A.1-12
<PAGE>
(5) _____ pursuant to the exemption from registration provided by Rule 144
under the Securities Act; or
(6) _____ pursuant to an effective registration statement under the
Securities Act; or
(7) _____ pursuant to another available exemption from the registration
requirements of the Securities Act.
Unless one of the boxes is checked, the Trustee will refuse to register any of
the Notes evidenced by this certificate in the name of any person other than the
registered Holder thereof; PROVIDED that if box (3), (4), (5) or (7) is checked,
the Company or the Trustee may require, prior to registering any such transfer
of the Notes, in its sole discretion, such legal opinions, certifications
(including an investment letter in the case of box (3) or (4)) and other
information as the Trustee or the Company has reasonably requested to confirm
that such transfer is being made pursuant to an exemption from, or in a
transaction not subject to, the registration requirements of the Securities Act.
If none of the foregoing boxes is checked, the Trustee or Registrar shall
not be obligated to register this Note in the name of any person other than the
Holder hereof unless and until the conditions to any such transfer of
registration set forth herein and in Section 2.16 of the Indenture shall have
been satisfied.
Date: _______________________ Signed: ____________________________
(Sign exactly as your name
appears on the other side of
this Note)
Signature Guarantee:___________________________________________
TO BE COMPLETED BY PURCHASER IF (2) ABOVE IS CHECKED
The undersigned represents and warrants that it is purchasing this Note for
its own account or an account with respect to which it exercises sole investment
discretion and that it and any such account is a "qualified institutional buyer"
within the meaning of Rule 144A under the Securities Act and is aware that the
sale to it is being made in reliance on Rule 144A and acknowledges that it has
received such information regarding the Company as the undersigned has requested
pursuant to Rule 144A or has determined not to request such information and that
it is aware that the transferor is relying upon the undersigned's foregoing
representations in order to claim the exemption from registration provided by
Rule 144A.
Date: _______________________ Signed: ____________________________
NOTICE: To be executed by
an executive officer
A.1-13
<PAGE>
[OPTION OF HOLDER TO ELECT PURCHASE]
If you want to elect to have this Note purchased by the Company pursuant to
Section 4.15 or Section 4.16 of the Indenture, check the appropriate box:
Section 4.15 [ ]
Section 4.16 [ ]
If you want to elect to have only part of this Note purchased by the
Company pursuant to Section 4.15 or Section 4.16 of the Indenture, state the
amount you elect to have purchased:
$_________________________
Dated: ____________________________ ___________________________________
NOTICE: The signature on this
assignment must correspond with
the name as it appears upon the
face of the within Note in
every particular without alteration
or enlargement or any change
whatsoever and be guaranteed by the
endorser's bank or broker.
Signature Guarantee: ____________________________________________________
A.1-14
<PAGE>
EXHIBIT A(2)
[FORM OF EXCHANGE NOTE]
CUSIP No.:[ ]
FEDERAL DATA CORPORATION
10 1/8% SENIOR SUBORDINATED NOTE DUE 2005
No.[ ] $[ ]
FEDERAL DATA CORPORATION, a Delaware corporation (the "Company," which term
includes any successor entity), for value received promises to pay to
[ ] or registered assigns, the principal sum of [ ]
Dollars, on August 1, 2005.
Interest Payment Dates: February 1 and August 1
Record Dates: January 15 and July 15
Reference is made to the further provisions of this Note contained herein,
which will for all purposes have the same effect as if set forth at this place.
IN WITNESS WHEREOF, the Company has caused this Note to be signed manually
or by facsimile by its duly authorized officers.
FEDERAL DATA CORPORATION
By:
-----------------------------------
Name:
Title:
By:
-----------------------------------
Name:
Dated: [ ], 1997 Title:
Certificate of Authentication
This is one of the 10 1/8% Senior Subordinated Notes due 2005 referred to
in the within-mentioned Indenture.
NORWEST BANK, MINNESOTA, N.A.,
as Trustee
By:
-----------------------------------
Authorized Signatory
<PAGE>
(REVERSE OF SECURITY)
10 1/8% SENIOR SUBORDINATED NOTE DUE 2005
1. INTEREST. FEDERAL DATA CORPORATION, a Delaware corporation (the
"Company"), promises to pay interest on the principal amount of this Note at the
rate per annum shown above. Interest on the Notes will accrue from the most
recent date on which interest has been paid or, if no interest has been paid,
from July 25, 1997. The Company will pay interest semi-annually in arrears on
each Interest Payment Date, commencing February 1, 1998. Interest will be
computed on the basis of a 360-day year of twelve 30-day months.
The Company shall pay interest on overdue principal and on overdue
installments of interest from time to time on demand at the rate borne by the
Notes and on overdue installments of interest (without regard to any applicable
grace periods) to the extent lawful.
2. METHOD OF PAYMENT. The Company shall pay interest on the Notes (except
defaulted interest) to the Persons who are the registered Holders at the close
of business on the Record Date immediately preceding the Interest Payment Date
even if the Notes are canceled on registration of transfer or registration of
exchange after such Record Date. Holders must surrender Notes to a Paying Agent
to collect principal payments. The Company shall pay principal and interest in
money of the United States that at the time of payment is legal tender for
payment of public and private debts ("U.S. Legal Tender"). However, the Company
may pay principal and interest by its check payable in such U.S. Legal Tender.
The Company may deliver any such interest payment to the Paying Agent or to a
Holder at the Holder's registered address.
3. PAYING AGENT AND REGISTRAR. Initially, Norwest Bank, Minnesota, N.A.
(the "Trustee") will act as Paying Agent and Registrar. The Company may change
any Paying Agent, Registrar or co-Registrar without notice to the Holders.
4. INDENTURE. The Company issued the Notes under an Indenture, dated as
of July 15, 1997 (the "Indenture"), between the Company and the Trustee.
Capitalized terms herein are used as defined in the Indenture unless otherwise
defined herein. This Note is one of a duly authorized issue of Unrestricted
Notes of the Company designated as its 10 1/8% Senior Subordinated Notes due
2005 (the "Unrestricted Notes"). The Notes include the Initial Notes, the
Private Exchange Notes and the Unrestricted Notes issued in exchange for the
Initial Notes pursuant to the Registration Rights Agreement or, with respect to
Initial Notes issued under the Indenture subsequent to the Issue Date, a
registration rights agreement substantially identical to the Registration Rights
Agreement. The Initial Notes and the Unrestricted Notes are treated as a single
class of securities under the Indenture. The terms of the Notes include those
stated in this Indenture and those made part of the Indenture by reference to
the Trust Indenture Act of 1939 (15 U.S. Code Sections 77aaa-77bbbb) (the
"TIA"), as in effect on the date of the Indenture. Notwithstanding anything to
the contrary herein, the Notes are subject to all such terms, and Holders of
Notes are referred to the Indenture and said Act for a statement of
A.2-2
<PAGE>
them. The Notes are general unsecured obligations of the Company limited in
aggregate principal amount to $175,000,000. Under certain circumstances as
provided for in Article Eleven of the Indenture, the payment on each Note may be
guaranteed on a senior subordinated basis by the Subsidiary Guarantors. Each
Holder, by accepting a Note, agrees to be bound by all of the terms and
provisions of the Indenture, as the same may be amended from time to time.
5. SUBORDINATION. The Notes are subordinated in right of payment, in the
manner and to the extent set forth in the Indenture, to the prior payment in
full in cash or Cash Equivalents of all Senior Indebtedness of the Company,
whether outstanding on the date of the Indenture or thereafter created,
incurred, assumed or guaranteed. The Guarantees in respect of the Notes will be
subordinated in right of payment, in the manner and to the extent set forth in
the Indenture, to the prior payment in full in cash or Cash Equivalents of all
Guarantor Senior Indebtedness of each Subsidiary Guarantor, whether outstanding
on the date of the Indenture or thereafter created, incurred, assumed or
guaranteed. Each Holder by its acceptance hereof agrees to be bound by such
provisions and authorizes and expressly directs the Trustee, on its behalf, to
take such action as may be necessary or appropriate to effectuate the
subordination provided for in the Indenture and appoints the Trustee its
attorney-in-fact for such purposes.
6. REDEMPTION PROVISIONS. Except as provided below, the Notes may not be
redeemed prior to August 1, 2001.
(a) OPTIONAL REDEMPTION. On or after such date, the Notes may be redeemed
at the option of the Company, at any time as a whole, or from time to time in
part, on not less than 30 nor more than 60 days' notice, at the following
redemption prices (expressed as percentages of principal amount), plus accrued
and unpaid interest (if any) to the date of redemption (subject to the rights of
holders of record on the relevant record date to receive interest due on the
relevant interest payment date), if redeemed during the 12-month period
commencing August 1:
REDEMPTION
PRICE
-----
2001. . . . . . . . . . . . . . . . . . . . . . . 105.063%
2002. . . . . . . . . . . . . . . . . . . . . . . 103.375%
2003. . . . . . . . . . . . . . . . . . . . . . . 101.688%
2004 and thereafter . . . . . . . . . . . . . . . 100.000%
A.2-3
<PAGE>
(b) Notwithstanding the foregoing, at any time prior to August 1, 2000,
the Company may redeem, in part and from time to time, with the net proceeds of
one or more Public Equity Offerings, up to 35% aggregate principal amount of the
Notes originally issued in the Offering at a redemption price equal to 110.125%
of the aggregate principal amount thereof plus accrued and unpaid interest
thereon, if any, to the redemption date; PROVIDED that at least 65% of the
aggregate principal amount of the Notes originally issued in the Offering remain
outstanding immediately after the occurrence of any such redemption and that any
such redemption occurs within 90 days following the closing of any such Public
Equity Offering.
(c) At any time on or prior to August 1, 2001, the Notes may also be
redeemed as a whole at the option of the Company upon the occurrence of a Change
of Control, upon not less than 30 nor more than 60 days prior notice (but in no
event more than 90 days after the occurrence of such Change of Control), at a
redemption price equal to 100% of the principal amount thereof plus the
Applicable Premium as of, and accrued and unpaid interest, if any, to, the date
of redemption (the "REDEMPTION DATE") (subject to the right of holders of record
on the relevant record date to receive interest due on the relevant interest
payment date). The Company may not redeem Notes pursuant to this paragraph if it
has made a Change of Control Offer (as defined) pursuant to Section 4.15 of the
Indenture with respect to such Change of Control.
7. NOTICE OF REDEMPTION. Notice of redemption will be mailed at least 30
days but not more than 60 days before the Redemption Date. Notes in
denominations larger than $1,000 may be redeemed in part.
Except as set forth in the Indenture, if monies for the redemption of the
Notes called for redemption shall have been deposited with the Paying Agent for
redemption on such Redemption Date, then, unless the Company defaults in the
payment of such Redemption Price plus accrued interest, if any, the Notes called
for redemption will cease to bear interest from and after such Redemption Date
and the only right of the Holders of such Notes will be to receive payment of
the Redemption Price plus accrued interest, if any.
8. OFFERS TO PURCHASE. Section 4.15 of the Indenture provides that, upon
a Change of Control if the Company does not redeem the Notes, each holder will
have the right, subject to certain conditions set forth in the Indenture, to
require the Company to repurchase such holder's Notes at a price equal to 101%
of the principal amount thereof plus accrued interest to the date of repurchase.
Section 4.16 of the Indenture provides that, after certain Asset Sales, and
subject to further limitations contained therein, the Company will make an offer
to purchase certain amounts of the Notes in accordance with the procedures set
forth in the Indenture.
9. DENOMINATIONS; TRANSFER; EXCHANGE. The Notes are in registered form,
without coupons, in denominations of $1,000 and integral multiples of $1,000. A
Holder shall register the transfer of or exchange Notes in accordance with the
Indenture. The Registrar may
A.2-4
<PAGE>
require a Holder, among other things, to furnish appropriate endorsements and
transfer documents and to pay certain transfer taxes or similar governmental
charges payable in connection therewith as permitted by the Indenture. The
Registrar need not register the transfer of or exchange of any Notes or portions
thereof selected for redemption.
10. PERSONS DEEMED OWNERS. The registered Holder of a Note shall be
treated as the owner of it for all purposes.
11. UNCLAIMED MONEY. If money for the payment of principal or interest
remains unclaimed for two years, the Trustee and the Paying Agent will pay the
money back to the Company. After that, all liability of the Trustee and such
Paying Agent with respect to such money shall cease.
12. DISCHARGE PRIOR TO REDEMPTION OR MATURITY. If the Company at any time
deposits with the Trustee U.S. Legal Tender or U.S. Government Obligations
sufficient to pay the principal of and interest on the Notes to redemption or
maturity and complies with the other provisions of the Indenture relating
thereto, the Company will be discharged from certain provisions of the Indenture
and the Notes (including certain covenants, but excluding its obligation to pay
the principal of and interest on the Notes).
13. AMENDMENT; SUPPLEMENT; WAIVER. Subject to certain exceptions, the
Indenture, the Notes or the Guarantee, if any, may be amended or supplemented
with the written consent of the Holders of at least a majority in aggregate
principal amount of the Notes then outstanding, and any existing Default or
Event of Default or noncompliance with any provision may be waived with the
written consent of the Holders of a majority in aggregate principal amount of
the Notes then outstanding. Without notice to or consent of any Holder, the
parties thereto may amend or supplement the Indenture or the Notes to, among
other things, cure any ambiguity, defect or inconsistency, provide for
uncertificated Notes in addition to or in place of certificated Notes, or comply
with Article Five of the Indenture or make any other change that does not
adversely affect in any material respect the rights of any Holder of a Note.
14. RESTRICTIVE COVENANTS. The Indenture imposes certain limitations on
the ability of the Company and its Restricted Subsidiaries to, among other
things, incur additional Indebtedness or Liens, make payments in respect of its
Capital Stock or Subordinated Obligations, enter into transactions with
Affiliates, create dividend or other payment restrictions affecting
Subsidiaries, incur additional Indebtedness that is by its terms subordinated or
junior to any other Indebtedness and senior to the Notes, merge or consolidate
with any other Person, sell, assign, transfer, lease, convey or otherwise
dispose of all or substantially all of its assets or adopt a plan of liquidation
and sell Capital Stock of a Restricted Subsidiary. Such limitations are subject
to a number of important qualifications and exceptions. The Company must
annually report to the Trustee on compliance with such limitations.
A.2-5
<PAGE>
15. SUCCESSORS. When a successor assumes, in accordance with the
Indenture, all the obligations of its predecessor under the Notes and the
Indenture, the predecessor will be released from those obligations.
16. DEFAULTS AND REMEDIES. If an Event of Default occurs and is
continuing, the Trustee or the Holders of at least 25% in aggregate principal
amount of Notes then outstanding may declare all the Notes to be due and payable
in the manner, at the time and with the effect provided in the Indenture.
Holders of Notes may not enforce the Indenture or the Notes except as provided
in the Indenture. The Trustee is not obligated to enforce the Indenture or the
Notes unless it has received indemnity reasonably satisfactory to it. The
Indenture permits, subject to certain limitations therein provided, Holders of a
majority in aggregate principal amount of the Notes then outstanding to direct
the Trustee in its exercise of any trust or power. The Trustee may withhold
from Holders of Notes notice of any continuing Default or Event of Default
(except a Default in payment of principal or interest) if it determines that
withholding notice is in their interest.
17. TRUSTEE DEALINGS WITH COMPANY. The Trustee under the Indenture, in
its individual or any other capacity, may become the owner or pledgee of Notes
and may otherwise deal with the Company, its Subsidiaries or their respective
Affiliates as if it were not the Trustee.
18. NO RECOURSE AGAINST OTHERS. No stockholder, director, officer,
employee or incorporator, as such, of the Company shall have any liability for
any obligation of the Company under the Notes or the Indenture. Each Holder of
a Note by accepting a Note waives and releases all such liability. The waiver
and release are part of the consideration for the issuance of the Notes.
19. AUTHENTICATION. This Note shall not be valid until the Trustee or
Authenticating Agent manually signs the certificate of authentication on this
Note.
20. GOVERNING LAW. The laws of the State of New York shall govern this
Note and the Indenture, without regard to principles of conflict of laws.
21. ABBREVIATIONS AND DEFINED TERMS. Customary abbreviations may be used
in the name of a Holder of a Note or an assignee, such as: TEN COM (= tenants
in common), TEN ENT (= tenants by the entireties), JT TEN (= joint tenants with
right of survivorship and not as tenants in common), CUST (= Custodian), and
U/G/M/A (= Uniform Gifts to Minors Act).
22. CUSIP NUMBERS. Pursuant to a recommendation promulgated by the
Committee on Uniform Security Identification Procedures, the Company has caused
CUSIP numbers to be printed on the Notes as a convenience to the Holders of the
Notes. No representation is made as to the accuracy of such numbers as printed
on the Notes and reliance may be placed only on the other identification numbers
printed hereon.
A.2-6
<PAGE>
23. INDENTURE. Each Holder, by accepting a Note, agrees to be bound by
all of the terms and provisions of the Indenture, as the same may be amended
from time to time.
The Company will furnish to any Holder of a Note upon written request and
without charge a copy of the Indenture, which has the text of this Note in
larger type. Requests may be made to: Federal Data Corporation, 4800 Hampden
Lane, Bethesda, Maryland 20814, Attn: Chief Financial Officer.
A.2-7
<PAGE>
SENIOR SUBORDINATED GUARANTEE
FDCT Corp., NYMA, Inc., Sylvest Management Systems Corporation, FDC
Technologies Inc., DoxSys, Inc. and VAD International, Inc. (the "Subsidiary
Guarantors") have unconditionally guaranteed on a senior subordinated basis
(such guarantee by each Guarantor being referred to herein as the "Guarantee")
(i) the due and punctual payment of the principal of and interest on the Notes,
whether at maturity, by acceleration or otherwise and the due and punctual
payment of interest on the overdue principal and interest, if any, on the Notes,
to the extent lawful, all in accordance with the terms set forth in Article
Eleven of the Indenture and (ii) in case of any extension of time of payment or
renewal of any Notes or any of such other obligations, that the same will be
promptly paid in full when due or performed in accordance with the terms of the
extension or renewal, whether at stated maturity, by acceleration or otherwise.
The obligations of each Subsidiary Guarantor to the Holders and to the
Trustee pursuant to the Guarantee and the Indenture are expressly set forth and
are expressly subordinated and subject in right of payment to the prior payment
in full in cash or Cash Equivalents of all Guarantor Senior Indebtedness of such
Subsidiary Guarantor, to the extent and in the manner provided, in Article
Eleven of the Indenture, and reference is hereby made to such Indenture for the
precise terms of the Guarantee therein made. This Guarantee is limited under
the Indenture to the extent necessary not to constitute a fraudulent conveyance.
No past, present or future stockholder, officer, director, employee or
incorporator, as such, of any of the Subsidiary Guarantors shall have any
liability under the Guarantee by reason of such person's status as stockholder,
officer, director, employee or incorporator. Each holder of a Note by accepting
a Note waives and releases all such liability. The waiver and release are part
of the consideration for the issuance of the Guarantees.
A.2-8
<PAGE>
The Guarantee shall not be valid or obligatory for any purpose until the
certificate of authentication on the Notes upon which the Guarantee is noted
shall have been executed by the Trustee under the Indenture by the manual
signature of one of its authorized officers.
FDCT CORP.
By:
-----------------------------------
Name:
Title:
NYMA, INC.
By:
-----------------------------------
Name:
Title:
SYLVEST MANAGEMENT SYSTEMS CORPORATION
By:
-----------------------------------
Name:
Title:
FDC TECHNOLOGIES INC.
By:
-----------------------------------
Name:
Title:
DOXSYS, INC.
By:
----------------------------------
Name:
Title:
A.2-9
<PAGE>
VAD INTERNATIONAL, INC.
By:
-----------------------------------
Name:
Title:
A.2-10
<PAGE>
ASSIGNMENT FORM
If you the Holder want to assign this Note, fill in the form below and have
your signature guaranteed:
I or we assign and transfer this Note to:
_______________________________________________________________
_______________________________________________________________
_______________________________________________________________
(Print or type name, address and zip code and
social security or tax ID number of assignee)
and irrevocably appoint ______________________ agent to transfer this Note on
the books of the Company. The agent may substitute another to act for him.
Date:___________________________ Signed: ____________________________
(Sign exactly as your name
appears on the other side of
this Note)
Signature Guarantee: ________________________________________
A.2-11
<PAGE>
[OPTION OF HOLDER TO ELECT PURCHASE]
If you want to elect to have this Note purchased by the Company pursuant to
Section 4.15 or Section 4.16 of the Indenture, check the appropriate box:
Section 4.15 [ ]
Section 4.16 [ ]
If you want to elect to have only part of this Note purchased by the
Company pursuant to Section 4.15 or Section 4.16 of the Indenture, state the
amount you elect to have purchased:
$___________________________
Dated:_____________________________ ___________________________________
NOTICE: The signature on this
assignment must correspond with
the name as it appears upon the
face of the within Note in
every particular without alteration
or enlargement or any change
whatsoever and be guaranteed by the
endorser's bank or broker.
Signature Guarantee:________________________________________________
A.2-12
<PAGE>
EXHIBIT B
FORM OF LEGEND FOR GLOBAL NOTES
Any Global Note authenticated and delivered hereunder shall bear a legend
(which would be in addition to any other legends required in the case of a
Restricted Security) in substantially the following form:
THIS NOTE IS A GLOBAL NOTE WITHIN THE MEANING OF THE INDENTURE
HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF A DEPOSITORY OR
A NOMINEE OF A DEPOSITORY OR A SUCCESSOR DEPOSITORY. THIS NOTE IS NOT
EXCHANGEABLE FOR NOTES REGISTERED IN THE NAME OF A PERSON OTHER THAN THE
DEPOSITORY OR ITS NOMINEE EXCEPT IN THE LIMITED CIRCUMSTANCES DESCRIBED
IN THE INDENTURE, AND NO TRANSFER OF THIS NOTE (OTHER THAN A TRANSFER OF
THIS NOTE AS A WHOLE BY THE DEPOSITORY TO A NOMINEE OF THE DEPOSITORY OR
BY A NOMINEE OF THE DEPOSITORY TO THE DEPOSITORY OR ANOTHER NOMINEE OF
THE DEPOSITORY) MAY BE REGISTERED EXCEPT IN THE LIMITED CIRCUMSTANCES
DESCRIBED IN THE INDENTURE.
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE
OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO
ISSUER OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT,
AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN
SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC
(AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE
OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS
WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN
INTEREST HEREIN.
<PAGE>
EXHIBIT C
FORM OF CERTIFICATE TO BE
DELIVERED IN CONNECTION WITH
TRANSFERS TO NON-QIB ACCREDITED INVESTORS
___________, ____
Norwest Bank, Minnesota, N.A.
Corporate Trust Services
6th and Marquette
Minneapolis, MN 55479-0069
Attention: Corporate Trust
Re: FEDERAL DATA CORPORATION
(the "Company")
10 1/8% Senior Subordinated
Notes due 2005 (the "Notes")
----------------------------
Ladies and Gentlemen:
In connection with our proposed purchase of $_______ aggregate principal
amount of the Notes, we confirm that:
1. We have received a copy of the Offering Memorandum (the "Offering
Memorandum"), dated July 18, 1997, relating to the Notes and such other
information as we deem necessary in order to make our investment decision. We
acknowledge that we have read and agreed to the matters stated on pages
(i)-(iii) of the Offering Memorandum and in the section entitled "Transfer
Restrictions" of the Offering Memorandum, including the restrictions on
duplication and circulation of the Offering Memorandum.
2. We understand that any subsequent transfer of the Notes is subject to
certain restrictions and conditions set forth in the Indenture dated as of
July 15, 1997 relating to the Notes (the "Indenture") and the undersigned agrees
to be bound by, and not to resell, pledge or otherwise transfer the Notes except
in compliance with, such restrictions and conditions and the Securities Act of
1933, as amended (the "Securities Act").
3. We understand that the offer and sale of the Notes have not been
registered under the Securities Act, and that the Notes may not be offered or
sold within the United States or to, or for the account or benefit of, U.S.
Persons except as permitted in the following sentence. We agree, on our own
behalf and on behalf of any accounts for which we are acting as hereinafter
stated, that if we should sell or otherwise transfer any Notes we will do so
only (i) to the Company or any subsidiary thereof, (ii) inside the United States
in accordance with Rule 144A under the Securities Act to a "qualified
institutional buyer" (as defined in Rule 144A under the Securities Act),
(iii) inside the United States to an institutional "accredited
<PAGE>
investor" (as defined below) that, prior to such transfer, furnishes (or has
furnished on its behalf by a U.S. broker-dealer) to you a signed letter
containing certain representatives and agreements relating to the restrictions
on transfer of the Notes, substantially in the form of this letter, (iv) outside
the United States in accordance with Rule 904 of Regulation S under the
Securities Act, (v) pursuant to the exemption from registration provided by Rule
144 under the Securities Act (if available), or (vi) pursuant to an effective
registration statement under the Securities Act, and we further agree to provide
to any person purchasing any of the Notes from us a notice advising such
purchaser that resales of the Notes are restricted as stated herein.
4. We are not acquiring the Notes for or on behalf of, and will not
transfer the Notes to, any pension or welfare plan (as defined in Section 3 of
the Employee Retirement Income Security Act of 1974), except as permitted in the
section entitled "Transfer Restrictions" of the Offering Memorandum.
5. We understand that, on any proposed resale of any Notes, we will be
required to furnish to you and the Company such certification, legal opinions
and other information as you and the Company may reasonably require to confirm
that the proposed sale complies with the foregoing restrictions. We further
understand that the Notes purchased by us will bear a legend to the foregoing
effect.
6. We are an institutional "accredited investor" (as defined in Rule
501(a)(1), (2), (3) or (7) of Regulation D under the Securities Act) and have
such knowledge and experience in financial and business matters as to be capable
of evaluating the merits and risks of our investment in the Notes, and we and
any accounts for which we are acting are each able to bear the economic risk of
our or their investment, as the case may be.
7. We are acquiring the Notes purchased by us for our own account or for
one or more accounts (each of which is an institutional "accredited investor")
as to each of which we exercise sole investment discretion.
You, the Company and the Initial Purchasers (as defined in the Offering
Memorandum) are entitled to rely upon this letter and are irrevocably authorized
to produce this letter or a copy hereof to any interested party in any
administrative or legal proceedings or official inquiry with respect to the
matters covered hereby.
Very truly yours,
[Name of Transferee]
By:
--------------------------------
Authorized Signature
C-2
<PAGE>
EXHIBIT D
Form of Certificate To Be Delivered
in Connection with Transfers
Pursuant to Regulations
______________, ____
Norwest Bank, Minnesota, N.A.
Corporate Trust Services
6th and Marquette
Minneapolis, MN 55479-0069
Attention: Corporate Trust
Re: FEDERAL DATA CORPORATION
(the "Company") 10 1/8% Senior Subordinated
Notes due 2005 (the "Notes")
----------------------------
Ladies and Gentlemen:
In connection with our proposed sale of $___________ aggregate principal
amount of the Notes, we confirm that such sale has been effected pursuant to and
in accordance with Regulation S under the U.S. Securities Act of 1933, as
amended (the "Securities Act"), and, accordingly, we represent that:
1. the offer of the Notes was not made to a person in the United
States;
2. either (a) at the time the buy offer was originated, the transferee
was outside the United States or we and any person acting on our behalf
reasonably believed that the transferee was outside the United States, or (b)
the transaction was executed in, on or through the facilities of a designated
off-shore securities market and neither we nor any person acting on our behalf
knows that the transaction has been pre-arranged with a buyer in the United
States;
3. no directed selling efforts have been made in the United States in
contravention of the requirements of Rule 903(b) or Rule 904(b) of Regulation S,
as applicable;
4. the transaction is not part of a plan or scheme to evade the
registration requirements of the Securities Act; and
5. we have advised the transferee of the transfer restrictions
applicable to the Notes.
You and the Company are entitled to rely upon this letter and are
irrevocably authorized to produce this letter or a copy hereof to any interested
party in any administrative
<PAGE>
or legal proceedings or official inquiry with respect to the matters covered
hereby. Terms used in this certificate have the meanings set forth in
Regulation S.
Very truly yours,
[Name of Transferor]
By:
---------------------------------
Authorized Signature
D-2
<PAGE>
EXHIBIT 4.3
FEDERAL DATA CORPORATION
$105,000,000
10 1/8% SENIOR SUBORDINATED NOTES DUE 2005
PURCHASE AGREEMENT
July 18, 1997
BT SECURITIES CORPORATION
LEHMAN BROTHERS INC.
c/o BT Securities Corporation
Bankers Trust Plaza
130 Liberty Street
New York, New York 10006
Ladies and Gentlemen:
Federal Data Corporation, a Delaware corporation (the "COMPANY"), and
each subsidiary of the Company listed on the signature page hereto (the
"GUARANTORS" and, together with the Company, the "ISSUERS") each hereby confirms
its agreement with you (the "INITIAL PURCHASERS"), as set forth below.
1. THE SECURITIES. Subject to the terms and conditions herein
contained, the Company proposes to issue and sell to the Initial Purchasers
$105,000,000 aggregate principal amount of its 10 1/8% Senior Subordinated Notes
due 2005 (the "NOTES"). The Notes will be guaranteed (the "GUARANTEES" and,
together with the Notes, the "SECURITIES") by each Guarantor on a senior
subordinated basis. The Securities are to be issued under an indenture (the
"INDENTURE") to be dated as of July 15, 1997 among the Company, the Guarantors
and Norwest Bank, Minnesota, N.A., as Trustee (the "TRUSTEE").
Shortly after the issuance and sale of the Securities, the Company
will terminate its existing senior credit facility and execute a new senior
secured revolving credit facility (together with all documents executed in
connection therewith, the "CREDIT AGREEMENT") among the Company, its
subsidiaries, Bankers Trust Company, as agent, and certain financial
institutions party thereto which will provide revolving borrowing availability
of up to $75.0 million, subject to a borrowing base.
<PAGE>
-2-
The Securities will be offered and sold to the Initial Purchasers
without such offers and sales being registered under the Securities Act of 1933,
as amended (the "ACT"), in reliance on exemptions therefrom.
In connection with the sale of the Securities, the Issuers have
prepared a preliminary offering memorandum dated July 2, 1997 (the "PRELIMINARY
MEMORANDUM"), and a final offering memorandum dated July 18, 1997 (the "FINAL
MEMORANDUM"; the Preliminary Memorandum and the Final Memorandum each herein
being referred to as a "MEMORANDUM") setting forth or including a description of
the terms of the Securities, the terms of the offering of the Securities, a
description of the Company and its subsidiaries and any material developments
relating to the Company and its subsidiaries occurring after the date of the
most recent historical financial statements included therein.
The Initial Purchasers and their direct and indirect transferees of
the Securities will be entitled to the benefits of the Registration Rights
Agreement, substantially in the form attached hereto as EXHIBIT A (the
"REGISTRATION RIGHTS AGREEMENT"), pursuant to which each of the Issuers has
agreed, among other things, to file a registration statement (the "REGISTRATION
STATEMENT") with the Securities and Exchange Commission (the "COMMISSION")
registering the exchange of the Securities for the Exchange Securities (as
defined in the Registration Rights Agreement) or, in certain circumstances, the
resale of the Securities under the Act.
This Agreement, the Securities, the Indenture and the Registration
Rights Agreement are herein collectively referred to as the "OFFERING
DOCUMENTS."
The issuance of the Securities and the consummation of the other
transactions contemplated hereby are herein collectively referred to as the
"TRANSACTIONS."
2. REPRESENTATIONS AND WARRANTIES OF THE ISSUERS. Each of the
Issuers, jointly and severally, represents and warrants to and agrees with each
of the Initial Purchasers that:
(a) Neither the Preliminary Memorandum as of the date thereof nor the
Final Memorandum nor any amendment or supplement thereto as of the date
thereof and at all times subsequent thereto up to the Closing Date (as
defined in Section 3 below) contained or contains any untrue statement of a
material fact or omitted or omits to state a material fact necessary to
make the statements therein, in
<PAGE>
-3-
the light of the circumstances under which they were made, not misleading,
except that the representations and warranties set forth in this Section
2(a) do not apply to statements or omissions made in reliance upon and in
conformity with information relating to either of the Initial Purchasers
furnished to the Issuers in writing by the Initial Purchasers expressly for
use in the Preliminary Memorandum, the Final Memorandum or any amendment or
supplement thereto.
(b) As of the Closing Date, the Company will have the authorized,
issued and outstanding capitalization set forth in the Final Memorandum;
all of the subsidiaries of the Company, including the Guarantors, are
listed in Schedule 2 attached hereto (each, a "SUBSIDIARY" and,
collectively, the "SUBSIDIARIES"); all of the outstanding shares of capital
stock of the Company and the Subsidiaries have been, and as of the Closing
Date will be, duly authorized and validly issued, are fully paid and
nonassessable and were not issued in violation of any preemptive or similar
rights; the Company owns, directly or indirectly, all of the outstanding
shares of capital stock of each of the Subsidiaries; except as described in
the Final Memorandum, with the exception of any director's qualifying
shares, all of the outstanding shares of capital stock of the Company and
of each of the Subsidiaries will be free and clear of all liens,
encumbrances, equities and claims or restrictions on transferability (other
than those imposed by the Act and the securities or "Blue Sky" laws of
certain jurisdictions) or voting; except as set forth in the Final
Memorandum, there are no (i) options, warrants or other rights to purchase,
(ii) agreements or other obligations to issue or (iii) other rights to
convert any obligation into, or exchange any securities for, shares of
capital stock of or ownership interests in the Company or any of the
Subsidiaries. Except for the Subsidiaries with respect to the Company and
any Subsidiary owning another Subsidiary or as disclosed in the Final
Memorandum, neither the Company nor the Subsidiaries own, directly or
indirectly, any shares of capital stock or any other equity or long-term
debt securities or have any equity interest in any firm, partnership, joint
venture or other entity.
(c) Each of the Company and the Subsidiaries has been duly
incorporated, and (except for VAD International, Inc.) each of the Company
and the Subsidiaries is validly existing and in good standing under the
laws of its juris-
<PAGE>
-4-
diction of incorporation, with all requisite corporate power and authority
to own its properties and conduct its business as now conducted as
described in the Final Memorandum; each of the Company and the Subsidiaries
is duly qualified to do business as a foreign corporation in good standing
in all other jurisdictions where the ownership or leasing of its properties
or the conduct of its business requires such qualification, except where
the failure to be so qualified would not, individually or in the aggregate,
have a material adverse effect on the business, condition (financial or
otherwise) or results of operations of the Company and the Subsidiaries,
taken as a whole (any such event, a "MATERIAL ADVERSE EFFECT").
(d) The Company has all requisite corporate power and authority to
execute, deliver and perform each of its obligations under the Notes, the
Exchange Notes and the Private Exchange Notes (as defined in the
Registration Rights Agreement). The Notes, when issued, will be in the
form contemplated by the Indenture. The Notes, the Exchange Notes and the
Private Exchange Notes have each been duly and validly authorized by the
Company and, when executed by the Company and authenticated by the Trustee
in accordance with the provisions of the Indenture and, in the case of the
Notes, when delivered to and paid for by the Initial Purchasers in
accordance with the terms of this Agreement, will constitute valid and
legally binding obligations of the Company, be entitled to the benefits of
the Indenture, and be enforceable against the Company in accordance with
their terms, except that the enforcement thereof may be subject to
(i) bankruptcy, insolvency, reorganization, moratorium or other similar
laws now or hereafter in effect relating to creditors' rights generally,
and (ii) general principles of equity and the discretion of the court
before which any proceeding therefor may be brought.
(e) Each of the Guarantors has all requisite power and authority to
execute, deliver and perform each of its obligations under the Guarantees.
The Guarantees to be endorsed on the Notes, the Exchange Notes and the
Private Exchange Notes have been duly and validly authorized by each of the
Guarantors and, when duly executed by each of the Guarantors and when the
Notes, the Exchange Notes and the Private Exchange Notes are duly executed,
authenticated, issued and delivered as provided in the Indenture and the
Registration Rights Agreement and, in the case of the Notes, paid for as
provided herein, will constitute
<PAGE>
-5-
valid and legally binding obligations of each of the Guarantors entitled to
the benefits of the Indenture, enforceable against each of the Guarantors
in accordance with their terms except that the enforcement thereof may be
subject to (i) bankruptcy, insolvency, reorganization, moratorium,
fraudulent conveyance or other similar laws now or hereafter in effect
relating to creditors' rights generally, and (ii) general principles of
equity and the discretion of the court before which any proceeding therefor
may be brought.
(f) Each of the Issuers has all requisite corporate power and
authority to execute, deliver and perform its obligations under the
Indenture. The Indenture meets the requirements for qualification under
the Trust Indenture Act of 1939, as amended (the "TIA"). The Indenture has
been duly and validly authorized by each of the Issuers and, when executed
and delivered by each of the Issuers (assuming the due authorization,
execution and delivery by the Trustee), will constitute a valid and legally
binding agreement of each of the Issuers, enforceable against each of the
Issuers in accordance with its terms, except that the enforcement thereof
may be subject to (i) bankruptcy, insolvency, reorganization, moratorium,
fraudulent conveyance or other similar laws now or hereafter in effect
relating to creditors' rights generally and (ii) general principles of
equity and the discretion of the court before which any proceeding therefor
may be brought.
(g) Each of the Issuers has all requisite corporate power and
authority to execute, deliver and perform its obligations under the
Registration Rights Agreement. The Registration Rights Agreement has been
duly and validly authorized by each of the Issuers and, when executed and
delivered by each of the Issuers, will constitute a valid and legally
binding agreement of each of the Issuers enforceable against each of the
Issuers in accordance with its terms, except that (A) the enforcement
thereof may be subject to (i) bankruptcy, insolvency, reorganization,
moratorium, fraudulent conveyance or other similar laws now or hereafter in
effect relating to creditors' rights generally and (ii) general principles
of equity and the discretion of the court before which any proceeding
therefor may be brought and (B) any rights to indemnity or contribution
thereunder may be limited by federal and state securities laws and public
policy considerations.
<PAGE>
-6-
(h) Each of the Issuers has all requisite corporate power and
authority to execute, deliver and perform its obligations under this
Agreement and to consummate the transactions contemplated hereby. Each of
the Issuers has duly and validly authorized this Agreement and the
consummation of the transactions contemplated hereby. This Agreement has
been duly executed and delivered by each of the Issuers.
(i) Except as disclosed in the Final Memorandum, no consent,
approval, authorization or order of any court or governmental agency or
body, or third party is required for the performance of any of the Offering
Documents by the Company or the Subsidiaries (to the extent each is a party
thereto) or the consummation by the Company or the Subsidiaries of the
other transactions contemplated hereby or thereby (assuming the accuracy of
the representations and warranties of the Initial Purchasers in Section 8
hereof), except such as have been obtained and such as may be required
under state securities or "Blue Sky" laws in connection with the purchase
and resale of the Securities by the Initial Purchasers. None of the
Company or the Subsidiaries is (i) in violation of its certificate of
incorporation or bylaws (or similar organizational document), (ii) in
breach or violation of any statute, judgment, decree, order, rule or
regulation applicable to any of them or any of their respective properties
or assets, except for any such breach or violation which would not,
individually or in the aggregate, have a Material Adverse Effect, or
(iii) in breach of or default under (nor has any event occurred which, with
notice or passage of time or both, would constitute a default under) or in
violation of any of the terms or provisions of any of (x) the Offering
Documents or (y) any other indenture, mortgage, deed of trust, loan
agreement, note, lease, license, franchise agreement, permit, certificate,
contract or other agreement or instrument to which any of them is a party
or to which any of them or their respective properties or assets is subject
(collectively, "Contracts"), except in the case of clause (iii)(y) for any
such breach, default, violation or event which would not reasonably be
expected, individually or in the aggregate, to have a Material Adverse
Effect.
(j) The execution, delivery and performance by the Company and the
Subsidiaries, to the extent each is a party thereto, of each of the
Offering Documents and the consummation by the Company and the Subsidiaries
of the
<PAGE>
-7-
transactions contemplated thereby (including, without limitation, the
issuance and sale of the Securities to the Initial Purchasers) will not
conflict with or constitute or result in a breach of or a default under (or
an event which with notice or passage of time or both would constitute a
default under) or violation of any of (i) the terms or provisions of
(x) any of the Offering Documents or (y) any Contract, except in the case
of clause (y) for any such conflict, breach, violation, default or event
which would not, individually or in the aggregate, have a Material Adverse
Effect, (ii) the certificate of incorporation or bylaws (or similar
organizational document) of the Company or any of the Subsidiaries, or
(iii) (assuming compliance with all applicable state securities or "Blue
Sky" laws and assuming the accuracy of the representations and warranties
of the Initial Purchasers in Section 8 hereof) any statute, judgment,
decree, order, rule or regulation applicable to the Company or any of the
Subsidiaries or any of their respective properties or assets, except for
any such conflict, breach or violation which would not reasonably be
expected, individually or in the aggregate, to have a Material Adverse
Effect.
(k) The audited consolidated financial statements of the Company
included in the Final Memorandum present fairly in all material respects
the financial position, results of operations and cash flows of the Company
and its consolidated subsidiaries at the dates and for the periods to which
they relate and have been prepared in accordance with generally accepted
accounting principles applied on a consistent basis, except as otherwise
stated therein. The audited consolidated financial statements of NYMA,
Inc. ("NYMA") included in the Final Memorandum present fairly in all
material respects the financial position, results of operations and cash
flows of NYMA and its consolidated subsidiaries at the dates and for the
periods to which they relate and have been prepared in accordance with
generally accepted accounting principles applied on a consistent basis,
except as otherwise stated therein. The audited financial statements of
Sylvest Management Systems Corporation ("Sylvest") included in the Final
Memorandum present fairly in all material respects the financial position,
results of operations and cash flows of Sylvest at the dates and for the
periods to which they relate and have been prepared in accordance with
generally accepted accounting principles applied on a consistent basis,
except as otherwise stated therein. The summary and selected financial and
statistical data in the Final Memo-
<PAGE>
-8-
randum present fairly in all material respects the information shown
therein and have been prepared and compiled on a basis consistent with the
audited financial statements included therein, except as otherwise stated
therein. Price Waterhouse LLP, which is reporting on the audited financial
statements of the Company and its consolidated subsidiaries included in the
Final Offering Memorandum, is an independent public accounting firm within
the meaning of the Act and the rules and regulations promulgated
thereunder. Deloitte & Touche LLP, which is reporting on the audited
financial statements of NYMA and its consolidated subsidiaries included in
the Final Offering Memorandum, is an independent public accounting firm
within the meaning of the Act and the rules and regulations promulgated
thereunder. Coopers & Lybrand L.L.P. (together with Price Waterhouse LLP
and Deloitte & Touche LLP, the "INDEPENDENT ACCOUNTANTS"), which is
reporting on the audited financial statements of Sylvest included in the
Final Offering Memorandum, is an independent public accounting firm within
the meaning of the Act and the rules and regulations promulgated
thereunder.
(l)The pro forma financial statements (including the notes thereto)
and the other pro forma financial information included in the Final
Memorandum (i) comply as to form in all material respects with the
applicable requirements of Regulation S-X promulgated under the Securities
Exchange Act of 1934, as amended (the "EXCHANGE ACT"), (ii) have been
prepared in accordance with the Commission's rules and guidelines with
respect to pro forma financial statements, and (iii) have been properly
computed on the bases described therein; the assumptions used in the
preparation of the pro forma financial data and other pro forma financial
information included in the Final Memorandum are reasonable in all material
respects and the adjustments used therein are appropriate in all material
respects to give effect to the transactions or circumstances referred to
therein.
(m) Except as described in the Final Memorandum, there is not pending
or, to the knowledge of the Issuers, threatened any action, suit,
proceeding, inquiry or investigation to which the Company or any of the
Subsidiaries is a party, or to which the property or assets of the Company
or any of the Subsidiaries are subject, before or brought by any court,
arbitrator or governmental agency or body which, if determined adversely to
the Company or any of the Subsidiaries, would reasonably be expected, indi-
<PAGE>
-9-
vidually or in the aggregate, to have a Material Adverse Effect or which
seeks to restrain, enjoin, prevent the consummation of or otherwise
challenge the issuance or sale of the Securities to be sold hereunder or
the consummation of the other transactions described in the Final
Memorandum.
(n) The Company and the Subsidiaries each possess all licenses,
permits, certificates, consents, orders, approvals and other authorizations
from, and have made all declarations and filings with (collectively,
"OBTAIN"), all federal, state, local and other governmental authorities,
all self-regulatory organizations and all courts and other tribunals,
presently required or necessary to own or lease, as the case may be, and to
operate their respective properties and to carry on their respective
businesses as now or proposed to be conducted as set forth in the Final
Memorandum ("PERMITS"), except as disclosed in the Final Memorandum and
except where the failure to obtain such Permits would not reasonably be
expected, individually or in the aggregate, to have a Material Adverse
Effect; the Company and the Subsidiaries have fulfilled and performed in
all material respects their respective obligations with respect to such
Permits and no event has occurred which allows, or after notice or lapse of
time would allow, revocation or termination thereof or results in any other
material impairment of the rights of the holder of any such Permit, except
where such revocation, termination or impairment would not reasonably be
expected, individually or in the aggregate, to have a Material Adverse
Effect; and the Company and the Subsidiaries have not received any notice
of any proceeding relating to revocation or modification of any such
Permit, except as disclosed in the Final Memorandum and except where such
revocation or modification would not reasonably be expected, individually
or in the aggregate, to have a Material Adverse Effect.
(o) Since the date of the most recent financial statements appearing
in the Final Memorandum, except as disclosed in the Final Memorandum,
(i) neither the Company nor any of the Subsidiaries has incurred any
liabilities or obligations, direct or contingent, or entered into or agreed
to enter into any transactions or contracts (written or oral) not in the
ordinary course of business which liabilities, obligations, transactions or
contracts would, individually or in the aggregate, be material to the
business, condition (financial or otherwise) or results of operations of
the Company and the Subsidiaries,
<PAGE>
-10-
taken as a whole, (ii) none of the Company or the Subsidiaries has
purchased any of its outstanding capital stock, nor declared, paid or
otherwise made any dividend or distribution of any kind on its capital
stock (other than with respect to any of such Subsidiaries, the purchase
of, or dividend or distribution on, capital stock owned by the Company) and
(iii) there shall not have been any change in the capital stock or long-
term indebtedness of the Company or the Subsidiaries.
(p) Each of the Company and the Subsidiaries has filed all necessary
federal, state and foreign income and franchise tax returns, except where
the failure to so file such returns would not reasonably be expected,
individually or in the aggregate, to have a Material Adverse Effect, and
has paid all taxes shown as due thereon; and other than tax deficiencies
being contested in good faith and for which adequate reserves have been
provided, there is no tax deficiency that has been asserted against the
Company or any of the Subsidiaries that would reasonably be expected to
have, individually or in the aggregate, a Material Adverse Effect.
(q) The statistical and market-related data included in the Final
Memorandum are based on or derived from sources which the Company and the
Subsidiaries believe to be reliable and accurate in all material respects.
(r) None of the Company, the Subsidiaries or any agent acting on
their behalf has taken or will take any action that might cause the
execution of this Agreement or the sale of the Securities to violate
Regulation G, T (assuming that the Initial Purchasers do not sell
Securities to any person or entity subject to Regulation T for such
person's or entity's own account), U or X of the Board of Governors of the
Federal Reserve System, in each case as in effect, or as the same may
hereafter be in effect, on the Closing Date.
(s) Each of the Company and the Subsidiaries has good and marketable
title to all real property and good title to all personal property
described in the Final Memorandum as being owned by it and good and
marketable title to a leasehold estate in the real and personal property
described in the Final Memorandum as being leased by it free and clear of
all liens, charges, encumbrances or restrictions, except for sales of
inventory in the ordinary course of business or as described in the Final
Memo-
<PAGE>
-11-
randum or to the extent the failure to have such title or the existence of
such liens, charges, encumbrances or restrictions would not reasonably be
expected, individually or in the aggregate, to have a Material Adverse
Effect. All leases, contracts and agreements to which the Company or any
of the Subsidiaries is a party or by which any of them is bound are valid
and enforceable against the Company or such Subsidiary, and, to the
knowledge of the Company and its Subsidiaries, are valid and enforceable
against the other party or parties thereto and are in full force and effect
with only such exceptions as would not reasonably be expected, individually
or in the aggregate, to have a Material Adverse Effect, and except as
enforceability may be limited by (i) bankruptcy, insolvency,
reorganization, moratorium, fraudulent conveyance or other similar laws now
or hereafter in effect relating to creditors' rights generally, and
(ii) general principles of equity and the discretion of the court before
which any proceeding therefor may be brought. The Company and the
Subsidiaries own or possess adequate licenses or other rights to use all
patents, trademarks, service marks, trade names, copyrights and know-how
necessary to conduct the businesses now or proposed to be operated by them
as described in the Final Memorandum, except as would not reasonably be
expected, individually or in the aggregate, to have a Material Adverse
Effect, and the Company and the Subsidiaries have not received any notice
of infringement of or conflict with (or know of any such infringement of or
conflict with) alleged rights of others with respect to any patents,
trademarks, service marks, trade names, copyrights or know-how which, if
such alleged infringement or conflict were sustained, would reasonably be
expected to have a Material Adverse Effect.
(t) There are no legal or governmental proceedings involving or
affecting the Company or any Subsidiary or any of their respective
properties or assets that would be required to be described in a prospectus
pursuant to the Act that are not described in the Final Memorandum, nor are
there any material contracts or other documents that would be required to
be described in a prospectus pursuant to the Act that are not described in
the Final Memorandum.
(u) Except as described in the Final Memorandum or as would not
reasonably be expected, individually or in the aggregate, to have a
Material Adverse Effect, (A) each of the Company and the Subsidiaries is in
compliance with and not subject to liability under applicable Environmental
<PAGE>
-12-
Laws (as defined below), (B) each of the Company and the Subsidiaries has
made all filings and provided all notices required under any applicable
Environmental Law, and has and is in compliance with all Permits required
under any applicable Environmental Laws and each of them is in full force
and effect, (C) there is no civil, criminal or administrative action, suit,
demand, claim, hearing, notice of violation, investigation, proceeding,
notice or demand letter or request for information pending or threatened
against the Company or any of the Subsidiaries under any Environmental Law,
(D) no lien, charge, encumbrance or restriction has been recorded under any
Environmental Law with respect to any assets, facility or property owned,
operated, leased or controlled by the Company or any of the Subsidiaries,
(E) the Company and the Subsidiaries have not received notice that any of
them has been identified as a potentially responsible party under the
Comprehensive Environmental Response, Compensation and Liability Act of
1980, as amended ("CERCLA"), or any comparable state law, (F) no property
or facility of the Company or any of the Subsidiaries is (i) listed or
proposed for listing on the National Priorities List under CERCLA or
(ii) listed in the Comprehensive Environmental Response, Compensation,
Liability Information System List promulgated pursuant to CERCLA, or on any
comparable list maintained by any state or local governmental authority.
For purposes of this Agreement, "Environmental Laws" means the common
law and all applicable federal, state and local laws or regulations, codes,
orders, decrees, judgments or injunctions issued, promulgated, approved or
entered thereunder, relating to pollution or protection of public health
and safety or the environment, including, without limitation, laws relating
to (i) emissions, discharges, releases or threatened releases of hazardous
materials into the environment (including, without limitation, ambient air,
surface water, ground water, land surface or subsurface strata), (ii) the
manufacture, processing, distribution, use, generation, treatment, storage,
disposal, transport or handling of hazardous materials, and (iii)
underground and above ground storage tanks and related piping, and
emissions, discharges, releases or threatened releases therefrom.
(v) There is no strike, labor dispute, slowdown or work stoppage with
the employees of the Company or any of the Subsidiaries which is pending
or, to the knowledge of the Company or any of the Subsidiaries, threatened.
<PAGE>
-13-
(w) Each of the Company and the Subsidiaries carries insurance
(including self-insurance) in such amounts and covering such risks as would
be obtained by companies in the same or similar businesses in the ordinary
course for the conduct of its business and the value of its properties.
(x) On the Closing Date, immediately after the consummation of the
transactions contemplated by the Offering Documents, the fair value and
present fair saleable value of the assets of each of the Company and the
Subsidiaries (each on a consolidated basis) will exceed the sum of their
stated liabilities and identified contingent liabilities; none of the
Company or the Subsidiaries (each on a consolidated basis) is, nor will the
Company and the Subsidiaries (each on a consolidated basis) after giving
effect to the execution, delivery and performance of the Offering Documents
and the consummation of the transactions contemplated thereby be, (i) left
with unreasonably small capital with which to carry on their respective
businesses as they are proposed to be conducted, (ii) unable to pay their
debts (contingent or otherwise) as they mature or (iii) otherwise
insolvent.
(y) Neither the Company nor any of the Subsidiaries has any liability
for any prohibited transaction or accumulated funding deficiency (within
the meaning of Section 412 of the Code) or any complete or partial
withdrawal liability with respect to any pension, profit sharing or other
plan which is subject to the Employee Retirement Income Security Act of
1974, as amended ("ERISA"), to which the Company or any of the Subsidiaries
makes or ever has made a contribution and in which any employee of the
Company or of any Subsidiary is or has ever been a participant. With
respect to such plans, the Company and each Subsidiary is in compliance in
all material respects with all applicable provisions of ERISA.
(z) Each of the Company and the Subsidiaries (i) makes and keeps
accurate books and records in all material respects and (ii) maintains
internal accounting controls which provide reasonable assurance that (A)
transactions are executed in accordance with management's authorization,
(B) transactions are recorded as necessary to permit preparation of its
financial statements and to maintain accountability for its assets, (C)
access to its assets is permitted only in accordance with management's
<PAGE>
-14-
authorization and (D) the reported accounts for its assets are compared
with existing assets at reasonable intervals.
(aa) None of the Company or the Subsidiaries is, or upon consummation
of the transactions contemplated by the Offering Documents will be, an
"investment company" or "promoter" or "principal underwriter" for an
"investment company," as such terms are defined in the Investment Company
Act of 1940, as amended, and the rules and regulations thereunder.
(bb) Upon issuance of the Securities, the Securities, the Exchange
Securities, the Indenture and the Registration Rights Agreement will
conform in all material respects to the descriptions thereof in the Final
Memorandum.
(cc) No holder of securities of the Company or any Subsidiary will be
entitled to have such securities registered under the registration
statements required to be filed by the Issuers pursuant to the Registration
Rights Agreement other than as expressly permitted thereby.
(dd) None of the Company, the Subsidiaries, or any of their
respective Affiliates (as defined in Rule 501(b) of Regulation D under the
Act) has directly, or through any agent, (i) sold, offered for sale,
solicited offers to buy or otherwise negotiated in respect of, any
"security" (as defined in the Act) which is or could be integrated with the
sale of the Securities in a manner that would require the registration
under the Act of the Securities or (ii) assuming the accuracy of the
representations and warranties of the Initial Purchasers in Section 8
hereof, engaged in any form of general solicitation or general advertising
(as those terms are used in Regulation D under the Act) in connection with
the offering of the Securities or in any manner involving a public offering
within the meaning of Section 4(2) of the Act. Assuming the accuracy of
the representations and warranties of the Initial Purchasers in Section 8
hereof, it is not necessary in connection with the offer, sale and delivery
of the Securities to the Initial Purchasers in the manner contemplated by
this Agreement to register any of the Securities under the Act or to
qualify the Indenture under the TIA.
(ee) No securities of the Company or any Subsidiary are of the same
class (within the meaning of Rule 144A under the Act) as the Securities and
listed on a national
<PAGE>
-15-
securities exchange registered under Section 6 of the Exchange Act, or
quoted in a U.S. automated inter-dealer quotation system.
(ff) None of the Company or the Subsidiaries has taken, nor will any
of them take, directly or indirectly, any action designed to, or that might
be reasonably expected to, cause or result in stabilization or manipulation
of the price of the Securities.
(gg) None of the Company, the Subsidiaries, any of their respective
Affiliates or any person acting on its or their behalf (other than the
Initial Purchasers) has engaged in any directed selling efforts (as that
term is defined in Regulation S under the Act ("Regulation S")) with
respect to the Securities; the Company, the Subsidiaries and their
respective Affiliates and any person acting on its or their behalf (other
than the Initial Purchasers) have complied with the offering restrictions
requirement of Regulation S.
Any certificate signed by any officer of the Company or any Subsidiary
and delivered to any Initial Purchaser or to counsel for the Initial Purchasers
shall be deemed a joint and several representation and warranty by the Company
and each of the Subsidiaries to each Initial Purchaser as to the matters covered
thereby.
3. PURCHASE, SALE AND DELIVERY OF THE SECURITIES. On the basis of
the representations, warranties, agreements and covenants herein contained and
subject to the terms and conditions herein set forth, the Company agrees to
issue and sell to the Initial Purchasers, and the Initial Purchasers, acting
severally and not jointly, agree to purchase the Securities in the respective
amounts set forth on SCHEDULE 1 hereto at 97.0% of their principal amount. One
or more certificates in definitive form for the Securities that the Initial
Purchasers have agreed to purchase hereunder, and in such denomination or
denominations and registered in such name or names as the Initial Purchasers
request upon notice to the Issuers at least 36 hours prior to the Closing Date,
shall be delivered by or on behalf of the Issuers to the Initial Purchasers,
against payment by or on behalf of the Initial Purchasers of the purchase price
therefor by wire transfer (same day funds), net of the Initial Purchasers'
overnight cost of such funds, to such account or accounts as the Issuers shall
specify prior to the Closing Date, or by such means as the parties hereto shall
agree prior to the Closing Date. Such delivery of and payment for the Se-
<PAGE>
-16-
curities shall be made at the offices of Cahill Gordon & Reindel, 80 Pine
Street, New York, New York at 10:00 A.M., New York time, on July 25, 1997, or at
such other place, time or date as the Initial Purchasers, on the one hand, and
the Issuers, on the other hand, may agree upon, such time and date of delivery
against payment being herein referred to as the "CLOSING DATE." The Issuers
will make such certificate or certificates for the Securities available for
checking and packaging by the Initial Purchasers at the offices of BT Securities
Corporation in New York, New York, or at such other place as BT Securities
Corporation may designate, at least 24 hours prior to the Closing Date.
4. OFFERING BY THE INITIAL PURCHASERS. The Initial Purchasers
propose to make an offering of the Securities at the price and upon the terms
set forth in the Final Memorandum, as soon as practicable after this Agreement
is entered into and as in the judgment of the Initial Purchasers is advisable.
5. COVENANTS OF THE ISSUERS. Each of the Issuers, jointly and
severally, covenants and agrees with each of the Initial Purchasers that:
(a) The Issuers will not amend or supplement the Final Memorandum or
any amendment or supplement thereto of which the Initial Purchasers shall
not previously have been advised and furnished a copy for a reasonable
period of time prior to the proposed amendment or supplement and as to
which the Initial Purchasers shall not have given their consent (which
consent shall not be unreasonably withheld). The Issuers will promptly,
upon the reasonable request of the Initial Purchasers or counsel for the
Initial Purchasers, make any amendments or supplements to the Preliminary
Memorandum or the Final Memorandum that may be necessary in connection with
the resale of the Securities by the Initial Purchasers for such Memorandum
not to contain any untrue statement of a material fact or omission of a
material fact necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading or to comply with
applicable laws, rules or regulations.
(b) The Issuers will cooperate with the Initial Purchasers in
arranging for the qualification of the Securities for offering and sale
under the securities or "Blue Sky" laws of which jurisdictions as the
Initial Purchasers may designate and will continue such qualifications in
effect for as long as may be necessary to complete the re-
<PAGE>
-17-
sale of the Securities; PROVIDED, HOWEVER, that in connection therewith,
none of the Issuers shall be required to qualify as a foreign corporation
or to execute a general consent to service of process in any jurisdiction
or subject itself to taxation in excess of a nominal dollar amount in any
such jurisdiction where it is not then so subject.
(c) If, at any time prior to the completion of the distribution by
the Initial Purchasers of the Securities or the Private Exchange
Securities, any event occurs or information becomes known as a result of
which the Final Memorandum as then amended or supplemented would include
any untrue statement of a material fact, or omit to state a material fact
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading, or if for any other reason it
is necessary at any time to amend or supplement the Final Memorandum to
comply with applicable law, the Issuers will promptly notify the Initial
Purchasers thereof and will prepare, at their expense, an amendment or
supplement to the Final Memorandum that corrects such statement or omission
or effects such compliance.
(d) The Issuers will, without charge, provide to the Initial
Purchasers and to counsel for the Initial Purchasers as many copies of the
Preliminary Memorandum and the Final Memorandum or any amendment or
supplement thereto as the Initial Purchasers may reasonably request.
(e) The Issuers will apply the net proceeds from the sale of the
Securities as set forth under "Use of Proceeds" in the Final Memorandum.
(f) For so long as any of the Securities remain outstanding, the
Issuers will furnish to the Initial Purchasers copies of all reports and
other communications (financial or otherwise) furnished by the Company to
the Trustee or to the holders of the Securities and, as soon as available,
copies of any reports or financial statements furnished to or filed by the
Company with the Commission or any national securities exchange on which
any class of securities of the Company may be listed.
(g) Prior to the Closing Date, the Issuers will furnish to the
Initial Purchasers, as soon as they have been prepared, a copy of any
unaudited interim financial statements of the Company for any period
subsequent to the pe-
<PAGE>
-18-
riod covered by the most recent financial statements appearing in the Final
Memorandum.
(h) Neither the Issuers nor any of their respective Affiliates will
sell, offer for sale or solicit offers to buy or otherwise negotiate in
respect of any "security" (as defined in the Act) which could be integrated
with the sale of the Securities in a manner which would require the
registration under the Act of the Securities.
(i) The Issuers will not, and will not permit any of the Subsidiaries
to, engage in any form of general solicitation or general advertising (as
those terms are used in Regulation D under the Act) in connection with the
offering of the Securities or in any manner involving a public offering
within the meaning of Section 4(2) of the Act.
(j) For so long as any of the Securities remain outstanding, the
Issuers will make available at their expense, upon request, to any holder
of such Securities and any prospective purchasers thereof the information
specified in Rule 144A(d)(4) under the Act, unless the Company is then
subject to Section 13 or 15(d) of the Exchange Act.
(k) The Issuers will use their best efforts to (i) permit the
Securities to be designated PORTAL securities in accordance with the rules
and regulations adopted by the NASD relating to trading in the Private
Offerings, Resales and Trading through Automated Linkages market (the
"PORTAL MARKET") and (ii) permit the Securities to be eligible for
clearance and settlement through The Depository Trust Company.
(l) In connection with Securities offered and sold in an offshore
transaction (as defined in Regulation S) the Company will not register any
transfer of such Securities not made in accordance with the provisions of
Regulation S and will not, except in accordance with the provisions of
Regulation S, if applicable, issue any such Securities in the form of
definitive securities.
(m) None of the Company or the Subsidiaries will take any action
prohibited by Regulation M under the Exchange Act (or any successor
provision), in connection with the distribution of the Securities
contemplated hereby.
<PAGE>
-19-
6. EXPENSES. Each of the Issuers, jointly and severally, agrees to
pay all costs and expenses incident to the performance of the obligations of the
Issuers under this Agreement, whether or not the transactions contemplated
herein are consummated or this Agreement is terminated pursuant to Section 11
hereof, including all costs and expenses incident to (i) the printing, word
processing or other production of documents with respect to the transactions
contemplated hereby, including any costs of printing the Preliminary Memorandum
and the Final Memorandum and any amendment or supplement thereto, and any "Blue
Sky" memoranda, (ii) all arrangements relating to the delivery to the Initial
Purchasers of copies of the foregoing documents, (iii) the fees and
disbursements of the counsel, the accountants and any other experts or advisors
retained by the Issuers, (iv) preparation (including printing), issuance and
delivery to the Initial Purchasers of the Securities, (v) the qualification of
the Securities under state securities and "Blue Sky" laws, including filing fees
and fees (not to exceed $10,000) and disbursements of counsel for the Initial
Purchasers relating thereto, (vi) expenses in connection with any meetings with
prospective investors in the Securities, (vii) fees and expenses of the Trustee
including fees and expenses of counsel to the extent required by the Company's
arrangements with the Trustee, (viii) all expenses and listing fees incurred in
connection with the application for quotation of the Securities on the PORTAL
Market and (ix) any fees charged by investment rating agencies for the rating of
the Securities. If the sale of the Securities provided for herein is not
consummated because any condition to the obligations of the Initial Purchasers
set forth in Section 7 hereof is not satisfied, because this Agreement is
terminated or because of any failure, refusal or inability on the part of the
Issuers to perform all obligations and satisfy all conditions on their part to
be performed or satisfied hereunder (other than solely by reason of a default by
the Initial Purchasers of their obligations hereunder after all conditions
hereunder have been satisfied in accordance herewith), the Issuers agree to
promptly reimburse the Initial Purchasers upon demand for all out-of-pocket
expenses (including fees, disbursements and charges of Cahill Gordon & Reindel,
counsel for the Initial Purchasers) that shall have been incurred by the Initial
Purchasers in connection with the proposed purchase and sale of the Securities.
7. CONDITIONS OF THE INITIAL PURCHASERS' OBLIGATIONS. The
obligation of the Initial Purchasers to purchase and pay for the Securities
shall, in their sole discretion, be
<PAGE>
-20-
subject to the satisfaction or waiver of the following conditions on or prior to
the Closing Date:
(a) On the Closing Date, the Initial Purchasers shall have received
the opinion, dated as of the Closing Date and addressed to the Initial
Purchasers, of Latham & Watkins, counsel for the Issuers, in form and
substance reasonably satisfactory to counsel for the Initial Purchasers, to
the effect that:
(i) The Company and the Subsidiaries have been duly
incorporated and are validly existing and in good standing under
the laws of their respective jurisdictions of incorporation and
have all requisite corporate power and authority to own their
properties and to conduct their business as described in the Final
Memorandum; PROVIDED that no opinion as to good standing need be
expressed with respect to VAD International, Inc. subsequent to
June 25, 1997.
(ii) Except as described in the Final Memorandum, all of the
outstanding shares of capital stock of the Subsidiaries are owned,
directly or indirectly, by the Company, free and clear of all
perfected security interests and, to the best knowledge of such
counsel, free and clear of all other liens, encumbrances, equities
and claims or restrictions on transferability (other than those
imposed by the Act and the securities or "Blue Sky" laws of certain
jurisdictions) or voting.
(iii) Except as set forth in the Final Memorandum, to the best
of such counsel's knowledge, no holder of securities of the Company
or any Subsidiary is entitled to have such securities registered
under a registration statement filed by the Issuers pursuant to the
Registration Rights Agreement.
(iv) Each of the Issuers has all requisite corporate power and
authority to execute, deliver and perform each of its obligations
under the Indenture, the Company has all requisite corporate power
and authority to execute, deliver and perform each of its
obligations under the Notes, the Exchange Notes and the Private
Exchange Notes; the Guarantors have all requisite corporate power
and authority to execute, deliver and perform each of their
obligations under the Guarantees; the Indenture meets the
requirements
<PAGE>
-21-
for qualification under the TIA; the Indenture has been duly and validly
authorized, executed and delivered by each of the Issuers and (assuming the
due authorization, execution and delivery thereof by the Trustee)
constitutes the legally valid and binding agreement of each of the Issuers,
enforceable against the Issuers in accordance with its terms, except that
the enforcement thereof may be limited or qualified by (i) bankruptcy,
insolvency, reorganization, moratorium, fraudulent conveyance or other
similar laws now or hereafter in effect relating to or affecting the rights
and remedies of creditors and (ii) general principles of equity, whether
enforcement is considered in a proceeding in equity or at law, and the
discretion of the court before which any proceeding therefor may be
brought.
(v) The Notes are in the form contemplated by the Indenture. The
Notes have each been duly and validly authorized, executed and delivered by
the Company and, when paid for by the Initial Purchasers in accordance with
the terms of this Agreement (assuming the due authorization, execution and
delivery of the Indenture by the Trustee and due authentication and
delivery of the Notes by the Trustee in accordance with the Indenture),
will constitute the legally valid and binding obligations of the Company,
will be entitled to the benefits of the Indenture, and will be enforceable
against the Company in accordance with their terms, except that the
enforcement thereof may be limited or qualified by (i) bankruptcy,
insolvency, reorganization, moratorium, fraudulent conveyance or other
similar laws now or hereafter in effect relating to or affecting the rights
and remedies of creditors and (ii) general principles of equity, whether
enforcement is considered in a proceeding in equity or at law, and the
discretion of the court before which any proceeding therefor may be
brought.
(vi) The Guarantees are in the form contemplated by the Indenture.
The Guarantees have each been duly and validly authorized, executed and
delivered by the Subsidiaries and, when paid for by the Initial Purchasers
in accordance with the terms of this Agreement (assuming the due
authorization, execution and delivery of the Indenture by the Trustee and
due authentication and delivery of the Guarantees by the
<PAGE>
-22-
Trustee in accordance with the Indenture), will constitute the legally
valid and binding obligations of the Subsidiaries, and will be enforceable
against the Subsidiaries in accordance with their terms, except that the
enforcement thereof may be limited or qualified by (i) bankruptcy,
insolvency, reorganization, moratorium, fraudulent conveyance or other
similar laws now or hereafter in effect relating to or affecting the rights
and remedies of creditors and (ii) general principles of equity, whether
enforcement is considered in a proceeding in equity or at law, and the
discretion of the court before which any proceeding therefor may be
brought.
(vii) The Exchange Notes and the Private Exchange Notes have been duly
and validly authorized by the Company, the Guarantees to be endorsed on the
Exchange Notes and the Private Exchange Notes have been duly and validly
authorized by the Guarantors and, when the Exchange Notes and Guarantees
thereof and the Private Exchange Notes have been duly executed and
delivered by the Issuers in accordance with the terms of the Registration
Rights Agreement and the Indenture (assuming the due authorization,
execution and delivery of the Indenture by the Trustee and due
authentication and delivery of the Exchange Notes and the Private Exchange
Notes by the Trustee in accordance with the Indenture), will constitute the
legally valid and binding obligations of the Issuers, be entitled to the
benefits of the Indenture, and be enforceable against the Issuers in
accordance with their terms, except that the enforcement thereof may be
limited or qualified by (i) bankruptcy, insolvency, reorganization,
moratorium, fraudulent conveyance or other similar laws now or hereafter in
effect relating to or affecting the rights and remedies of creditors and
(ii) general principles of equity, whether enforcement is considered in a
proceeding in equity or at law, and the discretion of the court before
which any proceeding therefor may be brought.
(viii) Each of the Issuers has all requisite corporate power and
authority to execute, deliver and perform its obligations under the
Registration Rights Agreement; the Registration Rights Agreement has been
duly and validly authorized, executed and delivered by each of the Issuers
and (assuming due authorization, execution and delivery thereof by the
Initial
<PAGE>
-23-
Purchasers) constitutes the legally valid and binding agreement of each of
the Issuers, enforceable against each of the Issuers in accordance with its
terms, except that the enforcement thereof may be limited or qualified by
(i) bankruptcy, insolvency, reorganization, moratorium or other similar
laws now or hereafter in effect relating to or affecting the rights and
remedies of creditors and (ii) general principles of equity, whether
enforcement is considered in a proceeding in equity or at law, and the
discretion of the court before which any proceeding therefor may be brought
and (iii) the unenforceability under certain circumstances under law or
court decision of provisions providing for the indemnification of or
contribution to a party with respect to a liability where such
indemnification or contribution is contrary to public policy.
(ix) Each of the Issuers has all requisite corporate power and
authority to execute, deliver and perform its obligations under this
Agreement and to consummate the transactions contemplated hereby; each of
the Issuers has duly and validly authorized this Agreement and the
consummation by the Issuers of the transactions contemplated hereby.
This Agreement has been duly executed and delivered by each of the
Issuers.
(x) The Indenture, the Securities and the Registration Rights
Agreement conform in all material respects to the descriptions thereof
contained in the Final Memorandum.
(xi) The execution, delivery and performance by the Company and the
Subsidiaries of this Agreement, the Indenture, the Registration Rights
Agreement and each of the other Offering Documents to which such entity
is a party (including, without limitation, the issuance and sale of the
Securities to the Initial Purchasers) will not conflict with or
constitute or result in a breach or a default under (or an event which
with notice or passage of time or both would constitute a default under)
or violation of any of (i) the terms or provisions of any Contract to
which such entity is a party identified to such counsel as material,
except for any such conflict, breach, violation, default or event which
would not, individually or in the aggregate, have a Material Adverse Ef-
<PAGE>
-24-
fect, (ii) the certificate of incorporation or bylaws (or similar
organizational document) of such entity, or (iii) (assuming compliance
with all applicable federal securities and state securities or "Blue Sky"
laws) any federal, New York or Illinois statute, judgment, decree, order,
rule or regulation known to such counsel to be applicable to such entity
or any of its respective properties or assets, except for any such
conflict, breach or violation which would not, individually or in the
aggregate, have a Material Adverse Effect.
(xii) To the best of such counsel's knowledge, no consent,
approval, authorization or order of any governmental authority is
required for the performance of any of the Offering Documents by the
Company or any Subsidiary, except such as may be required under Blue Sky
laws and except as required pursuant to or contemplated by the
Registration Rights Agreement, as to which such counsel need express no
opinion, and those which have previously been obtained.
(xiii) None of the Company or the Subsidiaries is, or immediately
after the sale of the Securities to be sold hereunder and the application
of the proceeds from such sale (as described in the Final Memorandum
under the caption "Use of Proceeds") will be, an "investment company" as
such term is defined in the Investment Company Act of 1940, as amended.
(xiv) Assuming (i) the accuracy of, and compliance by the Initial
Purchasers with, their representations, warranties and covenants in
Section 8 of the Purchase Agreement, (ii) that the initial resale of the
Securities by the Initial Purchasers is made only to "qualified
institutional buyers" as defined in Rule 144A promulgated under the Act
("QIBs") or a limited number of "accredited investors" as defined in Rule
501(a)(1), (2), (3) or (7) under the Act ("Accredited Investors"), (iii)
compliance by the Issuers' with Section 5(l) and the accuracy of the
Issuers' representations and warranties in Section 2(hh) and with respect
to whether (w) any form of general solicitation was used by the Issuers,
(x) the Final Memorandum contains all the information specified in, and
meeting the requirements of, Rule 144A(d)(4) under the Act, (y) other
offerings of securities are of the same class as the Securities or
<PAGE>
-25-
are of the same class as other securities of the Issuers that are listed on
a national securities exchange registered under Section 6 of the Securities
Exchange Act of 1934, as amended, or quoted in a U.S. automated
inter-dealer quotation system, (iv) the accuracy of the representations
made by each Accredited Investor in the form of Annex A to the Final
Memorandum, and (v) that each QIB and Accredited Investor to whom the
Initial Purchasers originally sell the Securities receives a copy of the
Final Memorandum at or prior to the delivery of a confirmation of sale,
no registration of the Securities under the Act and no qualification of
the Indenture under the TIA is required in connection with the purchase
of the Securities by the Initial Purchasers, or the initial resale of the
Securities by the Initial Purchasers to QIBs or Accredited Investors, in
each case in the manner contemplated by the Purchase Agreement and the
Final Memorandum.
(xv) Neither the consummation of the transactions contemplated by
this Agreement nor the sale, issuance, execution or delivery of the
Securities will violate Regulation G, T (assuming that the Initial
Purchasers do not sell Securities to any person or entity subject to
Regulation T for such person's or entity's own account), U or X of the
Board of Governors of the Federal Reserve System.
At the time the foregoing opinion is delivered, Latham & Watkins shall
additionally state that it has participated in conferences with officers
and other representatives of the Issuers, representatives of the
independent public accountants for the Issuers, representatives of the
Initial Purchasers and counsel for the Initial Purchasers, at which
conferences the contents of the Final Memorandum and related matters were
discussed, and, although it has not independently verified and is not
passing upon and assumes no responsibility for the accuracy, completeness
or fairness of the statements contained in the Final Memorandum, during the
course of such participation (relying as to materiality to the extent they
deemed appropriate upon the statements of officers and other
representatives of the Issuers) no facts have come to its attention which
lead it to believe that the Final Memorandum, on the date thereof or at the
Closing Date, contained an untrue statement of a material fact or omitted
to state a material fact required to be stated therein or necessary
<PAGE>
-26-
to make the statements contained therein, in light of the circumstances
under which they were made, not misleading (it being understood that such
firm need express no opinion with respect to the financial statements and
related notes thereto and the other financial, statistical and accounting
data included in the Final Memorandum). The opinion of Latham & Watkins
described in this Section shall be rendered to the Initial Purchasers at
the request of the Issuers and shall so state therein.
References to the Final Memorandum in this subsection (a) shall
include any amendment or supplement thereto prepared in accordance with the
provisions of this Agreement at the Closing Date.
(b) On the Closing Date, the Initial Purchasers shall have received
the opinion, in form and substance reasonably satisfactory to the Initial
Purchasers, dated as of the Closing Date and addressed to the Initial
Purchasers, of Cahill Gordon & Reindel, counsel for the Initial Purchasers,
with respect to certain legal matters relating to this Agreement and such
other related matters as the Initial Purchasers may reasonably require. In
rendering such opinion, Cahill Gordon & Reindel shall have received and may
rely upon such certificates and other documents and information as it may
reasonably request to pass upon such matters.
(c) The Initial Purchasers shall have received from each of the
Independent Accountants a comfort letter or letters dated the date hereof
and the Closing Date, in form and substance satisfactory to counsel for the
Initial Purchasers.
(d) The representations and warranties of the Issuers contained in
this Agreement shall be true and correct on and as of the date hereof and
on and as of the Closing Date as if made on and as of the Closing Date
(other than to the extent any such representation or warranty is expressly
made as to a certain date); the statements of the officers of the Issuers
made pursuant to any certificate delivered in accordance with the
provisions hereof shall be true and correct on and as of the date made and
on and as of the Closing Date; the Issuers shall each have performed all
covenants and agreements and satisfied all conditions on its part to be
performed or satisfied hereunder at or prior to the Closing Date; and,
except as disclosed in the Final Memorandum (exclusive of any amendment or
<PAGE>
-27-
supplement thereto after the date hereof), subsequent to the date of the
most recent financial statements in such Final Memorandum, there shall have
been no event or development, and no information shall have become known,
that, individually or in the aggregate, has had or would be reasonably
likely to have a Material Adverse Effect.
(e) None of the sale of the Securities or any of the other
Transactions hereunder shall be enjoined (temporarily or permanently) on
the Closing Date.
(f) Subsequent to the date of the most recent financial statements in
the Final Memorandum (exclusive of any amendment or supplement thereto
after the date hereof), none of the Company or any Subsidiary shall have
sustained any loss or interference with respect to any of their respective
businesses or properties from fire, flood, hurricane, accident or other
calamity, whether or not covered by insurance, or from any strike, labor
dispute, slow down or work stoppage or from any legal or governmental
proceeding, order or decree, which loss or interference, individually or in
the aggregate, has had or would be reasonably likely to have a Material
Adverse Effect.
(g) The Initial Purchasers shall have received a certificate of each
of the Issuers, dated the Closing Date, signed on behalf of such Issuer by
its Chairman of the Board, President or any Senior Vice President and the
Chief Financial Officer, to the effect that:
(i) The representations and warranties of the Issuers contained
in this Agreement are true and correct on and as of the date hereof
and on and as of the Closing Date, and the Issuers have in all
material respects performed all covenants and agreements and satisfied
all conditions on its part to be performed or satisfied hereunder at
or prior to the Closing Date;
(ii) At the Closing Date, since the date hereof or since the date
of the most recent financial statements in the Final Memorandum
(exclusive of any amendment or supplement thereto after the date
hereof), no event or development known to such officer has occurred,
and no information has become known, that, individually or in the
aggregate, has had or would be reasonably likely to have a Material
Adverse Effect; and
<PAGE>
-28-
(iii) The sale of the Securities hereunder has not been enjoined
(temporarily or permanently).
(h) On the Closing Date, the Initial Purchasers shall have received
the Registration Rights Agreement executed by the Issuers and such
agreement shall be in full force and effect.
All such documents, opinions, certificates, letters, schedules or
instruments delivered pursuant to this Agreement will comply with the provisions
hereof only if they are reasonably satisfactory in all material respects to the
Initial Purchasers and counsel for the Initial Purchasers. The Issuers shall
furnish to the Initial Purchasers such conformed copies of such documents,
opinions, certificates, letters, schedules and instruments in such quantities as
the Initial Purchasers shall reasonably request.
8. OFFERING OF SECURITIES; RESTRICTIONS ON TRANSFER. Each of the
Initial Purchasers represents and warrants (as to itself only) that it is a QIB.
Each of the Initial Purchasers agrees with the Issuers (as to itself only) that
(i) it has not and will not solicit offers for, or offer or sell, the Securities
by any form of general solicitation or general advertising (as those terms are
used in Regulation D under the Act) or in any manner involving a public offering
within the meaning of Section 4(2) of the Act; and (ii) it has and will solicit
offers for the Securities only from, and will offer the Securities only to
(A) in the case of offers inside the United States, (x) persons whom the Initial
Purchasers reasonably believe to be QIBs or, if any such person is buying for
one or more institutional accounts for which such person is acting as fiduciary
or agent, only when such person has represented to the Initial Purchasers that
each such account is a QIB, to whom notice has been given that such sale or
delivery is being made in reliance on Rule 144A, and, in each case, in
transactions under Rule 144A or (y) a limited number of other institutional
investors reasonably believed by the Initial Purchasers to be Accredited
Investors that, prior to their purchase of the Securities, deliver to the
Initial Purchasers a letter containing the representations and agreements set
forth in Annex A to the Final Memorandum and (B) in the case of offers outside
the United States, to persons other than U.S. persons ("foreign purchasers,"
which term shall include dealers or other professional fiduciaries in the United
States acting on a discretionary basis for foreign beneficial owners (other than
an estate or trust)); PROVIDED, HOWEVER, that, in the case of this clause (B),
in purchasing such Securities such persons are deemed to
<PAGE>
-29-
have represented and agreed as provided under the caption "Transfer
Restrictions" contained in the Final Memorandum.
9. INDEMNIFICATION AND CONTRIBUTION. (a) Each of the Issuers,
jointly and severally, agrees to indemnify and hold harmless the Initial
Purchasers, and each person, if any, who controls any Initial Purchaser within
the meaning of Section 15 of the Act or Section 20 of the Exchange Act, against
any losses, claims, damages or liabilities to which any Initial Purchaser or
such controlling person may become subject under the Act, the Exchange Act or
otherwise, insofar as any such losses, claims, damages or liabilities (or
actions in respect thereof) arise out of or are based upon:
(i) any untrue statement or alleged untrue statement of any material
fact contained in any Memorandum or any amendment or supplement thereto or
any application or other document, or any amendment or supplement thereto,
executed by the Issuers or based upon written information furnished by or
on behalf of the Issuers filed in any jurisdiction in order to qualify the
Securities under the securities or "Blue Sky" laws thereof or filed with
any securities association or securities exchange (each an "Application");
or
(ii) the omission or alleged omission to state, in any Memorandum or
any amendment or supplement thereto or any Application, a material fact
required to be stated therein or necessary to make the statements therein,
in light of the circumstances under which they were made, not misleading,
and will reimburse, as incurred, the Initial Purchasers and each such
controlling person for any legal or other expenses incurred by the Initial
Purchasers or such controlling person in connection with investigating,
defending against or appearing as a third-party witness in connection with any
such loss, claim, damage, liability or action; PROVIDED, HOWEVER, the Issuers
will not be liable in any such case to the extent that any such loss, claim,
damage, or liability arises out of or is based upon any untrue statement or
alleged untrue statement or omission or alleged omission made in any Memorandum
or any amendment or supplement thereto or any Application in reliance upon and
in conformity with written information concerning the Initial Purchasers
furnished to the Issuers by the Initial Purchasers specifically for use therein.
This indemnity agreement will be in addition to any liability that the Issuers
may otherwise have to the indemnified parties; and PROVIDED, FURTHER,
<PAGE>
-30-
that the Company will not be liable to the Initial Purchasers or any person
controlling the Initial Purchasers or any of their respective affiliates,
directors, officers, agents, representatives or employees with respect to any
such untrue statement or omission made in the Preliminary Memorandum that is
corrected in the Final Memorandum (or any amendment or supplement thereto) if
(i) the person asserting any such loss, claim, damage or liability purchased
Notes from the Initial Purchasers in reliance upon the Preliminary Memorandum
but was not delivered or sent a copy of the Final Memorandum (as amended or
supplemented) at or prior to the written confirmation of the sale of such Notes
to such person, unless such failure to deliver or send the Final Memorandum (as
amended or supplemented) was a result of noncompliance by the Company with
Section 5(d) of this Agreement and (ii) it shall have been determined that the
Initial Purchasers, and each such controlling person, if any, would not have
incurred such losses, claims, damages or liabilities had the Final Memorandum
been delivered or sent. The Issuers shall not be liable under this Section 9
for any settlement of any claim or action effected without the prior written
consent of the Company, which shall not be unreasonably withheld.
(b) The Initial Purchasers severally agree to indemnify and hold
harmless the Issuers, their respective directors, officers and each person, if
any, who controls such entity within the meaning of Section 15 of the Act or
Section 20 of the Exchange Act against any losses, claims, damages or
liabilities to which such entity or any such director, officer or controlling
person may become subject under the Act, the Exchange Act or otherwise, insofar
as such losses, claims, damages or liabilities (or actions in respect thereof)
arise out of or are based upon (i) any untrue statement or alleged untrue
statement of any material fact contained in any Memorandum or any amendment or
supplement thereto or any Application, or (ii) the omission or the alleged
omission to state therein a material fact required to be stated in any
Memorandum or any amendment or supplement thereto or any Application, or
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading, in each case to the extent, but only to
the extent, that such untrue statement or alleged untrue statement or omission
or alleged omission was made in reliance upon and in conformity with written
information concerning such Initial Purchaser, furnished to the Issuers by such
Initial Purchaser specifically for use therein; and subject to the limitation
set forth immediately preceding this clause, will reimburse, as incurred, any
legal or other expenses incurred by the Issuers or any such director,
<PAGE>
-31-
officer or controlling person in connection with investigating or defending
against or appearing as a third party witness in connection with any such loss,
claim, damage, liability or action in respect thereof. This indemnity agreement
will be in addition to any liability that the Initial Purchasers may otherwise
have to the indemnified parties. The Initial Purchasers shall not be liable
under this Section 9 for any settlement of any claim or action effected without
their consent, which shall not be unreasonably withheld.
(c) Promptly after receipt by an indemnified party under this
Section 9 of notice of the commencement of any action for which such indemnified
party is entitled to indemnification under this Section 9, such indemnified
party will, if a claim in respect thereof is to be made against the indemnifying
party under this Section 9, notify the indemnifying party of the commencement
thereof in writing; but the omission to so notify the indemnifying party
(i) will not relieve it from any liability under paragraph (a) or (b) above
unless and to the extent such failure results in the forfeiture by the
indemnifying party of substantial rights and defenses and (ii) will not, in any
event, relieve the indemnifying party from any obligations to any indemnified
party other than the indemnification obligation provided in paragraphs (a) and
(b) above. In case any such action is brought against any indemnified party,
and it notifies the indemnifying party of the commencement thereof, the
indemnifying party will be entitled to participate therein and, to the extent
that it may wish, jointly with any other indemnifying party similarly notified,
to assume the defense thereof, with counsel reasonably satisfactory to such
indemnified party; PROVIDED, HOWEVER, that if (i) the use of counsel chosen by
the indemnifying party to represent the indemnified party would present such
counsel with a conflict of interest, (ii) the defendants in any such action
include both the indemnified party and the indemnifying party and the
indemnified party shall have been advised by counsel that there may be one or
more legal defenses available to it and/or other indemnified parties that are
different from or additional to those available to the indemnifying party, or
(iii) the indemnifying party shall not have employed counsel reasonably
satisfactory to the indemnified party to represent the indemnified party within
a reasonable time after receipt by the indemnifying party of notice of the
institution of such action, then, in each such case, the indemnifying party
shall not have the right to direct the defense of such action on behalf of such
indemnified party or parties and such indemnified party or parties shall have
the right to select separate counsel to defend such action on behalf of such
indemnified party or parties (it being understood,
<PAGE>
-32-
however, that in connection with any such action the indemnifying party shall
not be liable for the expenses of more than one separate counsel (in addition to
local counsel) designated by the Initial Purchasers in the case of paragraph (a)
of this Section 9 or the Issuers in the case of paragraph (b) of this Section 9,
representing the indemnified parties under such paragraph (a) or paragraph (b),
as the case may be, who are parties to such action or actions). After notice
from the indemnifying party to such indemnified party of its election so to
assume the defense thereof and approval by such indemnified party of counsel
appointed to defend such action, the indemnifying party will not be liable to
such indemnified party under this Section 9 for any legal or other expenses,
other than reasonable costs of investigation, subsequently incurred by such
indemnified party in connection with the defense thereof, unless (i) the
indemnified party shall have employed separate counsel in accordance with the
proviso to the immediately preceding sentence or (ii) the indemnifying party has
authorized in writing the employment of counsel for the indemnified party at the
expense of the indemnifying party. After such notice from the indemnifying
party to such indemnified party, the indemnifying party will not be liable for
the costs and expenses of any settlement of such action effected by such
indemnified party without the prior written consent of the indemnifying party
(which consent shall not be unreasonably withheld), unless such indemnified
party waived in writing its rights under this Section 9, in which case the
indemnified party may effect such a settlement without such consent. The
Issuers shall not, without the prior written consent of the Initial Purchasers,
effect any settlement or compromise of any pending or threatened proceeding in
respect of which any Initial Purchaser is or could have been a party, or
indemnity could have been sought hereunder by any Initial Purchaser, unless such
settlement (A) includes an unconditional written release of the Initial
Purchasers, in form and substance reasonably satisfactory to the Initial
Purchasers, from all liability on claims that are the subject matter of such
proceeding and (B) does not include any statement as to an admission of fault,
culpability or failure to act by or on behalf of any Initial Purchaser.
(d) In circumstances in which the indemnity agreement provided for in
the preceding paragraphs of this Section 9 is unavailable to, or insufficient to
hold harmless, an indemnified party in respect of any losses, claims, damages or
liabilities (or actions in respect thereof), each indemnifying party, in order
to provide for just and equitable contribution, shall contribute to the amount
paid or payable by such indemnified party as a result of such losses, claims,
damages or li-
<PAGE>
-33-
abilities (or actions in respect thereof) in such proportion as is appropriate
to reflect (i) the relative benefits received by the indemnifying party or
parties on the one hand and the indemnified party on the other from the offering
of the Securities or (ii) if the allocation provided by the foregoing clause (i)
is not permitted by applicable law, not only such relative benefits but also the
relative fault of the indemnifying party or parties on the one hand and the
indemnified party on the other in connection with the statements or omissions or
alleged statements or omissions that resulted in such losses, claims, damages or
liabilities (or actions in respect thereof). The relative benefits received by
the Issuers on the one hand and any Initial Purchaser on the other shall be
deemed to be in the same proportion as the total proceeds from the offering
(before deducting expenses) received by the Company bear to the total discounts
and commissions received by such Initial Purchaser hereunder. The relative
fault of the parties shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to information
supplied by the Issuers on the one hand, or such Initial Purchaser on the other,
the parties' relative intent, knowledge, access to information and opportunity
to correct or prevent such statement or omission or alleged statement or
omission, and any other equitable considerations appropriate in the
circumstances. The Issuers and the Initial Purchasers agree that it would not
be equitable if the amount of such contribution were determined by pro rata or
per capita allocation or by any other method of allocation that does not take
into account the equitable considerations referred to in the first sentence of
this paragraph (d). Notwithstanding any other provision of this paragraph (d),
no Initial Purchaser shall be obligated to make contributions hereunder that in
the aggregate exceed the total discounts, commissions and other compensation
received by such Initial Purchaser under this Agreement, less the aggregate
amount of any damages that such Initial Purchaser has otherwise been required to
pay by reason of the untrue or alleged untrue statements or the omissions or
alleged omissions to state a material fact, and no person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Act) shall be
entitled to contribution from any person who was not guilty of such fraudulent
misrepresentation. For purposes of this paragraph (d), each person, if any, who
controls an Initial Purchaser within the meaning of Section 15 of the Act or
Section 20 of the Exchange Act shall have the same rights to contribution as the
Initial Purchasers, and each director, officer and each person, if any, who
controls any Issuer within the
<PAGE>
-34-
meaning of Section 15 of the Act or Section 20 of the Exchange Act, shall have
the same rights to contribution as the Issuers.
10. SURVIVAL CLAUSE. The respective representations, warranties,
agreements, covenants, indemnities and other statements of the Issuers, their
officers and the Initial Purchasers set forth in this Agreement or made by or on
behalf of them pursuant to this Agreement shall remain in full force and effect,
regardless of (i) any investigation made by or on behalf of the Issuers, any of
their respective Affiliates or any of their respective officers or directors,
the Initial Purchasers or any controlling person referred to in Section 9 hereof
and (ii) delivery of and payment for the Securities. The respective agreements,
covenants, indemnities and other statements set forth in Sections 6, 9 and 15
hereof shall remain in full force and effect, regardless of any termination or
cancellation of this Agreement.
11. TERMINATION. (a) This Agreement may be terminated in the sole
discretion of the Initial Purchasers by notice to the Company given prior to the
Closing Date in the event that the Issuers shall have failed, refused or been
unable to perform all obligations and satisfy all conditions on their part to be
performed or satisfied hereunder at or prior thereto or, if at or prior to the
Closing Date:
(i) any of the Company or the Subsidiaries shall have sustained any
loss or interference with respect to its businesses or properties from
fire, flood, hurricane, accident or other calamity, whether or not covered
by insurance, or from any strike, labor dispute, slow down or work stoppage
or any legal or governmental proceeding, which loss or interference, in the
sole judgment of the Initial Purchasers, has had or has a Material Adverse
Effect, or there shall have been, in the sole judgment of the Initial
Purchasers, any event or development that, individually or in the
aggregate, has or could be reasonably likely to have a Material Adverse
Effect (including without limitation a change in control of the Company or
the Subsidiaries), except in each case as described in the Final Memorandum
(exclusive of any amendment or supplement thereto);
(ii) trading in securities of the Company or in securities generally
on the New York Stock Exchange, American Stock Exchange or the NASDAQ
National Market shall have been suspended or minimum or maximum prices
shall have been established on any such exchange or market;
<PAGE>
-35-
(iii) a banking moratorium shall have been declared by New York or
United States authorities;
(iv) there shall have been (A) an outbreak or escalation of
hostilities between the United States and any foreign power, or (B) an
outbreak or escalation of any other insurrection or armed conflict
involving the United States or any other national or international calamity
or emergency, or (C) any material change in the financial markets of the
United States which, in the case of (A), (B) or (C) above and in the sole
judgment of the Initial Purchasers, makes it impracticable or inadvisable
to proceed with the offering or the delivery of the Securities as
contemplated by the Final Memorandum; or
(v) any securities of the Company shall have been downgraded or
placed on any "watch list" for possible downgrading by any nationally
recognized statistical rating organization.
(b) Termination of this Agreement pursuant to this Section 11 shall
be without liability of any party to any other party except as provided in
Section 10 hereof.
12. INFORMATION SUPPLIED BY THE INITIAL PURCHASERS. The statements
set forth in the last paragraph on the front cover page and in the second and
third sentences of the third paragraph under the heading "Private Placement" in
the Final Memorandum (to the extent such statements relate to the Initial
Purchasers) constitute the only information furnished by the Initial Purchasers
to the Issuers for the purposes of Sections 2(a) and 9 hereof.
13. NOTICES. All communications hereunder shall be in writing and,
if sent to the Initial Purchasers, shall be mailed or delivered to (i) BT
Securities Corporation, 130 Liberty Street, New York, New York 10006, Attention:
Corporate Finance Department; if sent to the Issuers, shall be mailed or
delivered to the Company at 4800 Hampden Lane, Bethesda, Maryland 20814,
Attention: Chief Financial Officer; with a copy to Latham & Watkins, 5800 Sears
Tower, Chicago, Illinois 60606, Attention: Mark A. Stegemoeller, Esq.
All such notices and communications shall be deemed to have been duly
given: when delivered by hand, if personally delivered; five business days
after being deposited in the mail, postage prepaid, if mailed; and one business
day after being timely delivered to a next-day air courier.
<PAGE>
-36-
14. SUCCESSORS. This Agreement shall inure to the benefit of and be
binding upon the Initial Purchasers and the issuers and their respective
successors and legal representatives, and nothing expressed or mentioned in this
Agreement is intended or shall be construed to give any other person any legal
or equitable right, remedy or claim under or in respect of this Agreement, or
any provisions herein contained; this Agreement and all conditions and
provisions hereof being intended to be and being for the sole and exclusive
benefit of such persons and for the benefit of no other person except that
(i) the indemnities of the Issuers contained in Section 9 of this Agreement
shall also be for the benefit of any person or persons who control the Initial
Purchasers within the meaning of Section 15 of the Act or Section 20 of the
Exchange Act and (ii) the indemnities of the Initial Purchasers contained in
Section 9 of this Agreement shall also be for the benefit of the directors of
the Issuers, their officers and any person or persons who control the Issuers
within the meaning of Section 15 of the Act or Section 20 of the Exchange Act.
No purchaser of Securities from the Initial Purchasers will be deemed a
successor because of such purchase.
15. APPLICABLE LAW. THE VALIDITY AND INTERPRETATION OF THIS
AGREEMENT, AND THE TERMS AND CONDITIONS SET FORTH HEREIN SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO
CONTRACTS MADE AND TO BE PERFORMED WHOLLY THEREIN, WITHOUT GIVING EFFECT TO ANY
PROVISIONS THEREOF RELATING TO CONFLICTS OF LAW.
16. COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
17. ENTIRE AGREEMENT. This Agreement constitutes the entire
agreement among the parties hereto and supersedes all prior agreements,
undertakings and arrangements, oral or written, among the parties hereto with
respect to the subject matter hereof.
<PAGE>
-37-
If the foregoing correctly sets forth our understanding, please
indicate your acceptance thereof in the space provided below for that purpose,
whereupon this letter shall constitute a binding agreement among the Issuers and
the Initial Purchasers.
Very truly yours,
FEDERAL DATA CORPORATION
By: /s/ James M. Dean
------------------------------
Name: James M. Dean
Title: Vice President
FDCT CORP.
By: /s/ James M. Dean
------------------------------
Name: James M. Dean
Title: Vice President
NYMA, INC.
By: /s/ James M. Dean
------------------------------
Name: James M. Dean
Title: Vice President
SYLVEST MANAGEMENT SYSTEMS CORPORATION
By: /s/ James M. Dean
------------------------------
Name: James M. Dean
Title: Vice President
FDC TECHNOLOGIES INC.
By: /s/ James M. Dean
------------------------------
Name: James M. Dean
Title: Vice President
<PAGE>
-38-
DOXSYS, INC.
By: /s/ James M. Dean
------------------------------
Name: James M. Dean
Title: Vice President
VAD INTERNATIONAL, INC.
By: /s/ James M. Dean
------------------------------
Name: James M. Dean
Title: Vice President
The foregoing Agreement is
hereby confirmed and accepted
as of the date first above
written.
BT SECURITIES CORPORATION
By: /s/ Frank V. Nash
-------------------------
Name: Frank V. Nash
Title: Senior Managing Director
LEHMAN BROTHERS INC.
By: /s/ Stephen Mehos
-------------------------
Name: Stephen Mehos
Title: Associate
<PAGE>
SCHEDULE 1
Principal
Amount of
Initial Purchaser Notes
- ----------------- -----
BT Securities Corporation.................. $63,000,000
Lehman Brothers Inc........................ 42,000,000
------------
Total................................. $105,000,000
<PAGE>
SCHEDULE 2
Subsidiary Incorporation
---------- -------------
Federal Data Corporation Delaware
FDCT Corp. Delaware
FDC Technologies Inc. Delaware
DoxSys, Inc. Delaware
Sylvest Management Systems Corporation Maryland
NYMA, Inc. Maryland
VAD International, Inc. Maryland
<PAGE>
EXHIBIT 4.4
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
REGISTRATION RIGHTS AGREEMENT
Dated as of July 25, 1997
by and among
FEDERAL DATA CORPORATION,
THE SUBSIDIARY GUARANTORS NAMED HEREIN,
BT SECURITIES CORPORATION
and
LEHMAN BROTHERS INC.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
$105,000,000
10 1/8% SENIOR SUBORDINATED NOTES DUE 2005
<PAGE>
This Registration Rights Agreement is dated as of July 25, 1997, by
and among Federal Data Corporation, a Delaware corporation (the "COMPANY"), each
of the subsidiaries of the Company listed on the signature pages hereto as a
Guarantor (collectively, the "SUBSIDIARY GUARANTORS" and, together with the
Company, the "ISSUERS") and BT Securities Corporation and Lehman Brothers Inc.
(collectively, the "INITIAL PURCHASERS").
This Agreement is made pursuant to the Purchase Agreement, dated July
18, 1997, among the Company, the Subsidiary Guarantors and the Initial
Purchasers (the "PURCHASE AGREEMENT"). In order to induce the Initial
Purchasers to enter into the Purchase Agreement, the Issuers have agreed to
provide the registration rights provided for in this Agreement to the Initial
Purchasers and their respective direct and indirect transferees and assigns.
The execution and delivery of this Agreement is a condition to the closing of
the transactions contemplated by the Purchase Agreement.
The parties hereby agree as follows:
1. DEFINITIONS
As used in this Agreement, the following terms shall have the
following meanings:
AFFILIATE: With respect to any specified person, "Affiliate" shall
mean any other person directly or indirectly controlling or controlled by or
under direct or indirect common control with such specified person. For the
purposes of this definition, "control," when used with respect to any person,
means the power to direct the management and policies of such person, directly
or indirectly, whether through the ownership of voting securities, by contract
or otherwise and the terms "affiliated," controlling" and "controlled" have
meanings correlative to the foregoing.
AGREEMENT: This Registration Rights Agreement, as the same may be
amended, supplemented or modified from time to time in accordance with the terms
hereof.
BUSINESS DAY: Any day except a Saturday, a Sunday or a day on which
banking institutions in New York, New York generally are required or authorized
by law or other government action to be closed.
COMPANY: As defined in the preamble hereof.
<PAGE>
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CONSUMMATE OR CONSUMMATE: When used to qualify the term "Exchange
Offer", shall mean validly and lawfully to issue and deliver the Exchange Notes
pursuant to the Exchange Offer for all Notes validly tendered and not validly
withdrawn pursuant thereto in accordance with the terms of this Agreement.
CONSUMMATION DATE: The date that is 30 days immediately following the date that
the Exchange Registration Statement shall have been declared effective by the
SEC.
EFFECTIVENESS PERIOD: As defined in Section 3(a) hereof.
EXCHANGE ACT: The Securities Exchange Act of 1934, as amended, and
the rules and regulations promulgated by the SEC pursuant thereto.
EXCHANGE DATE: As defined in Section 2(d) hereof.
EXCHANGE NOTES: The 10 1/8% Senior Subordinated Notes due 2005 of the
Company, guaranteed on a senior subordinated unsecured basis by each of the
Subsidiary Guarantors, that are identical to the Notes in all material respects,
except that the provisions regarding restrictions on transfer shall be modified,
as provided in the Indenture (or the indenture pursuant to which the Exchange
Notes are issued), and the issuance thereof pursuant to the Exchange Offer shall
have been registered pursuant to an effective Registration Statement in
compliance with the Securities Act.
EXCHANGE OFFER: An offer to issue, in exchange for any and all of the
Notes, a like aggregate principal amount of Exchange Notes, which offer shall be
made by the Company pursuant to Section 2 hereof.
EXCHANGE REGISTRATION STATEMENT: As defined in Section 2(a) hereof.
FILING DATE: As defined in Section 2(a) hereof.
INDEMNIFIED PERSON: As defined in Section 7(a) hereof.
INDENTURE: The Indenture, dated as of July 15, 1997, among the
Issuers and Norwest Bank, Minnesota, N.A., as trustee thereunder, pursuant to
which the Notes are issued, as amended or supplemented from time to time in
accordance with the terms thereof.
<PAGE>
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INITIAL PURCHASERS: As defined in the preamble hereof.
ISSUE DATE: As defined in Section 2(a) hereof.
ISSUERS: As defined in the preamble hereof.
LIQUIDATED DAMAGES. As defined in Section 4(a) hereof.
NOTES: The 10 1/8% Senior Subordinated Notes due 2005 of the Company,
guaranteed on a senior subordinated unsecured basis by each of the Subsidiary
Guarantors, issued pursuant to the Indenture.
PARTICIPATING BROKER-DEALER: As defined in Section 2(e) hereof.
PRIVATE EXCHANGE: As defined in Section 2(c) hereof.
PRIVATE EXCHANGE NOTES: As defined in Section 2(c) hereof.
PROSPECTUS: The prospectus included in any Registration Statement
(including, without limitation, a prospectus that discloses information
previously omitted from a prospectus filed as part of an effective registration
statement in reliance upon Rule 430A promulgated pursuant to the Securities
Act), as amended or supplemented by any prospectus supplement, with respect to
the terms of the offering of any portion of the Notes, Exchange Notes or Private
Exchange Notes covered by such Registration Statement, and all other amendments
and supplements to any such prospectus, including post-effective amendments, and
all material incorporated by reference or deemed to be incorporated by
reference, if any, in such prospectus.
REGISTRATION DEFAULT: As defined in Section 4(b) hereof.
REGISTRATION STATEMENT: Any registration statement of the Company and
the Subsidiary Guarantors that covers any of the Notes, Exchange Notes or
Private Exchange Notes pursuant to the provisions of this Agreement, including
the Prospectus, amendments and supplements to such registration statement or
Prospectus, including pre- and post-effective amendments, all exhibits thereto,
and all material incorporated by reference or deemed to be incorporated by
reference, if any, in such registration statement.
<PAGE>
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RULE 144(K): Rule 144(k) promulgated by the SEC pursuant to the
Securities Act, as such Rule may be amended from time to time, or any similar
rule or regulation hereafter adopted by the SEC as a replacement thereto having
substantially the same effect as such Rule.
RULE 144A: Rule 144A promulgated by the SEC pursuant to the
Securities Act, as such Rule may be amended from time to time, or any similar
rule or regulation hereafter adopted by the SEC as a replacement thereto having
substantially the same effect as such Rule.
RULE 158: Rule 158 promulgated by the SEC pursuant to the Securities
Act, as such Rule may be amended from time to time, or any similar rule or
regulation hereafter adopted by the SEC as a replacement thereto having
substantially the same effect as such Rule.
RULE 174: Rule 174 promulgated by the SEC pursuant to the Securities
Act, as such Rule may be amended from time to time, or any similar rule or
regulation hereafter adopted by the SEC as a replacement thereto having
substantially the same effect as such Rule.
RULE 415: Rule 415 promulgated by the SEC pursuant to the Securities
Act, as such Rule may be amended from time to time, or any similar rule or
regulation hereafter adopted by the SEC as a replacement thereto having
substantially the same effect as such Rule.
RULE 424: Rule 424 promulgated by the SEC pursuant to the Securities
Act, as such Rule may be amended from time to time, or any similar rule or
regulation hereafter adopted by the SEC as a replacement thereto having
substantially the same effect as such Rule.
SEC: The Securities and Exchange Commission.
SECURITIES ACT: The Securities Act of 1933, as amended, and the rules
and regulations promulgated by the SEC thereunder.
SHELF BLACKOUT PERIOD: As defined in Section 3(a) hereof.
SHELF FILING EVENT: As defined in Section 3(a) hereof.
<PAGE>
-5-
SHELF REGISTRATION: As defined in Section 3(a) hereof.
SHELF REGISTRATION STATEMENT: As defined in Section 3(a) hereof.
SPECIAL COUNSEL: Cahill Gordon & Reindel, special counsel to the
holders of Transfer Restricted Notes, or such other counsel as shall be agreed
upon by the Issuers and holders of a majority in aggregate principal amount of
Transfer Restricted Notes, the reasonable expenses of which holders of Transfer
Restricted Notes will be reimbursed by the Issuers pursuant to Section 6 hereof.
SUBSIDIARY GUARANTORS: As defined in the preamble hereof.
TIA: The Trust Indenture Act of 1939, as amended.
TRANSFER RESTRICTED NOTE: Each Note, upon original issuance thereof,
and at all times subsequent thereto, each Exchange Note as to which Section
3(a)(ii) hereof is applicable upon original issuance and at all times subsequent
thereto and each Private Exchange Note upon original issuance thereof and at all
times subsequent thereto, until in the case of any such Note, Exchange Note or
Private Exchange Note, as the case may be, the earliest to occur of (i) the date
on which any such Note has been exchanged by a person other than a Participating
Broker-Dealer for an Exchange Note (other than with respect to an Exchange Note
as to which Section 3(a)(ii) hereof applies) pursuant to the Exchange Offer,
(ii) with respect to Exchange Notes received by Participating Broker-Dealers in
the Exchange Offer, the earlier of (x) the date on which such Exchange Note has
been sold by such Participating Broker-Dealer by means of the Prospectus
contained in the Exchange Registration Statement and (y) the date on which the
Exchange Registration Statement has been effective under the Securities Act for
a period of six months after the Consummation Date, (iii) a Shelf Registration
Statement covering such Note, Exchange Note or Private Exchange Note has been
declared effective by the SEC and such Note, Exchange Note or Private Exchange
Note, as the case may be, has been disposed of in accordance with such effective
Shelf Registration Statement, (iv) the date on which such Note, Exchange Note or
Private Exchange Note, as the case may be, is eligible for distribution to the
public without volume or manner of sale restrictions pursuant to Rule 144(k) or
(v) the date on which such Note, Exchange Note or Private Exchange Note, as the
case may be, ceases to be outstanding for purposes of the Indenture
<PAGE>
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or any other indenture under which such Exchange Note or Private Exchange Note
was issued.
TRUSTEE: The trustee under the Indenture.
UNDERWRITTEN REGISTRATION OR UNDERWRITTEN OFFERING: A registration in
connection with which securities are sold to an underwriter for reoffering to
the public pursuant to an effective Registration Statement.
2. EXCHANGE OFFER
(a) To the extent not prohibited by any applicable law or
applicable interpretation of the staff of the SEC, the Issuers shall (A) prepare
and, on or prior to 60 days (the "FILING DATE") after the date of original
issuance of the Notes (the "ISSUE DATE"), file with the SEC a Registration
Statement under the Securities Act with respect to an offer by the Company to
the holders of the Notes to issue and deliver to such holders, in exchange for
Notes, a like principal amount of Exchange Notes, (B) use their best efforts to
cause the Registration Statement relating to the Exchange Offer to be declared
effective by the SEC under the Securities Act on or prior to 150 days after the
Issue Date, and (C) commence the Exchange Offer and use their best efforts to
issue, on or prior to the Consummation Date, the Exchange Notes. The offer and
sale of the Exchange Notes pursuant to the Exchange Offer shall be registered
pursuant to the Securities Act on an appropriate form (the "EXCHANGE
REGISTRATION STATEMENT") and duly registered or qualified under all applicable
state securities or Blue Sky laws and will comply with all applicable tender
offer rules and regulations under the Exchange Act and state securities or Blue
Sky laws. The Exchange Offer shall not be subject to any condition, other than
that the Exchange Offer does not violate any applicable law or regulation or
interpretation of the staff of the SEC. Upon consummation of the Exchange Offer
in accordance with this Section 2, the Issuers shall have no further
registration obligations other than with respect to (i) Private Exchange Notes,
(ii) Exchange Notes held by Participating Broker-Dealers and (iii) Notes or
Exchange Notes as to which Section 3(a)(iii) hereof applies. No securities
shall be included in the Exchange Registration Statement other than the Exchange
Notes.
(b) The Issuers may require each holder of Notes, as a condition to
its participation in the Exchange Offer, to represent to the Issuers and their
counsel in writing (which may be contained in the applicable letter of
transmittal) that
<PAGE>
-7-
at the time of the consummation of the Exchange Offer (i) any Exchange Notes
received by such holder will be acquired in the ordinary course of its business,
(ii) such holder will have no arrangement or understanding with any person to
participate in the distribution (within the meaning of the Securities Act) of
the Exchange Notes and (iii) such holder is not an Affiliate of an Issuer, or if
it has such an arrangement or understanding or is an Affiliate of an Issuer, it
will comply with the registration and prospectus delivery requirements of the
Securities Act, to the extent applicable.
If the holder is not a broker-dealer, it will be required to represent
that it is not engaged in, and does not intend to engage in, the distribution of
the Exchange Notes. If the holder is a broker-dealer that will receive Exchange
Notes for its own account in exchange for Notes that were acquired as a result
of market-making activities or other trading activities, it will be required to
acknowledge that it will deliver a prospectus in connection with any resale of
such Exchange Notes.
(c) If, prior to consummation of the Exchange Offer, any of the
Initial Purchasers holds any Notes acquired by it and having, or which are
reasonably likely to be determined to have, the status of an unsold allotment in
the initial distribution, or any other holder of Notes is not entitled to
participate in the Exchange Offer, the Issuers, upon the request of any Initial
Purchaser or any such holder, shall, simultaneously with the delivery of the
Exchange Notes in the Exchange Offer, issue and deliver to such Initial
Purchaser and any such holder, in exchange (the "PRIVATE EXCHANGE") for such
Notes held by such Initial Purchaser and any such holder, a like principal
amount of debt securities of the Company, guaranteed by each of the Subsidiary
Guarantors on a senior subordinated basis, that are identical in all material
respects to the Exchange Notes (the "PRIVATE EXCHANGE NOTES") (and which are
issued pursuant to the same indenture as the Exchange Notes). The Private
Exchange Notes shall bear the same CUSIP number as the Exchange Notes.
(d) Unless the Exchange Offer would not be permitted by any
applicable law or interpretation of the staff of the SEC, the Company shall mail
the Exchange Offer Prospectus and appropriate accompanying documents, including
appropriate letters of transmittal, to each holder of Notes providing, in
addition to such other disclosures as are required by applicable law:
<PAGE>
-8-
(i) that the Exchange Offer is being made pursuant to this
Agreement and that all Notes validly tendered will be accepted for
exchange;
(ii) The date of acceptance for exchange (the "EXCHANGE DATE"),
which date shall in no event be later than the Consummation Date (unless
otherwise required by applicable law);
(iii) that a holder of a Note electing to have a Note exchanged
pursuant to the Exchange Offer will be required to surrender such Note,
together with the enclosed letters of transmittal, to the institution and
at the address (located in the Borough of Manhattan, The City of New York)
specified in the notice prior to the close of business on the Exchange
Date; and
(iv) that holders of Notes that do not tender all such securities
pursuant to the Exchange Offer may no longer have any registration rights
hereunder with respect to Notes not tendered.
Promptly after the Exchange Date, the Company shall:
(i) accept for exchange all Notes or portions thereof validly
tendered and not validly withdrawn pursuant to the Exchange Offer; and
(ii) deliver, or cause to be delivered, to the Trustee for
cancellation all Notes or portions thereof so accepted for exchange by the
Company, and issue, cause the Trustee under the Indenture (or the indenture
pursuant to which the Exchange Notes are issued) to authenticate, and mail
to each holder of Notes, Exchange Notes equal in principal amount to the
principal amount of the Notes surrendered by such holder.
(e) The Issuers and the Initial Purchasers acknowledge that the
staff of the SEC has taken the position that any broker-dealer that owns
Exchange Notes that were received by such broker-dealer for its own account in
the Exchange Offer (a "PARTICIPATING BROKER-DEALER") may be deemed to be an
"underwriter" within the meaning of the Securities Act and must deliver a
prospectus meeting the requirements of the Securities Act in connection with any
resale of such Exchange Notes (other than a resale of an unsold allotment
resulting from the original offering of the Notes).
<PAGE>
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The Issuers and the Initial Purchasers also acknowledge that it is the
SEC staff's position that if the Prospectus contained in the Exchange
Registration Statement includes a plan of distribution containing a statement to
the above effect and the means by which Participating Broker-Dealers may resell
the Exchange Notes, without naming the Participating Broker-Dealers or
specifying the amount of Exchange Notes owned by them, such Prospectus may be
delivered by Participating Broker-Dealers to satisfy their prospectus delivery
obligations under the Securities Act in connection with resales of Exchange
Notes for their own accounts, so long as the Prospectus otherwise meets the
requirements of the Securities Act.
In light of the foregoing, if requested by a Participating
Broker-Dealer, the Issuers agree (x) to use their best efforts to keep the
Exchange Registration Statement continuously effective for a period of up to six
months after the Consummation Date or such earlier date as each Participating
Broker-Dealer shall have notified the Company in writing that such Participating
Broker-Dealer has resold all Exchange Notes acquired in the Exchange Offer,
(y) to comply with the provisions of Section 5 of this Agreement, as they relate
to the Exchange Offer and the Exchange Registration Statement, and (z) to
deliver to such Participating Broker-Dealer a "cold comfort" letter of the
independent public accountants of the Issuers and a legal opinion as to matters
reasonably requested by such Participating Broker-Dealer relating to the
Exchange Registration Statement and the related Prospectus and any amendments or
supplements thereto.
(f) The Initial Purchasers shall have no liability to any
Participating Broker-Dealer with respect to any request made pursuant to
Section 2(e).
(g) Interest on each Exchange Note or Private Exchange Note will
accrue (A) from the later of (i) the last interest payment date on which
interest was paid on the Note surrendered in exchange therefor, or (ii) if the
Note is surrendered for exchange on a date in a period which includes the record
date for an interest payment date to occur on or after the date of such exchange
and as to which interest will be paid, the date of such interest payment date or
(B) if no interest has been paid on the Notes, from the Issue Date.
(h) The Exchange Notes and the Private Exchange Notes may be issued
under (i) the Indenture or (ii) an indenture identical in all material respects
to the Indenture, which in either event shall provide that the Exchange Notes
<PAGE>
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shall not be subject to the transfer restrictions set forth in the Indenture.
The Indenture or such indenture shall provide that the Exchange Notes, the
Private Exchange Notes and the Notes shall vote and consent together on all
matters as one class and that neither the Exchange Notes, the Private Exchange
Notes nor the Notes will have the right to vote or consent as a separate class
on any matter.
3. SHELF REGISTRATION
(a) If (i) the Issuers are not permitted to file the Exchange Offer
Registration Statement or to consummate the Exchange Offer because the Exchange
Offer is not permitted by any applicable law or applicable interpretation of the
staff of the SEC or (ii) any holder of a Note notifies the Company on or prior
to the 30th day following the Issue Date that (A) due to a change in law or
policy it is not entitled to participate in the Exchange Offer, (B) due to a
change in law or policy it may not resell Exchange Notes acquired by it in the
Exchange Offer to the public without delivering a prospectus and the Prospectus
contained in the Exchange Registration Statement is not appropriate or available
for such resales by such holder or (C) it owns Notes (including any Initial
Purchaser that holds Notes as part of an unsold allotment from the original
offering of the Notes) acquired directly from an Issuer or an Affiliate of an
Issuer or (iii) any holder of Private Exchange Notes so requests after the
consummation of the Private Exchange or (iv) the Issuers have not consummated
the Exchange Offer within 180 days after the Issue Date (each such event
referred to in clauses (i) through (iv), a "SHELF FILING EVENT"), the Issuers
shall (x) promptly deliver to the holders and the Trustee notice thereof and
(y) at their own expense cause to be filed with the SEC pursuant to Rule 415 a
shelf registration statement (the "SHELF REGISTRATION STATEMENT") as promptly as
practicable and in any event prior to 60 days after such filing obligation
arises relating to all Transfer Restricted Notes (the "SHELF REGISTRATION") the
holders of which have provided the information required pursuant to Section 3(b)
hereof (PROVIDED that if the Shelf Filing Event arises pursuant to clause (iv)
above and the Exchange Offer Registration Statement shall not have been filed or
shall have been withdrawn, the Issuers shall file the Shelf Registration
Statement on the 181st day after the Issue Date), and shall use their best
efforts to have the Shelf Registration Statement declared effective by the SEC
on or prior to 90 days after the filing thereof. In such circumstances, the
Issuers shall use their best efforts to keep the Shelf Registration Statement
continuously effective under the Securities Act, until (A) two
<PAGE>
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years (or such shorter period as may be established by any amendment to the two
year period set forth in Rule 144(K) under the Securities Act) following the
Issue Date or (B) if sooner, the date immediately following the date that all
Transfer Restricted Notes covered by the Shelf Registration Statement have been
sold pursuant thereto or otherwise cease to be Transfer Restricted Notes (the
"EFFECTIVENESS PERIOD"); PROVIDED that the Effectiveness Period shall be
extended to the extent required to permit dealers to comply with the applicable
prospectus delivery requirements of Rule 174; PROVIDED, FURTHER, that during any
consecutive 365 day period, the Company may suspend the effectiveness of a Shelf
Registration Statement, in the event that, and for up to two periods of up to 45
consecutive days, but no more than an aggregate of 60 days during any 365 day
period (a "SHELF BLACKOUT PERIOD") if, (i) an event occurs and is continuing as
a result of which the Shelf Registration Statement would, in the Company's good
faith judgment, contain an untrue statement of a material fact or omit to state
a material fact necessary in order to make the statements therein not misleading
and (ii) if the Company determines in good faith that the disclosure of such
event at such time would have a material adverse effect on the business,
operations or prospects of the Company or (b) the disclosure otherwise relates
to a pending material business transaction which has not yet been publicly
disclosed.
(b) No holder of Transfer Restricted Notes may include any of its
Transfer Restricted Notes in any Shelf Registration Statement pursuant to this
Agreement unless and until such holder furnishes to the Company in writing,
within 15 days after receipt of a request therefor, such information as the
Company may reasonably request for use in connection with any Shelf Registration
Statement or Prospectus or preliminary prospectus included therein. No holder
of Transfer Restricted Notes shall be entitled to Liquidated Damages pursuant to
Section 4 hereof unless and until such holder shall have provided all such
reasonably requested information. Each holder of Transfer Restricted Notes as
to which any Shelf Registration Statement is being effected agrees to furnish
promptly to the Company all information required to be disclosed in order to
make the information previously furnished to the Company by such holder not
materially misleading.
4. LIQUIDATED DAMAGES
(a) The parties hereto agree that the holders of Transfer
Restricted Notes will suffer damages if the Issuers fail to fulfill their
obligations pursuant to Section 2 or
<PAGE>
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Section 3, as applicable, and that it would not be feasible to ascertain the
extent of such damages. Accordingly, in the event that:
(i) if (A) neither the Exchange Offer Registration Statement nor
Shelf Registration Statement is filed with the Commission on or prior to
the Filing Date or (B) notwithstanding that the Issuers have consummated or
will consummate an Exchange Offer, the Issuers are required to file a Shelf
Registration Statement and such Shelf Registration Statement is not filed
on or prior to the date required by this Registration Rights Agreement,
then commencing on the day after either such required filing date,
Liquidated Damages shall accrue on the principal amount of the Notes at a
rate of 0.5% per annum for the first 90 days immediately following each
such filing date, such Liquidated Damages rate increasing by an additional
0.5% per annum at the beginning of each subsequent 90-day period; or
(ii) if (A) neither the Exchange Offer Registration Statement nor
Shelf Registration Statement is declared effective by the Commission on or
prior to 90 days after the applicable filing date or (B) notwithstanding
that the Issuers have consummated or will consummate an Exchange Offer, the
Issuers are required to file a Shelf Registration Statement and such Shelf
Registration Statement is not declared effective by the Commission on or
prior to the 90th day following the date such Shelf Registration Statement
was filed, then commencing on the day after the 90th day following the
applicable filing date, Liquidated Damages shall accrue on the principal
amount of the Notes at a rate of 0.5% per annum for the first 90 days
immediately following such date, such Liquidated Damages rate increasing by
an additional 0.5% per annum at the beginning of each subsequent 90-day
period; or
(iii) if (A) the Issuers have not exchanged Exchange Notes for all
Notes validly tendered in accordance with the terms of the Exchange Offer
on or prior to the 30th day after the date on which the Exchange Offer
Registration Statement was declared effective or (B) if applicable, the
Shelf Registration Statement has been declared effective and such Shelf
Registration Statement ceases to be effective at any time prior to the
second anniversary of its effective date (other than after such time as all
Notes have been disposed of thereunder), then Liquidated Damages shall
accrue on the principal amount of the Notes
<PAGE>
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at a rate of 0.5% per annum for the first 90 days commencing on (x) the
31st day after such effective date, in the case of (A) above, or (y) the
day such Shelf Registration Statement ceases to be effective in the case of
(B) above, such Liquidated Damages rate increasing by an additional 0.5%
per annum at the beginning of each subsequent 90-day period;
PROVIDED, HOWEVER, that the Liquidated Damages rate on the Notes may not
exceed in the aggregate 1.50% per annum; PROVIDED, FURTHER, HOWEVER, that
(1) upon the filing of the Exchange Offer Registration Statement or a Shelf
Registration Statement (in the case of clause (i) above), (2) upon the
effectiveness of the Exchange Offer Registration Statement or a Shelf
Registration Statement (in the case of clause (ii) above), or (3) upon the
exchange of Exchange Notes for all Notes tendered (in the case of clause
(iii)(A) above), or upon the effectiveness of the Shelf Registration
Statement which had ceased to remain effective (in the case of clause
(iii)(B) above), Liquidated Damages on the Notes as a result of such clause
(or the relevant subclause thereof), as the case may be, shall cease to
accrue; PROVIDED FURTHER, that Liquidated Damages shall not accrue during
any Shelf Blackout Period permitted pursuant to Section 3(a).
(b) The Issuers shall notify the Trustee and paying agent under the
Indenture (or the trustee and paying agent under such other indenture under
which any Transfer Restricted Notes are issued) promptly upon the happening of
each and every event described in clauses (a)(i), (a)(ii) or (a)(iii) above
(each a Registration Default). The Issuers shall pay the Liquidated Damages due
on the Transfer Restricted Notes by depositing with the paying agent (which
shall not be an Issuer for these purposes) for the Transfer Restricted Notes, in
trust, for the benefit of the holders thereof, prior to 11:00 A.M. on the next
interest payment date specified by the Indenture (or such other indenture), sums
sufficient to pay the Liquidated Damages then due. The Liquidated Damages due
shall be payable on each interest payment date specified by the Indenture (or
such other indenture) to the record holders entitled to receive the interest
payment to be made on such date. Each obligation to pay Liquidated Damages
shall be deemed to accrue from and including the applicable Registration
Default.
(c) The parties hereto agree that the Liquidated Damages
provided for in this Section 4 constitutes a reasonable
<PAGE>
-14-
estimate of the damages that will be suffered by holders of Transfer Restricted
Notes by reason of the happening of any Registration Default.
5. REGISTRATION PROCEDURES
In connection with the Issuers' registration obligations hereunder,
the Issuers shall effect such registrations on the appropriate form available
for the sale of the Notes, the Exchange Notes or Private Exchange Notes, as
applicable, to (i) in the case of the Exchange Offer, permit the exchange of
Exchange Notes for Notes in the Exchange Offer and, if applicable, resales of
Exchange Notes by Participating Broker-Dealers and (ii) in the case of a Shelf
Registration, permit the sale of the applicable Transfer Restricted Notes in
accordance with the method or methods of disposition thereof specified by the
holders of such Transfer Restricted Notes, and pursuant thereto the Issuers
shall as expeditiously as possible:
(a) In the case of a Shelf Registration, a reasonable period of
time prior to the initial filing of a Shelf Registration Statement or
Prospectus and a reasonable period of time prior to the filing of any
amendment or supplement thereto (including any document that would be
incorporated or deemed to be incorporated therein by reference), furnish to
the holders of the Transfer Restricted Notes included in such Shelf
Registration Statement, their Special Counsel and the managing
underwriters, if any, copies of all such documents proposed to be filed,
which documents (other than those incorporated or deemed to be incorporated
by reference) will be subject to the review of such holders, their Special
Counsel and such underwriters, if any, and cause the officers and directors
of the Issuers, counsel to the Issuers and independent certified public
accountants to the Issuers to respond to such reasonable inquiries as shall
be necessary, in the opinion of respective counsel to such holders and such
underwriters, to conduct a reasonable investigation within the meaning of
the Securities Act; PROVIDED that the foregoing inspection and information
gathering shall be conducted by the Initial Purchasers and on behalf of any
other persons, by one counsel designated by and on behalf of such other
persons; PROVIDED FURTHER, that Liquidated Damages shall be suspended
during any period longer than ten Business Days after the Issuers have
provided the information specified above if such inspection and information
gathering has not been completed; PROVIDED, HOWEVER, that
<PAGE>
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the Issuers shall not be deemed to have kept a Shelf Registration Statement
effective during the applicable period if any of them voluntarily takes any
unreasonable action (which shall not be deemed to included any Shelf
Blackout Period) or voluntarily fails to take any reasonable action that
results in holders of the Transfer Restricted Notes covered thereby not
being able to sell such Transfer Restricted Notes pursuant to federal
securities laws during that period. The Issuers shall not file any such
Shelf Registration Statement or related Prospectus or any amendments or
supplements thereto which the holders of a majority in principal amount of
the Transfer Restricted Notes included in such Shelf Registration Statement
shall reasonably object on a timely basis;
(b) Prepare and file with the SEC such amendments, including post-
effective amendments, to each Registration Statement as may be necessary to
keep such Registration Statement continuously effective for the applicable
time period required hereunder; cause the related Prospectus to be
supplemented by any required Prospectus supplement, and as so supplemented
to be filed pursuant to Rule 424; and comply with the provisions of the
Securities Act and the Exchange Act with respect to the disposition of all
securities covered by such Registration Statement during such period in
accordance with the intended methods of disposition by the sellers thereof
set forth in such Registration Statement as so amended or in such
Prospectus as so supplemented;
(c) Notify the holders of Transfer Restricted Notes to be sold or,
in the case of an Exchange Offer, tendered for, their Special Counsel and
the managing underwriters, if any, promptly, and (if requested by any such
person), confirm such notice in writing, (i)(A) when a Prospectus or any
Prospectus supplement or post-effective amendment is proposed to be filed,
and (B) with respect to a Registration Statement or any post-effective
amendment, when the same has become effective, (ii) of any request by the
SEC or any other Federal or state governmental authority for amendments or
supplements to a Registration Statement or related Prospectus or for
additional information, (iii) of the issuance by the SEC, any state
securities commission, any other governmental agency or any court of any
stop order or injunction suspending or enjoining the use of a Prospectus or
the effectiveness of a Registration Statement or the initiation of any
<PAGE>
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proceedings for that purpose, (iv) of the receipt by the Company of any
notification with respect to the suspension of the qualification or
exemption from qualification of any of the Notes, Exchange Notes or Private
Exchange Notes for sale in any jurisdiction, or the initiation or
threatening of any proceeding for such purpose, and (v) of the happening of
any event or information becoming known to any Issuer that makes any
statement made in a Registration Statement or related Prospectus or any
document incorporated or deemed to be incorporated therein by reference
untrue in any material respect or that requires the making of any changes
in such Registration Statement, Prospectus or documents so that it will not
contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the
statements therein, not misleading, and that in the case of a Prospectus,
it will not contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary to make
the statements therein, in light of the circumstances under which they were
made, not misleading;
(d) Use their best efforts to avoid the issuance of or, if issued,
obtain the withdrawal of any order enjoining or suspending the use of a
Prospectus or the effectiveness of a Registration Statement or the lifting
of any suspension of the qualification (or exemption from qualification) of
any of the Notes, Exchange Notes or Private Exchange Notes for sale in any
jurisdiction, at the earliest practicable moment;
(e) If a Shelf Registration Statement is filed pursuant to
Section 3 hereof and if requested by the managing underwriters, if any, or
the holders of a majority in aggregate principal amount of the Transfer
Restricted Notes being sold pursuant to such Shelf Registration Statement,
(i) promptly incorporate in a Prospectus supplement or post-effective
amendment such information as the managing underwriters, if any, and such
holders reasonably believe should be included therein, and (ii) make all
required filings of such Prospectus supplement or such post-effective
amendment under the Securities Act as soon as practicable after the Company
has received notification of the matters to be incorporated in such
Prospectus supplement or post-effective amendment; PROVIDED, HOWEVER, that
the Issuers shall not be required to take any action pursuant
<PAGE>
-17-
to this Section 5(e) that would, in the opinion of counsel for the Issuers,
violate applicable law;
(f) Upon written request to the Company by a holder of Notes,
Exchange Notes or Private Exchange Notes to be exchanged or sold pursuant
to a Registration Statement, their Special Counsel and each managing
underwriter, if any, without charge, furnish at least one conformed copy of
such Registration Statement and each amendment thereto, including financial
statements and schedules, all documents incorporated or deemed to be
incorporated therein by reference, and all exhibits to the extent requested
(including those previously furnished or incorporated by reference) as soon
as practicable after the filing of such documents with the SEC;
(g) Deliver to each holder of Notes, Exchange Notes or Private
Exchange Notes to be exchanged or sold pursuant to a Registration
Statement, their Special Counsel, and the underwriters, if any, without
charge, as many copies of the Prospectus (including each form of
prospectus) and each amendment or supplement thereto as such persons
reasonably request; and the Issuers hereby consent to the use of such
Prospectus and each amendment or supplement thereto by each of the selling
holders of Transfer Restricted Notes and the underwriters, if any, in
connection with the offering and sale of the Transfer Restricted Notes in
accordance with the terms thereof and with U.S. federal securities laws and
Blue Sky laws covered by such Prospectus and any amendment or supplement
thereto;
(h) Prior to any public offering of Notes, Exchange Notes or
Private Exchange Notes, use their best efforts to register or qualify or
cooperate with the holders of Notes, Exchange Notes or Private Exchange
Notes to be sold or tendered for, the underwriters, if any, and their
respective counsel in connection with the registration or qualification (or
exemption from such registration or qualification) of such Notes, Exchange
Notes or Private Exchange Notes for offer and sale under the securities or
Blue Sky laws of such jurisdictions within the United States as any such
holder or underwriter reasonably requests in writing; keep each such
registration or qualification (or exemption therefrom) effective during the
period such Registration Statement is required to be kept effective
hereunder and do any and all other acts or things necessary or advisable to
enable the disposition in
<PAGE>
-18-
such jurisdictions of the Notes, Exchange Notes or Private Exchange Notes
covered by the applicable Registration Statement; PROVIDED, HOWEVER, that
the Issuers shall not be required to (i) qualify generally to do business
in any jurisdiction where they are not then so qualified or (ii) take any
action which would subject them to general service of process or to
taxation in any jurisdiction where they are not so subject;
(i) In connection with any sale or transfer of Transfer Restricted
Notes that will result in such securities no longer being Transfer
Restricted Notes, cooperate with the holders thereof and the managing
underwriters, if any, to facilitate the timely preparation and delivery of
certificates representing Transfer Restricted Notes to be sold, which
certificates shall not bear any restrictive legends and shall be in a form
eligible for deposit with The Depository Trust Company and to enable such
Transfer Restricted Notes to be in such denominations and registered in
such names as the managing underwriters, if any, or such holders may
request at least two Business Days prior to any sale of Transfer Restricted
Notes;
(j) Upon the occurrence of any event contemplated by Section
5(c)(v) hereof, as promptly as practicable, prepare a supplement or
amendment, including, if appropriate, a post-effective amendment, to each
Registration Statement or a supplement to the related Prospectus or any
document incorporated or deemed to be incorporated therein by reference,
and file any other required document so that, as thereafter delivered, such
Prospectus will not contain an untrue statement of a material fact or omit
to state a material fact required to be stated therein or necessary to make
the statements therein, in light of the circumstances under which they were
made, not misleading;
(k) Prior to the effective date of the Exchange Registration
Statement, to provide a CUSIP number for the Exchange Notes (and Private
Exchange Notes, if applicable);
(l) If a Shelf Registration Statement is filed pursuant to
Section 3 hereof, enter into such agreements (including an underwriting
agreement in form, scope and substance as is customary in underwritten
offerings) and take all such other reasonable actions in connection
<PAGE>
-19-
therewith (including those reasonably requested by the managing
underwriters, if any, or the holders of a majority in aggregate principal
amount of the Transfer Restricted Notes being sold) in order to expedite or
facilitate the disposition of such Transfer Restricted Notes, and, whether
or not an underwriting agreement is entered into and whether or not the
registration is an underwritten registration, (i) make such representations
and warranties to the holders of such Transfer Restricted Notes and the
underwriters, if any, with respect to the business of the Issuers and their
subsidiaries (including with respect to businesses or assets acquired or to
be acquired by any of them), and the Shelf Registration Statement,
Prospectus and documents, if any, incorporated or deemed to be incorporated
by reference therein, in each case, in form, substance and scope as are
customarily made by issuers to underwriters in underwritten offerings, and
confirm the same if and when customarily requested; (ii) obtain opinions
of counsel to the Issuers and updates thereof (which counsel and opinions
(in form, scope and substance) shall be reasonably satisfactory to the
managing underwriters, if any, and Special Counsel to the holders of the
Transfer Restricted Notes being sold), addressed to each selling holder of
Transfer Restricted Notes and each of the underwriters, if any, covering
the matters customarily covered in opinions requested in underwritten
offerings and such other matters as may be reasonably requested by such
Special Counsel and the managing underwriters, in any; (iii) use their best
efforts to obtain customary "cold comfort" letters and updates thereof from
the independent certified public accountants of the Issuers (and, if
necessary, any other independent certified public accountants of any
subsidiary of the Issuers or of any business acquired by an Issuer or any
such subsidiary for which financial statements and financial data is, or is
required to be, included in the Shelf Registration Statement), addressed
(where reasonably possible) to each selling holder of Transfer Restricted
Notes and each of the underwriters, if any, such letters to be in customary
form and covering matters of the type customarily covered in "cold comfort"
letters in connection with underwritten offerings; (iv) if an underwriting
agreement is entered into, the same shall contain indemnification
provisions and procedures no less favorable to the selling holders and the
underwriters, if any, than those set forth in Section 7 hereof (or such
other provisions and procedures acceptable to holders of a majority in
aggregate principal amount of Transfer
<PAGE>
-20-
Restricted Notes covered by such Shelf Registration Statement and the
managing underwriters, if any); and (v) deliver such documents and
certificates as may be reasonably requested by the holders of a majority in
aggregate principal amount of the Transfer Restricted Notes being sold,
their Special Counsel and the managing underwriters, if any, to evidence
the continued validity of the representations and warranties made pursuant
to clause (i) above and to evidence compliance with any customary
conditions contained in the underwriting agreement or other agreement
entered into by the Issuers;
(m) In the case of a Shelf Registration, make available for
inspection by a representative of the holders of Transfer Restricted Notes
being sold, any underwriter participating in any such disposition of
Transfer Restricted Notes, and any attorney, consultant or accountant
retained by such selling holders or underwriter, at the offices where
normally kept, during reasonable business hours, all relevant financial and
other records, pertinent corporate documents and properties of the Issuers
and their subsidiaries (including with respect to businesses and assets
acquired or to be acquired to the extent that such information is available
to the Issuers), and cause the officers, directors, agents and employees of
the Issuers and their subsidiaries (including with respect to businesses
and assets acquired or to be acquired to the extent that such information
is available to the Issuers) to supply all information in each case
reasonably requested by any such representative, underwriter, attorney,
consultant or accountant in connection with such Shelf Registration;
PROVIDED, HOWEVER, that such persons shall first agree in writing with the
Company that any information that is reasonably and in good faith
designated by the Company in writing as confidential at the time of
delivery of such information shall be kept confidential by such persons,
unless and to the extent that (i) disclosure of such information is
required by court or administrative order or is necessary to respond to
inquiries of regulatory authorities, (ii) disclosure of such information is
required by law (including any disclosure requirements pursuant to Federal
securities laws in connection with the filing of the Shelf Registration
Statement or the use of any Prospectus), (iii) such information becomes
generally available to the public other than as a result of a disclosure or
failure to safeguard such information by such person or (iv) such
information becomes available to
<PAGE>
-21-
such person from a source other than the Issuers and their subsidiaries and
such source is not bound by a confidentiality agreement; and PROVIDED,
FURTHER, that the foregoing inspection and information gathering shall be
conducted by the Initial Purchasers and on behalf of any other persons, by
one counsel designated by and on behalf of such other persons; PROVIDED,
FURTHER that Liquidated Damages shall be suspended during any period longer
than ten Business Days after the Issuers have provided the information
specified above if such inspection and information gathering has not been
completed;
(n) Provide an indenture trustee for the Notes and/or the Exchange
Notes and Private Exchange Notes, as the case may be, and cause an
indenture to be qualified under the TIA not later than the effective date
of the first Registration Statement relating to the Notes and/or the
Exchange Notes and Private Exchange Notes, as the case may be; and if such
indenture shall be the Indenture, in connection therewith, cooperate with
the Trustee and the holders of the Notes and/or the Exchange Notes and
Private Exchange Notes, to effect such changes to the Indenture, if any, as
may be required for the Indenture to be so qualified in accordance with the
terms of the TIA; and execute, and use its reasonable efforts to cause the
Trustee to execute, all customary documents as may be required to effect
such changes, and all other forms and documents required to be filed with
the SEC to enable the Indenture to be so qualified in a timely manner;
(o) Comply with all applicable rules and regulations of the SEC and
make generally available to their securityholders earning statements
satisfying the provisions of Section 11(a) of the Securities Act and
Rule 158, no later than 45 days after the end of any 12-month period (or 90
days after the end of any 12-month period if such period is a fiscal year)
(i) commencing at the end of any fiscal quarter in which Transfer
Restricted Notes are sold to underwriters in a firm commitment or
reasonable efforts underwritten offering and (ii) if not sold to
underwriters in such an offering, commencing on the first day of the first
fiscal quarter after the effective date of a Registration Statement, which
statement shall cover said period, consistent with the requirements of
Rule 158;
(p) Cooperate with each seller of Transfer Restricted Notes covered
by any Registration Statement and
<PAGE>
-22-
each underwriter, if any, participating in the disposition of such Transfer
Restricted Notes and their respective counsel in connection with any
filings required to be made with the National Association of Securities
Dealers, Inc.; and
(q) Use their best efforts to take all other steps reasonably
necessary to effect the registration of the Transfer Restricted Notes
covered by a Registration Statement contemplated hereby.
The Issuers may require a holder of Transfer Restricted Notes to be
included in a Registration Statement to furnish to the Issuers such information
regarding the distribution of such Transfer Restricted Notes as is required by
law to be disclosed in such Registration Statement and the Issuers may exclude
from such Registration Statement the Transfer Restricted Notes of any holder who
unreasonably fails to furnish such information within a reasonable time after
receiving such request.
If any such Registration Statement refers to any holder by name or
otherwise as the holder of any securities of an Issuer, then such holder shall
have the right to require (i) the insertion therein of language, in form and
substance reasonably satisfactory to such holder, to the effect that the holding
by such holder of such securities is not to be construed as a recommendation by
such holder of the investment quality of the Issuers' securities covered thereby
and that such holding does not imply that such holder will assist in meeting any
future financial requirements of the Issuers, or (ii) in the event that such
reference to such holder by name or otherwise is not required by the Securities
Act, the deletion of the reference to such holder in any amendment or supplement
to the Registration Statement filed or prepared subsequent to the time that such
reference ceases to be required.
In the case of a Shelf Registration pursuant to Section 3 hereof, each
holder of Transfer Restricted Notes agrees by acquisition of such Transfer
Restricted Notes that, upon receipt of any notice from the Company of the
happening of any event of the kind described in Section 5(c)(ii), 5(c)(iii),
5(c)(iv) or 5(c)(v) hereof, (A) such holder will forthwith discontinue
disposition of such Transfer Restricted Notes covered by such Registration
Statement or Prospectus until such holder's receipt of the copies of the
supplemented or amended Prospectus contemplated by Section 5(j) hereof, or until
it is advised in writing by the Company that the use of the applica-
<PAGE>
-23-
ble Prospectus may be resumed, and, in either case, has received copies of any
additional or supplemental filings that are incorporated or deemed to be
incorporated by reference in such Prospectus, and (B) such holder agrees to
maintain the receipt of such notice as confidential information; PROVIDED, that
such notice shall be marked confidential by the Issuers.
6. REGISTRATION EXPENSES
All fees and expenses incident to the performance of or compliance
with this Agreement by the Issuers shall be borne by the Issuers whether or not
any Registration Statement is filed or becomes effective and whether or not any
Notes, Exchange Notes or Private Exchange Notes are issued or sold pursuant to
any Registration Statement. The fees and expenses referred to in the foregoing
sentence shall include, without limitation, (i) all registration and filing fees
(including, without limitation, fees and expenses (A) with respect to filings
required to be made with the National Association of Securities Dealers, Inc.
and (B) in compliance with securities or Blue Sky laws), (ii) printing expenses
(including, without limitation, expenses of printing certificates for Notes,
Exchange Notes and Private Exchange Notes in a form eligible for deposit with
The Depository Trust Company and of printing Prospectuses), (iii) reasonable
fees and disbursements of counsel for the Issuers and the Special Counsel (not
to exceed one firm or counsel), (iv) fees and disbursements of all independent
certified public accountants referred to in Section 2(e) and Section 5(l)(iii)
hereof (including, without limitation, the expenses of any special audit and
"cold comfort" letters required by or incident to such performance), (v) if
required, the reasonable fees and expenses of any "qualified independent
underwriter" and its counsel as may be required by the rules and regulations of
the National Association of Securities Dealers, Inc., and (vi) fees and expenses
of all other persons retained by the Issuers. In addition, the Issuers shall
pay their internal expenses (including, without limitation, all salaries and
expenses of their respective officers and employees performing legal or
accounting duties), the expense of any annual audit, and the fees and expenses
incurred in connection with the listing of the Notes, Exchange Notes or Private
Exchange Notes to be registered on any securities exchange. Notwithstanding the
foregoing or anything in this Agreement to the contrary, each holder of Transfer
Restricted Notes shall pay all underwriting discounts and commissions of any
underwriters with respect to any Notes, Exchange Notes or Private Exchange Notes
sold by or on behalf of it.
<PAGE>
-24-
7. INDEMNIFICATION
(a) The Issuers agree, jointly and severally, to indemnify and hold
harmless (i) the Initial Purchasers, each holder of Notes, Exchange Notes and
Private Exchange Notes and each Participating Broker-Dealer, (ii) each person,
if any, who controls (within the meaning of Section 15 of the Act or Section 20
of the Exchange Act) any of the foregoing (any of the persons referred to in
this clause (ii) being hereinafter referred to as a "controlling person"), and
(iii) the respective officers, directors, partners, employees, representatives
and agents of the Initial Purchasers, each holder of Notes, Exchange Notes and
Private Exchange Notes, each Participating Broker-Dealer and any controlling
person (any person referred to in clause (i), (ii) or (iii) may hereinafter be
referred to as an "INDEMNIFIED PERSON"), from and against any and all losses,
claims, damages, liabilities and judgments arising out of or relating to any
untrue statement or alleged untrue statement of a material fact contained in any
Registration Statement, Prospectus or preliminary prospectus or in any amendment
or supplement thereto, or arising out of or relating to any omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein (in the case of any Prospectus or
preliminary prospectus or supplement thereto, in light of the circumstances
under which they were made) not misleading, except insofar as such losses,
claims, damages, liabilities or judgments are caused by any such untrue
statement or omission or alleged untrue statement or omission based upon
information relating to any Indemnified Person furnished in writing to the
Issuers by or on behalf of such Indemnified Person expressly for use therein;
PROVIDED that the foregoing indemnity with respect to any preliminary prospectus
shall not inure to the benefit of any Indemnified Person from whom the person
asserting such losses, claims, damages, liabilities and judgments purchased
securities if such untrue statement or omission or alleged untrue statement or
omission made in such preliminary prospectus is eliminated or remedied in the
Prospectus and a copy of the Prospectus shall not have been furnished to such
person in a timely manner due to the wrongful action or wrongful inaction of
such Indemnified Person.
(b) In case any action shall be brought against any Indemnified
Person, based upon any Registration Statement or any such Prospectus or
preliminary prospectus or any amendment or supplement thereto and with respect
to which indemnity may be sought against the Issuers hereunder, such Indemnified
<PAGE>
-25-
Person shall promptly notify the Issuers in writing and the Company shall assume
the defense thereof, including the employment of counsel reasonably satisfactory
to such Indemnified Person and payment of all fees and expenses. Any
Indemnified Person shall have the right to employ separate counsel in any such
action and participate in the defense thereof, but the fees and expenses of such
counsel shall be at the expense of such Indemnified Person, unless (i) the
employment of such counsel shall have been specifically authorized in writing by
the Issuers, (ii) the Company shall have failed to assume the defense and employ
counsel or pay all such fees and expenses or (iii) the named parties to any such
action (including any impleaded parties) include both such Indemnified Person
and an Issuer and such Indemnified Person shall have been advised by counsel
that there may be one or more legal defenses available to it which are different
from or additional to those available to any such Issuer (in which case the
Company shall not have the right to assume the defense of such action on behalf
of such Indemnified Person, it being understood, however, that the Issuers shall
not, in connection with any one such action or separate but substantially
similar or related actions in the same jurisdiction arising out of the same
general allegations or circumstances, be liable for the reasonable fees and
expenses of more than one separate firm of attorneys (in addition to any local
counsel) for all such Indemnified Persons, which firm shall be designated in
writing by such Indemnified Persons, and that all such reasonable fees and
expenses shall be reimbursed as they are incurred). The Issuers shall not be
liable for any settlement of any such action effected without their written
consent but if settled with the written consent of the Issuers, the Issuers
agree, jointly and severally, to indemnify and hold harmless each Indemnified
Person from and against any loss or liability by reason of such settlement. No
Issuer shall, without the prior written consent of each Indemnified Person,
effect any settlement of any pending or threatened proceeding in respect of
which any Indemnified Person is a party and indemnity could have been sought
hereunder by such Indemnified Person, unless such settlement includes an
unconditional release of such Indemnified Person from all liability on claims
that are the subject matter of such proceeding.
(c) In connection with any Registration Statement pursuant to which
a holder of Transfer Restricted Notes offers or sells Transfer Restricted Notes,
such holder agrees, severally and not jointly, to indemnify and hold harmless
the Issuers, their respective directors and officers and any person controlling
an Issuer within the meaning of Section 15 of the
<PAGE>
-26-
Securities Act or Section 20 of the Exchange Act, to the same extent as the
foregoing indemnity from the Issuers to each Indemnified Person but only with
respect to information relating to such holder furnished in writing by or on
behalf of such holder expressly for use in such Registration Statement. In any
such case in which any action shall be brought against an Issuer, any director
or officer of an Issuer or any person controlling an Issuer based on such
Registration Statement and in respect of which indemnity may be sought against a
holder of Transfer Restricted Notes, such holder shall have the rights and
duties given to the Issuers (except that if an Issuer shall have assumed the
defense thereof, such holder shall not be required to do so, but may employ
separate counsel therein and participate in the defense thereof but the fees and
expenses of such counsel shall be at the expense of such holder), and the
Issuers, their respective directors and officers and any person controlling an
Issuer shall have the rights and duties given to the Indemnified Persons by
Section 7(b) hereof.
(d) If the indemnification provided for in this Section 7 is
unavailable to an indemnified party in respect of any losses, claims, damages,
liabilities or judgments referred to herein, then each indemnifying party, in
lieu of indemnifying such indemnified party, shall contribute to the amount paid
or payable by such indemnified party as a result of such losses, claims,
damages, liabilities and judgments (i) in such proportion as is appropriate to
reflect the relative benefits received by each indemnifying party on the one
hand and the indemnified party on the other hand from the offering of the Notes,
the Exchange Notes or the Private Exchange Notes, as the case may be (it being
expressly understood and agreed that the relative benefits received by the
Issuers from the offering of the Notes, Exchange Notes or Private Exchange
Notes, as the case may be, shall be the amount of the net proceeds received by
the Company from the sale of the Notes to the Initial Purchasers), or (ii) if
the allocation provided by clause (i) above is not permitted by applicable law,
in such proportion as is appropriate to reflect not only the relative benefits
referred to in clause (i) above but also the relative fault of each indemnifying
party on the one hand and the indemnified party on the other hand in connection
with the statements or omissions which resulted in such losses, claims, damages,
liabilities or judgments, as well as any other relevant equitable
considerations. The relative fault of the each indemnifying party on the one
hand the indemnified party on the other hand shall be determined by reference
to, among other things, whether the untrue or alleged untrue statement of a
material fact or the omission to state a material fact
<PAGE>
-27-
relates to information supplied by an indemnifying party or such indemnified
party and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission.
The Issuers and the Initial Purchasers agree that it would not be just
and equitable if contribution pursuant to this Section 7(d) were determined by
PRO RATA allocation (even if all Indemnified Persons were treated as one entity
for such purpose) or by any other method of allocation which does not take
account of the equitable considerations referred to in the immediately preceding
paragraph. The amount paid or payable by an indemnified party as a result of
the losses, claims, damages, liabilities or judgments referred to in the
immediately preceding paragraph shall be deemed to include, subject to the
limitations set forth above, any legal or other expenses reasonably incurred by
such indemnified party in connection with investigating or defending any such
action or claim. Notwithstanding the provisions of this Section 7, no
Indemnified Person shall be required to contribute any amount in excess of the
amount by which the net proceeds received by it in connection with the sale of
the Notes, Exchange Notes or Private Exchange Notes contemplated by this
Agreement (or, in the case of an underwriter that is an Indemnified Person, the
total underwriting discounts received by such underwriter) exceeds the amount of
any damages which such Indemnified Person has otherwise been required to pay by
reason of such untrue or alleged untrue statement or omission or alleged
omission. No person guilty of fraudulent misrepresentation (within the meaning
of Section 11(f) of the Securities Act) shall be entitled to contribution from
any person who was not guilty of such fraudulent misrepresentation. The
Indemnified Person's obligations to contribute pursuant to this Section 7(d) are
several in proportion to the respective amount of Notes, Exchange Notes or
Private Exchange Notes included in any such Registration Statement by each
Indemnified Person and not joint.
8. RULE 144A
Each of Issuers shall use its best efforts to file the reports
required to be filed by it under the Securities Act and the Exchange Act in a
timely manner and, if at any time it is not required to file such reports but in
the past had been required to or did file such reports, it will, upon the
request of any holder of Transfer Restricted Notes, make available other
information as required by, and so long as necessary to permit sales of Transfer
Restricted Notes pursuant to Rule 144A. Notwithstanding the foregoing, nothing
in this Sec-
<PAGE>
-28-
tion 8 shall be deemed to require an Issuer to register any of its securities
pursuant to the Exchange Act.
9. UNDERWRITTEN REGISTRATIONS
If any of the Transfer Restricted Notes covered by any Shelf
Registration are to be sold in an underwritten offering, the investment banker
or investment bankers and manager or managers that will administer the offering
will be selected by the holders of a majority in aggregate principal amount of
the Transfer Restricted Notes included in such offering, subject to the consent
of the Company (which will not be unreasonably withheld or delayed).
No person may participate in any underwritten registration
hereunder unless such person (i) agrees to sell such Transfer Restricted
Notes on the basis reasonably provided in any underwriting arrangements
approved by the persons entitled hereunder to approve such arrangements and
(ii) completes and executes all questionnaires, powers of attorney,
indemnities, underwriting agreements and other documents required under the
terms of such underwriting arrangements.
10. MISCELLANEOUS
(a) REMEDIES. In the event of a breach by an Issuer or by a holder
of Notes, Exchange Notes or Private Exchange Notes of any of its obligations
under this Agreement, each holder of Notes, Exchange Notes or Private Exchange
Notes and each Issuer, in addition to being entitled to exercise all rights
granted by law, including recovery of damages, will be entitled to specific
performance of its rights under this Agreement. Notwithstanding the provisions
of Section 4 hereof, the Issuers and each holder of Notes, Exchange Notes and
Private Exchange Notes agree that monetary damages would not be adequate
compensation for any loss incurred by reason of a breach of any of the
provisions of this Agreement and each hereby further agrees that, in the event
of any action for specific performance in respect of such breach, it shall waive
the defense that a remedy at law would be adequate.
(b) NO INCONSISTENT AGREEMENTS. The Issuers will not enter into
any agreement with respect to their securities that is inconsistent with the
rights granted to the holders of Notes, Exchange Notes and Private Exchange
Notes and Indemnified Persons in this Agreement or otherwise conflicts with the
provisions hereof. Without the written consent of the holders of a majority in
aggregate principal amount of the
<PAGE>
-29-
outstanding Transfer Restricted Notes, the Issuers shall not grant to any person
any rights which conflict with or are inconsistent with the provisions of this
Agreement.
(c) NO PIGGYBACK ON REGISTRATIONS. The Issuers shall not grant to
any of their securityholders (other than the holders of Transfer Restricted
Notes in such capacity) the right to include any of their securities in any
Registration Statement other than Transfer Restricted Notes.
(d) AMENDMENTS AND WAIVERS. The provisions of this Agreement,
including the provisions of this sentence, may not be amended, modified or
supplemented, and waivers or consents to departures from the provisions hereof
may not be given, otherwise than with the prior written consent of the holders
of not less than a majority of the then outstanding aggregate principal amount
of Transfer Restricted Notes; PROVIDED, HOWEVER, that, for the purposes of this
Agreement, Transfer Restricted Notes that are owned, directly or indirectly, by
the Issuers or any of their Affiliates are not deemed outstanding.
Notwithstanding the foregoing, a waiver or consent to depart from the provisions
hereof with respect to a matter that relates exclusively to the rights of
holders of Transfer Restricted Notes whose securities are being sold or tendered
pursuant to a Registration Statement and that does not directly or indirectly
affect the rights of other holders of Transfer Restricted Notes may be given by
holders of a majority in aggregate principal amount of the Transfer Restricted
Notes being sold or tendered by such holders pursuant to such Registration
Statement; PROVIDED, HOWEVER, that the provisions of this sentence may not be
amended, modified or supplemented except in accordance with the provisions of
the immediately preceding sentence. Notwithstanding the foregoing, no
amendment, modification, supplement, waiver or consent with respect to Section 7
shall be made or given otherwise than with the prior written consent of each
Indemnified Person affected thereby.
(e) NOTICES. All notices and other communications provided for
herein shall be made in writing by hand-delivery, next-day air courier,
certified first-class mail, return receipt requested, telex or telecopier:
(i) if to the Issuers, as provided in the Purchase Agreement,
(ii) if to the Initial Purchasers, as provided in the Purchase
Agreement, or
<PAGE>
-30-
(iii) if to any other person who is then the registered holder of
Notes, Exchange Notes or Private Exchange Notes, to the address of such
holder as it appears in the register therefor of the Company.
Except as otherwise provided in this Agreement, all such
communications shall be deemed to have been duly given: when delivered by hand,
if personally delivered; one Business Day after being timely delivered to a
next-day air courier; five Business Days after being deposited in the mail,
postage prepaid, if mailed; when answered back, if telexed; and when receipt is
acknowledged by the recipient's telecopier machine, if telecopied.
(f) SUCCESSORS AND ASSIGNS. This Agreement shall inure to the
benefit of and be binding upon the successors and permitted assigns of each of
the parties and shall inure to the benefit of each holder of Notes, Exchange
Notes and Private Exchange Notes and each Indemnified Person. The Issuers may
not assign any of their rights or obligations hereunder without the prior
written consent of each holder of Transfer Restricted Notes and each Indemnified
Person. Notwithstanding the foregoing, no successor or assignee of an Issuer
shall have any of the rights granted under this Agreement until such person
shall acknowledge its rights and obligations hereunder by a signed written
statement of such person's acceptance of such rights and obligations.
(g) COUNTERPARTS. This Agreement may be executed in any number of
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and, all of which taken
together shall constitute one and the same Agreement.
(h) GOVERNING LAW; SUBMISSION TO JURISDICTION. THIS AGREEMENT
SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF
NEW YORK, AS APPLIED TO CONTRACTS MADE AND PERFORMED WITHIN THE STATE OF NEW
YORK. THE ISSUERS HEREBY IRREVOCABLY SUBMIT TO THE JURISDICTION OF ANY NEW YORK
STATE COURT SITTING IN THE BOROUGH OF MANHATTAN IN THE CITY OF NEW YORK OR ANY
FEDERAL COURT SITTING IN THE BOROUGH OF MANHATTAN IN THE CITY OF NEW YORK IN
RESPECT OF ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS
AGREEMENT, AND EACH IRREVOCABLY ACCEPTS FOR ITSELF AND IN RESPECT OF ITS
PROPERTY, GENERALLY AND UNCONDITIONALLY, JURISDICTION OF THE AFORESAID COURTS.
<PAGE>
-31-
(i) SEVERABILITY. The remedies provided herein are cumulative and
not exclusive of any remedies provided by law. If any term, provision, covenant
or restriction of this Agreement is held by a court of competent jurisdiction to
be invalid, illegal, void or unenforceable, the remainder of the terms,
provisions, covenants and restrictions set forth herein shall remain in full
force and effect and shall in no way be affected, impaired or invalidated, and
the parties hereto shall use their reasonable efforts to find and employ an
alternative means to achieve the same or substantially the same result as that
contemplated by such term, provision, covenant or restriction. It is hereby
stipulated and declared to be the intention of the parties that they would have
executed the remaining terms, provisions, covenants and restrictions without
including any of such that may be hereafter declared invalid, illegal, void or
unenforceable.
(j) HEADINGS. The headings in this Agreement are for convenience
of reference only and shall not limit or otherwise affect the meaning hereof.
All references made in this Agreement to "Section" and "paragraph" refer to such
Section or paragraph of this Agreement, unless expressly stated otherwise.
(k) ENTIRE AGREEMENT. This Agreement is intended by the parties as
a final expression of their agreement and is intended to be a complete and
exclusive statement of the agreement and understanding of the parties hereto in
respect of the subject matter contained herein. There are no restrictions,
promises, warranties or undertakings, other than those set forth or referred to
herein with respect to the registration rights granted by the Issuers with
respect to the Notes, the Exchange Notes and the Private Exchange Notes. This
Agreement supersedes all prior agreements and understandings between the parties
with respect to such subject matter.
<PAGE>
-32-
IN WITNESS WHEREOF, the parties have caused this Registration Rights
Agreement to be duly executed as of the date first written above.
FEDERAL DATA CORPORATION
By: /s/ James M. Dean
--------------------------
Name: James M. Dean
Title: Vice President
The foregoing Agreement is
hereby confirmed and accepted
as of the date first above
written.
BT SECURITIES CORPORATION
LEHMAN BROTHERS INC.
By: BT SECURITIES CORPORATION
By: /s/ Frank V. Nash
--------------------------
Name Frank V. Nash
Title: Senior Managing Director
<PAGE>
-33-
Each of the Subsidiaries specified below agrees to become a party to
this Agreement as a Subsidiary Guarantor as of the date hereof:
FDCT CORP.
By: /s/ James M. Dean
-------------------------------
Name: James M. Dean
Title: Vice President
NYMA, INC.
By: /s/ James M. Dean
-------------------------------
Name: James M. Dean
Title: Vice President
SYLVEST MANAGEMENT SYSTEMS
CORPORATION
By: /s/ James M. Dean
-------------------------------
Name: James M. Dean
Title: Vice President
FDC TECHNOLOGIES INC.
By: /s/ James M. Dean
-------------------------------
Name: James M. Dean
Title: Vice President
DOXSYS, INC.
By: /s/ James M. Dean
-------------------------------
Name: James M. Dean
Title: Vice President
VAD INTERNATIONAL, INC.
By: /s/ James M. Dean
-------------------------------
Name: James M. Dean
Title: Vice President
<PAGE>
EXHIBIT 4.6
AGREEMENT FOR WHOLESALE FINANCING
This Agreement for Wholesale Financing ("Agreement") is made as of 17
September, 1996 between DEUTSCHE FINANCIAL SERVICES CORPORATION ("DFS") and
SYLVEST MANAGEMENT SYSTEMS CORPORATION, a [__]SOLE PROPRIETORSHIP, [_]
PARTNERSHIP, [X]CORPORATION, [_] LIMITED LIABILITY COMPANY (check applicable
term) ("Dealer"), having a principal place of business located at 10001
Derekwood Lane Suite 225 Lanham, MD 20706.
1. Extension of Credit. Subject to the terms of this Agreement, DFS may
extend credit to Dealer from time to time to purchase inventory from
DFS approved vendors ("Vendors") and for other purposes. If DFS
advances funds to Dealer following Dealer's execution of this
Agreement, DFS will be deemed to have entered into this Agreement with
Dealer, whether or not executed by DFS. DFS' decision to advance
funds will not be binding until the funds are actually advanced. DFS
may combine all of DFS' advances to Dealer or on Dealer's behalf,
whether under this Agreement or any other agreement, and whether
provided by one or more of DFS' branch offices, together with all
finance charges, fees and expenses related thereto, to make one debt
owed by Dealer. DFS may, at any time and without notice to Dealer,
elect not to finance any inventory sold by particular Vendors who are
in default of their obligations to DFS, or with respect to which DFS
reasonably feels insecure. This is an agreement regarding the
extension of credit, and not the provision of goods or services.
2. Financing Terms and Statements of Transaction. Dealer and DFS agree that
certain financial terms of any advance made by DFS under this Agreement,
whether regarding finance charges, other fees, maturities, curtailments or
other financial terms, are not set forth herein because such terms depend,
in part, upon the availability of Vendor discounts, payment terms or other
incentives, prevailing economic conditions, DFS' floorplanning volume with
Dealer and with Dealer's Vendors, and other economic factors which may vary
over time. Dealer and DFS further agree that it is therefore in their
mutual best interest to set forth in this Agreement only the general terms
of Dealer's financing arrangement with DFS. Upon agreeing to finance a
particular item of inventory for Dealer, DFS will send Dealer a Statement
of Transaction identifying such inventory and the applicable financial
terms. Unless Dealer notifies DFS in writing of any objection within
fifteen (15) days after a Statement of Transaction is mailed to Dealer: (a)
the amount shown on such Statement of Transaction will be an account
stated; (b) Dealer will have agreed to all rates, charges and other terms
shown on such Statement of Transaction; (c) Dealer will have agreed that
DFS is financing the items of inventory referenced in such Statement of
Transaction at Dealer's request; and (d) such Statement of Transaction will
be incorporated herein by
<PAGE>
reference, will be made a part hereof as if originally set forth herein,
and will constitute an addendum hereto. If Dealer objects to the terms of
any Statement of Transaction, Dealer agrees to pay DFS for such inventory
in accordance with the most recent terms for similar inventory to which
Dealer has not objected (or, if there are no prior terms, at the lesser of
16% per annum or at the maximum lawful contract rate of interest permitted
under applicable law), but Dealer acknowledges that DFS may then elect to
terminate Dealer's financing program pursuant to SECTION 17, and cease
making additional advances to Dealer. However, such termination will not
accelerate the maturities of advances previously made, unless Dealer shall
otherwise be in default of this Agreement.
3. GRANT OF SECURITY INTEREST. To secure payment of all of Dealer's
current and future debts to DFS, whether under this Agreement or any
current or future guaranty or other agreement, Dealer grants DFS a
security interest in all of Dealer's inventory, equipment, fixtures,
accounts, contract rights, chattel paper, security agreements,
instruments, deposit accounts, reserves, documents, and general
intangibles; and all judgments, claims, insurance policies, and
payments owed or made to Dealer thereon; all whether now owned or
hereafter acquired, all attachments, accessories, accessions, returns,
repossessions, exchanges, substitutions and replacements thereto, and
all proceeds thereof. All such assets are collectively referred to
herein as the "Collateral". All of such terms for which meanings are
provided in the Uniform Commercial Code of the applicable state are
used herein with such meanings. All Collateral financed by DFS, and
all proceeds thereof, will be held in trust by Dealer for DFS, with
such proceeds being payable in accordance with SECTION 9.
4. AFFIRMATIVE WARRANTIES AND REPRESENTATIONS. Dealer warrants and represents
to DFS that: (a) Dealer has good title to all Collateral; (b) DFS' security
interest in the Collateral financed by DFS is not now and will not become
subordinate to the security interest, lien, encumbrance or claim of any
person; (c) Dealer will execute all documents DFS requests to perfect and
maintain DFS' security interest in the Collateral; (d) Dealer will deliver
to DFS immediately upon each request, and DFS may retain, each Certificate
of Title or Statement of Origin issued for Collateral financed by DFS; (e)
Dealer will at all times be duly organized, existing, in good standing,
qualified and licensed to do business in each state, county, or parish, in
which the nature of its business or property so requires; (f) Dealer has
the right and is duly authorized to enter into this Agreement; (g) Dealer's
execution of this Agreement does not constitute a breach of any agreement
to which Dealer is now or hereafter becomes bound; (h) there are and will
be no actions or proceedings pending or threatened against Dealer which
might result in any material adverse change in Dealer's financial or
business condition or which might in any way adversely affect any of
Dealer's assets; (i)
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Dealer will maintain the Collateral in good condition and repair, (j)
Dealer has duly filed and will duly file all tax returns required by law;
(k) Dealer has paid and will pay when due all taxes, levies, assessments
and governmental charges of any nature; (l) Dealer will keep and maintain
all of its books and records pertaining to the Collateral at its principal
place of business designated in this Agreement; (m) Dealer will promptly
supply DFS with such information concerning it or any guarantor as DFS
hereafter May reasonably request; (n) all Collateral will be kept at
Dealer's principal place of business listed above, and such other
locations, if any, of which Dealer has notified DFS in writing or as listed
on any current or future Exhibit "A" attached hereto which written
notice(s) to DFS and Exhibit A(s) are incorporated herein by reference; (o)
Dealer will give DFS thirty (30) days prior written notice of any change in
Dealer's identity, name, form of business organization, ownership,
management, principal place of business, Collateral locations or other
business locations, and before moving any books and records to any other
location; (p) Dealer will observe and perform all matters required by any
lease, license, concession or franchise forming part of the Collateral in
order to maintain all the rights of DFS thereunder; (q) Dealer will advise
DFS of the commencement of material legal proceedings against Dealer or any
guarantor; and (r) Dealer will comply with all applicable laws and will
conduct its business in a manner which preserves and protects the
Collateral and the earnings and incomes thereof.
5. NEGATIVE COVENANTS. Dealer will not at any time (without 60 days prior
written notice to DFS): (a) other than in the ordinary course of its
business, sell, lease or otherwise dispose of or transfer any of its
assets; (b) rent, lease, demonstrate, consign, or use any Collateral
financed by DFS; or (c) merge or consolidate with another entity, wherein
Dealer is not the surviving entity.
6. INSURANCE. Dealer will immediately notify DFS of any loss, theft or damage
to any Collateral. Dealer will keep the Collateral insured for its full
insurable value under an "all risk" property insurance policy with a
company acceptable to DFS, naming DFS as a lender loss-payee or mortgagee
and containing standard lender's loss payable and termination provisions.
Dealer will provide DFS with written evidence of such property insurance
coverage and lender's loss-payee or mortgagee endorsement.
7. FINANCIAL STATEMENTS. Dealer will deliver to DFS: (a) within ninety (90)
days after the end of each of Dealer's fiscal years, a reasonably detailed
balance sheet as of the last day of such fiscal year and a reasonably
detailed income statement covering Dealer's operations for such fiscal
year, in a form satisfactory to DFS; (b) within forty-five (45) days
after the end of each of Dealer's fiscal quarters, a reasonably detailed
balance sheet as of the last day of such quarter and an income
3
<PAGE>
statement covering Dealer's operations for such quarter, in a form
satisfactory to DFS; and (c) within ten (10) days after request therefor
by DFS, any other report requested by DFS relating to the Collateral or
the financial condition of Dealer. Dealer warrants and represents to DFS
that all financial statements and information relating to Dealer or any
guarantor which have been or may hereafter be delivered by Dealer or any
guarantor are true and correct and have been and will be prepared in
accordance with generally accepted accounting principles consistently
applied and, with respect to such previously delivered statements or
information, there has been no material adverse change in the financial or
business condition of Dealer or any guarantor since the submission to DFS,
either as of the date of delivery, or, if different, the date specified
therein, and Dealer acknowledges DFS' reliance thereon.
8. REVIEWS. Dealer grants DFS a right to enter Dealer's business locations
during normal business hours without notice to Dealer to: (a) account for
and inspect all Collateral; (b) verify Dealer's compliance with this
Agreement; and (c) examine and copy Dealer's books and records related to
the Collateral.
9. PAYMENT TERMS. Dealer will immediately pay DFS the principal indebtedness
owed DFS on each item of Collateral financed by DFS (as shown on the
Statement of Transaction identifying such Collateral) on the earliest
occurrence of any of the following events: (a) when such Collateral is
lost, stolen or damaged; (b) for Collateral financed under Pay-As-Sold
("PAS") terms (as shown on the Statement of Transaction identifying such
Collateral), when such Collateral is sold, transferred, rented, leased,
otherwise disposed of or matured; (c) in strict accordance with any
curtailment schedule for such Collateral (as shown on the Statement of
Transaction identifying such Collateral); (d) for Collateral financed under
Scheduled Payment Program ("SPP") terms (as shown on the Statement of
Transaction identifying such Collateral), in strict accordance with the
installment payment schedule; and (e) when otherwise required under the
terms of any financing program agreed to in writing by the parties.
Regardless of the SPP terms pertaining to any Collateral financed by DFS,
if DFS determines that the current outstanding debt which Dealer owes to
DFS exceeds the aggregate wholesale invoice price of such Collateral in
Dealer's possession, Dealer will immediately upon demand pay DFS the
difference between such outstanding debt and the aggregate wholesale
invoice price of such Collateral. If Dealer from time to time is required
to make immediate payment to DFS of any past due obligation discovered
during any Collateral audit, or at any other time, Dealer agrees that
acceptance of such payment by DFS shall not be construed to have waived or
amended the terms of its financing program. The proceeds of any Collateral
received by Dealer will be held by Dealer in trust for DFS' benefit, for
application as provided in this Agreement. Dealer will send all payments to
DFS' branch
4
<PAGE>
office(s) responsible for Dealer's account. DFS may apply: (i) payments to
reduce finance charges first and then principal, regardless of Dealer's
instructions; and (ii) principal payments to the oldest (earliest) invoice
for Collateral financed by DFS, but, in any event, all principal payments
will first be applied to such Collateral which is sold, lost, stolen,
damaged, rented, leased, or otherwise disposed of or unaccounted for. Any
third party discount, rebate, bonus or credit granted to Dealer for any
Collateral will not reduce the debt Dealer owes DFS until DFS has received
payment therefor in cash. Dealer will: (1) pay DFS even if any Collateral
is defective or fails to conform to any warranties extended by any third
party; (2) not assert against DFS any claim or defense Dealer has against
any third party; and (3) indemnity and hold DFS harmless against all claims
and defenses asserted by any buyer of the Collateral relating to the
condition of, or any representations regarding, any of the Collateral.
Dealer waives all rights of offset and counterclaims Dealer may have
against DFS.
10. CALCULATION OF CHARGES. Dealer will pay finance charges to DFS on the
outstanding principal debt which Dealer owes DFS for each item of
Collateral financed by DFS at the rate(s) shown on the Statement of
Transaction identifying such Collateral, unless Dealer objects thereto as
provided in SECTION 2. The finance charges attributable to the rate shown
on the Statement of Transaction will: (a) be computed based on a 360 day
year; (b) be calculated by multiplying the Daily Charge (as defined below)
by the actual number of days in the applicable billing period; and (c)
accrue from the invoice date of the Collateral identified on such Statement
of Transaction until DFS receives full payment in good funds of the
principal debt Dealer owes DFS for each item of such Collateral in
accordance with DFS' payment recognition policy and DFS applies such
payment to Dealer's principal debt in accordance with the terms of this
Agreement. The "Daily Charge" is the product of the Daily Rate (as defined
below) multiplied by the Average Daily Balance (as defined below). The
"Daily Rate" is the quotient of the annual rate shown on the Statement of
Transaction divided by 360, or the monthly rate shown on the Statement of
Transaction divided by 30. The "Average Daily Balance" is the quotient of
(i) the sum of the outstanding principal debt owed DFS on each day of a
billing period for each item of Collateral identified on a Statement of
Transaction, divided by (ii) the actual number of days in such billing
period. Dealer will also pay DFS $100 for each check returned unpaid for
insufficient funds (an "NSF check") (such $100 payment repays DFS'
estimated administrative costs; it does not waive the default caused by the
NSF check). The annual percentage rate of the finance charges relating to
any item of Collateral financed by DFS will be calculated from the invoice
date of such Collateral, regardless of any period during which any finance
charge subsidy shall be paid or payable by any third party. Dealer
acknowledges that DFS intends to strictly conform to the applicable usury
laws governing this
5
<PAGE>
Agreement. Regardless of any provision contained herein or in any other
document executed or delivered in connection herewith or therewith, DFS
shall never be deemed to have contracted for, charged or be entitled to
receive, collect or apply as interest on this Agreement (whether termed
interest herein or deemed to be interest by judicial determination or
operation of law), any amount in excess of the maximum amount allowed by
applicable law, and, if DFS ever receives, collects or applies as interest
any such excess, such amount which would be excessive interest will be
applied first to the reduction of the unpaid principal balances of advances
under this Agreement, and, second, any remaining excess will be paid to
Dealer. In determining whether or not the interest paid or payable under
any specific contingency exceeds the highest lawful rate, Dealer and DFS
shall, to the maximum extent permitted under applicable law: (A)
characterize any non-principal payment (other than payments which are
expressly designated as interest payments hereunder) as an expense or fee
rather than as interest; (B) exclude voluntary pre-payments and the effect
thereof; and (C) spread the total amount of interest throughout the entire
term of this Agreement so that the interest rate is uniform throughout such
term.
11. BILLING STATEMENT. DFS will send Dealer a monthly billing statement
identifying all charges due on Dealer's account with DFS. The charges
specified on each billing statement will be: (a) due and payable in full
immediately on receipt; and (b) an account stated, unless DFS receives
Dealer's written objection thereto within 15 days after it is mailed to
Dealer. If DFS does not receive, by the 25th day of any given month,
payment of all charges accrued to Dealer's account with DFS during the
immediately preceding month, Dealer will (to the extent allowed by law) pay
DFS a late fee ("Late Fee") equal to the greater of $5 or 5% of the amount
of such finance charges (payment of the Late Fee does not waive the default
caused by the late payment). DFS may adjust the billing statement at any
time to conform to applicable law and this Agreement.
12. DEFAULT. Dealer will be in default under this Agreement if: (a) Dealer
breaches any terms, warranties or representations contained herein, in any
Statement of Transaction to which Dealer has not objected as provided in
SECTION 2, or in any other agreement between DFS and Dealer; (b) any
guarantor of Dealer's debts to DFS breaches any terms, warranties or
representations contained in any guaranty or other agreement between the
guarantor and DFS; (c) any representation, statement, report or certificate
made or delivered by Dealer or any guarantor to DFS is not accurate when
made; (d) Dealer fails to pay any portion of Dealer's debts to DFS when due
and payable hereunder or under any other agreement between DFS and Dealer;
(e) Dealer abandons any Collateral; (f) Dealer or any guarantor is or
becomes in default in the payment of any debt owed to any third party; (g)
a money judgment issues against Dealer or any guarantor; (h) an
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<PAGE>
attachment, sale or seizure issues or is executed against any assets of
Dealer or of any guarantor; (i) the undersigned dies while Dealer's
business is operated as a sole proprietorship, any general partner dies
while Dealer's business is operated as a general or limited partnership, or
any member dies while Dealer's business is operated as a limited liability
company, as applicable; (j) any guarantor dies; (k) Dealer or any guarantor
shall cease existence as a corporation, partnership, limited liability
company or trust, as applicable; (l) Dealer or any guarantor ceases or
suspends business; (m) Dealer, any guarantor or any member while Dealer's
business is operated as a limited liability company, as applicable, makes a
general assignment for the benefit of creditors; (n) Dealer, any guarantor
or any member while Dealer's business is operated as a limited liability
company, as applicable, becomes insolvent or voluntarily or involuntarily
becomes subject to the Federal Bankruptcy Code, any state insolvency law or
any similar law; (o) any receiver is appointed for any assets of Dealer,
any guarantor or any member while Dealer's business is operated as a
limited liability company, as applicable; (p) any guaranty of Dealer's
debts to DFS is terminated; (q) Dealer loses any franchise, permission,
license or right to sell or deal in any Collateral which DFS finances; (r)
Dealer or any guarantor misrepresents Dealer's or such guarantor's
financial condition or organizational structure; or (s) DFS determines in
good faith that it is insecure with respect to any of the Collateral or the
payment of any part of Dealer's obligation to DFS.
13. Rights of DFS Upon on Default. In the event of a default:
(a) DFS may at any time at DFS' election, without notice or demand to
Dealer, do any one or more of the following: declare all or any part
of the debt Dealer owes DFS immediately due and payable, together with
all costs and expenses of DFS' collection activity, including, without
limitation, all reasonable attorneys' fees; exercise any or all rights
under applicable law (including, without limitation, the right to
possess, transfer and dispose of the Collateral); and/or cease
extending any additional credit to Dealer (DFS' right to cease
extending credit shall not be construed to limit the discretionary
nature of this credit facility).
(b) Dealer will segregate and keep the Collateral in trust for DFS,
and in good order and repair, and will not sell, rent, lease,
consign, otherwise dispose of or use any Collateral, nor further
encumber any collateral.
(c) Upon DFS' oral or written demand, Dealer will immediately deliver the
Collateral to DFS, in good order and repair, at a place specified by
DFS, together with all related documents; or DFS may, in DFS' sole
discretion
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and without notice or demand to Dealer, take immediate possession of
the Collateral together with all related documents.
(d) DFS may, without notice, apply a default finance charge to Dealer's
outstanding principal indebtedness equal to the default rate specified
in Dealer's financing program with DFS, if any, or if there is none so
specified, at the lesser of 3% per annum above the rate in effect
immediately prior to the default, or the highest lawful contract rate
of interest permitted under applicable law.
All of DFS' rights and remedies are cumulative. DFS' failure to
exercise any of DFS' rights or remedies hereunder will not waive any
of DFS' rights or remedies as to any past, current or future default.
14. SALE OF COLLATERAL. Dealer agrees that if DFS conducts a private sale of
any Collateral by requesting bids from 10 or more dealers or distributors
in that type of Collateral, any sale by DFS of such Collateral in bulk or
in parcels within 120 days of: (a) DFS' taking possession and control Or
such Collateral; or (b) when DFS is otherwise authorized to sell such
Collateral; whichever occurs last, to the bidder submitting the highest
cash bid therefor, is a commercially reasonable sale of such Collateral
under the Uniform Commercial Code. Dealer agrees that the purchase of any
Collateral by a Vendor, as provided in any agreement between DFS and the
Vendor, is a commercially reasonable disposition and private sale of such
Collateral under the Uniform Commercial Code, and no request for bids shall
be required. Dealer further agrees that 7 or more days prior written
notice will be commercially reasonable notice of any public or private sale
(including any sale to a Vendor). Dealer irrevocably waives any
requirement that DFS retain possession and not dispose of any Collateral
until after an arbitration hearing, arbitration award, confirmation, trial
or final judgment. If DFS disposes of any such Collateral other than as
herein contemplated, the commercial reasonableness of such disposition will
be determined in accordance with the laws of the state governing this
Agreement.
15. POWER OF ATTORNEY. Dealer grants DFS an irrevocable power of attorney
to: execute or endorse on Dealer's behalf any checks, financing
statements, instruments, Certificates of Title and Statements of
Origin pertaining to the Collateral; supply any omitted information
and correct errors in any documents between DFS and Dealer; initiate
and settle any insurance claim pertaining to the Collateral; and do
anything to preserve and protect the Collateral and DFS' rights and
interest therein.
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16. INFORMATION. DFS may provide to any third party (a) any standard
credit information in response to a credit request, and (b) any other
financial or other information on Dealer that DFS may from time to
time possess, as required by law. DFS may obtain from any Vendor any
credit, financial or other information regarding Dealer that such
Vendor may from time to time possess.
17. TERMINATION. Either party may terminate this Agreement at any time by
written notice received by the other party. If DFS terminates this
Agreement, Dealer agrees that if Dealer: (a) is not in default hereunder,
30 days prior notice of termination is reasonable and sufficient (although
this provision shall not be construed to mean that shorter periods may not,
in particular circumstance, also be reasonable and sufficient); or (b) is
in default hereunder, no prior notice of termination is required. Dealer
will not be relieved from any obligation to DFS arising out of DFS'
advances or commitments made before the effective termination date of this
Agreement. DFS will retain all of its rights, interests and remedies
hereunder until Dealer has paid all of Dealer's debts to DFS. All waivers
set forth within this Agreement will survive any termination of this
Agreement.
18. BINDING EFFECT. Dealer cannot assign its interest in this Agreement
without DFS' prior written consent, although DFS may assign or participate
DFS' interest, in whole or in part, without Dealer's consent. This
Agreement will protect and bind DFS' and Dealer's respective heirs,
representatives, successors and assigns.
19. NOTICES. Except as otherwise stated herein, all notices, arbitration
claims, responses, requests and documents will be sufficiently given or
served if mailed or delivered: (a) to Dealer at Dealer's principal place of
business specified above; and (b) to DFS at 655 Maryville Centre Drive, St.
Louis, Missouri 63141-5832, Attention: General Counsel, or such other
address as the parties may hereafter specify in writing.
20. NO ORAL AGREEMENTS. ORAL AGREEMENTS OR COMMITMENTS TO LOAN MONEY, EXTEND
CREDIT OR TO FORBEAR FROM ENFORCING REPAYMENT OF A DEBT INCLUDING PROMISES
TO EXTEND OR RENEW SUCH DEBTS ARE NOT ENFORCEABLE. TO PROTECT DEALER AND
DFS FROM MISUNDERSTANDING OR DISAPPOINTMENT, ALL AGREEMENTS COVERING SUCH
MATTERS ARE CONTAINED IN THIS WRITING, WHICH IS THE COMPLETE AND EXCLUSIVE
STATEMENT OF THE AGREEMENT BETWEEN THE PARTIES, EXCEPT AS SPECIFICALLY
PROVIDED HEREIN OR AS THE PARTIES MAY LATER AGREE IN
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WRITING TO MODIFY IT. THERE ARE NO UNWRITTEN AGREEMENTS BETWEEN THE
PARTIES.
21. OTHER WAIVERS. Dealer irrevocably waives notice of: DFS' acceptance of
this Agreement, presentment, demand, protest, nonpayment, nonperformance,
and dishonor. Dealer and DFS irrevocably waive all rights to claim any
punitive and/or exemplary damages.
22. SEVERABILITY. If any provision of this Agreement or its application
is invalid or unenforceable, the remainder of this Agreement will not
be impaired or affected and will remain binding and enforceable.
23. SUPPLEMENT. If Dealer and DFS have heretofore executed other agreements in
connection with all or any part of the Collateral, this Agreement shall
supplement each and every other agreement previously executed by and
between Dealer and DFS, and in that event this Agreement shall neither be
deemed a novation nor a termination of such previously executed agreement
nor shall execution of this Agreement be deemed a satisfaction of any
obligation secured by such previously executed agreement.
24. RECEIPT OF AGREEMENT. Dealer acknowledges that it has received a true and
complete copy of this Agreement. Dealer acknowledges that it has read and
understood this Agreement. Notwithstanding anything herein to the
contrary: (a) DFS may rely on any facsimile copy, electronic data
transmission or electronic data storage of this Agreement, any Statement of
Transaction, billing statement, invoice from a Vendor, financial statements
or other reports, and (b) such facsimile copy, electronic data transmission
or electronic data storage will be deemed an original, and the best
evidence thereof for all purposes, including, without limitation, under
this Agreement or any other agreement between DFS and Dealer, and for all
evidentiary purposes before any arbitrator, court or other adjudicatory
authority.
25. MISCELLANEOUS. Time is of the essence regarding Dealer's performance of
its obligations to DFS notwithstanding any course of dealing or custom on
DFS' part to grant extensions of time. Dealer's liability under this
Agreement is direct and unconditional and will not be affected by the
release or nonperfection of any security interest granted hereunder. DFS
will have the right to refrain from or postpone enforcement of this
Agreement or any other agreements between DFS and Dealer without prejudice
and the failure to strictly enforce these agreements will not be construed
as having created a course of dealing between DFS and Dealer contrary to
the specific terms of the agreements or as having modified,
10
<PAGE>
released or waived the same. The express terms of this Agreement will not
be modified by any course of dealing, usage of trade, or custom of trade
which may deviate from the terms hereof. If Dealer fails to pay any taxes,
fees or other obligations which may impair DFS' interest in the Collateral,
or fails to keep the Collateral insured, DFS may, but shall not be required
to, pay such taxes, fees or obligations and pay the cost to insure the
Collateral, and the amounts paid will be: (a) an additional debt owed by
Dealer to DFS, which shall be subject to finance charges as provided
herein; and (b) due and payable immediately in full. Dealer agrees to pay
all of DFS' reasonable attorneys' fees and expenses incurred by DFS in
enforcing DFS' rights hereunder. The Section titles used in this Agreement
are for convenience only and do not define or limit the contents of any
Section.
26. BINDING ARBITRATION.
26.1 ARBITRABLE CLAIMS. Except as otherwise specified below, all actions,
disputes, claims and controversies under common law, statutory law or
in equity of any type or nature whatsoever (including, without
limitation, all torts whether regarding negligence, breach of
fiduciary duty, restraint of trade, fraud, conversion, duress,
interference, wrongful replevin, wrongful sequestration, fraud in the
inducement, usury or any other tort, all contract actions, whether
regarding express or implied terms, such as implied covenants of good
faith, fair dealing, and the commercial reasonableness of any
Collateral disposition, or any other contract claim, all claims of
deceptive trade practices or lender liability, and all claims
questioning the reasonableness or lawfulness of any act), whether
arising before or after the date of this Agreement, and whether
directly or indirectly relating to: (a) this Agreement and/or any
amendments and addenda hereto, or the breach, invalidity or
termination hereof; (b) any previous or subsequent agreement between
DFS and Dealer; (c) any act committed by DFS or by any parent company,
subsidiary or affiliated company of DFS (the "DFS Companies"), or by
any employee, agent, officer or director of a DFS Company whether or
not arising within the scope and course of employment or other
contractual representation of the DFS Companies provided that such act
arises under a relationship, transaction or dealing between DFS and
Dealer; and/or (d) any other relationship, transaction or dealing
between DFS and Dealer (collectively the "Disputes"), will be subject
to and resolved by binding arbitration.
26.2 ADMINISTRATIVE BODY. All arbitration hereunder will be conducted in
accordance with the Commercial Arbitration Rules of The American
Arbitration Association ("AAA"). If the AAA is dissolved, disbanded
or becomes subject to any state or federal bankruptcy or insolvency
proceeding, the parties will remain subject to binding arbitration
which will be conducted by a mutually agreeable arbitral
11
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forum. The parties agree that all arbitrator(s) selected will be
attorneys with at least five (5) years secured transactions
experience. The arbitrator(s) will decide if any inconsistency exists
between the rules of any applicable arbitral forum and the arbitration
provisions contained herein. If such inconsistency exists, the
arbitration provisions contained herein will control and supersede
such rules. The site of all arbitration proceedings will be in the
Division of the Federal Judicial District in which AAA maintains a
regional office that is closest to Dealer.
26.3 DISCOVERY. Discovery permitted in any arbitration proceeding
commenced hereunder is limited as follows. No later than thirty (30)
days after the filing of claim for arbitration, the parties will
exchange detailed statements setting forth the facts supporting the
claim(s) and all defenses to be raised during the arbitration, and a
list of all exhibits and witnesses. No later than twenty-one (21)
days prior to the arbitration hearing, the parties will exchange a
final list of all exhibits and all witnesses, including any
designation of any expert witness(es) together with a summary of their
testimony; a copy of all documents and a detailed description of any
property to be introduced at the hearing. Under no circumstances will
the use of interrogatories, requests for admission, requests for the
production of documents or the taking of depositions be permitted.
However, in the event of the designation of any expert witness(es),
the following will occur: (a) all information and documents relied
upon by the expert witness(es) will be delivered to the opposing
party, (b) the opposing party will be permitted to depose the expert
witness(es), (c) the opposing party will be permitted to designate
rebuttal expert witness(es), and (d) the arbitration hearing will be
continued to the earliest possible date that enables the foregoing
limited discovery to be accomplished.
26.4 EXEMPLARY PUNITIVE DAMAGES. The Arbitrator(s) will not have the
authority to award exemplary or punitive damages.
26.5 CONFIDENTIALITY OF AWARDS. All arbitration proceedings, including
testimony or evidence at hearings, will be kept confidential, although
any award or order rendered by the arbitrator(s) pursuant to the terms
of this Agreement may be entered as a judgment or order in any state
or federal court and may be confirmed within the federal judicial
district which includes the residence of the party against whom such
award or order was entered. This Agreement concerns transactions
involving commerce among the several states. The Federal Arbitration
Act, Title 9 U.S.C. Sections 1 et seq., as amended ("FAA") will govern
all arbitration(s) and confirmation proceedings hereunder.
26.6 PREJUDGMENT AND PROVISIONAL REMEDIES. Nothing herein will be
construed to prevent DFS' or Dealer's use of bankruptcy, receivership,
injunction, repossession, replevin, claim and delivery, sequestration,
seizure, attachment,
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foreclosure, dation and/or any other prejudgment or provisional action
or remedy relating to any Collateral for any current or future debt
owed by either party to the other. Any such action or remedy will not
waive DFS' or Dealer's right to compel arbitration of any Dispute.
26.7 ATTORNEYS' FEES. If either Dealer or DFS brings any other action for
judicial relief with respect to any Dispute (other than those set
forth in SECTION 26.6), the party bringing such action will be liable
for and immediately pay all of the other party's costs and expenses
(including attorneys'' fees) incurred to stay or dismiss such action
and remove or refer such Dispute to arbitration. If either Dealer or
DFS brings or appeals an action to vacate or modify an arbitration
award and such party does not prevail, such party will pay all costs
and expenses, including attorneys' fees, incurred by the other party
in defending such action. Additionally, if Dealer sues DFS or
institutes any arbitration claim or counterclaim against DFS in which
DFS is the prevailing party, Dealer will pay all costs and expenses
(including attorneys' fees) incurred by DFS in the course of defending
such action or proceeding.
26.8 LIMITATIONS. Any arbitration proceeding must be instituted: (a) with
respect to any Dispute for the collection of any debt owed by either
party to the other, within two (2) years after the date the last
payment was received by the instituting party; and (b) with respect to
any other Dispute, within two (2) years after the date the incident
giving rise thereto occurred, whether or not any damage was sustained
or capable of ascertainment or either party knew of such incident.
Failure to institute an arbitration proceeding within such period will
constitute an absolute bar and waiver to the institution of any
proceeding, whether arbitration or a court proceeding, with respect to
such Dispute.
26.9 SURVIVAL AFTER TERMINATION. The agreement to arbitrate will survive
the termination of this Agreement.
27. INVALIDITY/ UNENFORCEABILITY OF BINDING ARBITRATION. IF THIS AGREEMENT IS
FOUND TO BE NOT SUBJECT TO ARBITRATION, ANY LEGAL PROCEEDING WITH RESPECT
TO ANY DISPUTE WILL BE TRIED IN A COURT OF COMPETENT JURISDICTION BY A
JUDGE WITHOUT A JURY. DEALER AND DFS WAIVE ANY RIGHT TO A JURY TRIAL IN ANY
SUCH PROCEEDING.
28. GOVERNING LAW. Dealer acknowledges and agrees that this and all other
agreements between Dealer and DFS have been substantially negotiated, and
will be substantially performed, in the slate of Maryland. Accordingly,
Dealer agrees that all Disputes will be governed by, and construed in
accordance with, the laws
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of such state, except to the extent inconsistent with the provisions of the
FAA which shall control and govern all arbitration proceedings hereunder.
IN WITNESS WHEREOF, Dealer and DFS have executed this Agreement as of the date
first set forth hereinabove.
THIS CONTRACT CONTAINS BINDING ARBITRATION, JURY WAIVER AND PUNITIVE DAMAGE
WAIVER PROVISIONS.
DEUTSCHE FINANCIAL SERVICES CORPORATION
By: /s/ Kenneth Guest
-----------------------------------
Print Name: Kenneth Guest
----------------------------
Title: Regional Vice President
---------------------------------
SYLVEST MANAGEMENT SYSTEMS CORPORATION
By: /s/ Gary S. Murray
------------------------------------
Print Name: Gary S. Murray
------------------------------------
Title: President
------------------------------------
By: ____________________________________
Print Name: ____________________________
Title: _________________________________
ATTEST:
/s/ William S. Strang
- ----------------------------------------
(Assistant) Secretary)
Print Name: William S. Strang
---------------------------
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EXHIBIT 4.7
AMENDMENT TO AGREEMENT FOR WHOLESALE FINANCING
This Amendment to Agreement for Wholesale Financing is made to that
certain Agreement for Wholesale Financing entered into by and between Sylvest
Management Systems Corporation ("Dealer") and Deutsche Financial Services
Corporation ("DFS") on September 17, 1996, as amended ("Agreement").
FOR VALUE RECEIVED, Dealer and DFS agree as follows:
1. Dealer and DFS agree to amend paragraph number 9 of the Agreement to
provide as follows:
"9. PAYMENT TERMS/PAYDOWN. Dealer will immediately pay DFS the principal
indebtedness owed DFS on each item of Collateral financed by DFS (as shown
on the Statement of Transaction identifying such Collateral) on the
earliest occurrence of any of the following events: (a) when such
Collateral is lost, stolen or damaged; (b) for Collateral financed under
Pay-As-Sold ('PAS') terms (as shown on the Statement of Transaction
identifying such Collateral), when such Collateral is sold, transferred,
rented, leased, otherwise disposed of or matured; (c) in strict accordance
with any curtailment schedule for such Collateral (as shown on the
Statement of Transaction identifying such Collateral); (d) for Collateral
financed under Scheduled Payment Program ('SPP") terms (as shown on the
Statement of Transaction identifying such Collateral), in strict accordance
with the installment payment schedule; and (e) when otherwise required
under the terms of any financing program agreed to in writing by the
parties. Dealer will forward to DFS by the 15th day of each month a
Collateral Summary Report (as defined below) dated as of the last day of
the prior month. Regardless of the SPP terms pertaining to any Collateral
financed by DFS, and notwithstanding any scheduled payments made by Dealer
after the Determination Date (as defined below) if DFS determines, after
reviewing the Collateral Summary Report, after conducting an inspection of
the Collateral or otherwise, that (i) the total current outstanding
indebtedness owed by Dealer to DFS as of the date of the Collateral Summary
Report, inspection or any other date on which a paydown is otherwise
required hereunder, as applicable (the 'Determination Date'), exceeds (ii)
the Collateral Liquidation Value (as defined below) as of the Determination
Date, Dealer will immediately upon demand pay DFS the difference between
(i) Dealer's total current outstanding indebtedness owed to DFS as of the
Determination Date, and (ii) the Collateral Liquidation Value as of the
Determination Date.
The term 'Collateral Summary Report' is defined herein to mean a report
compiled by Dealer specifying the following information: (a) the total
aggregate wholesale
<PAGE>
invoice price of all of Dealer's inventory financed by DFS that is unsold
and in Dealer's possession and control as of the date of such Report; (b)
the total aggregate wholesale invoice price of all of Dealer's inventory
not financed by DFS that is unsold, and in Dealer's possession and control
as of the date of such Report; and (c) the total outstanding balance owed
to Dealer on Dealer's Eligible Accounts (as defined below) as of the date
of such Report; in each case to the extent DFS has a first priority, fully
perfected security interest therein.
The term 'Eligible Accounts' is defined herein to include all of Dealer's
accounts receivable arising from or related to any sale or lease of any
goods and/or services by Dealer to end users on approved Short Term
Accounts Receivable ("STAR") contracts to the extent DFS has received
documentation satisfactory to it providing for direct payment from such
account debtors to DFS except for (a) accounts created from the sale of
goods and services on non-standard terms and/or that allow for payment to
be made more than thirty (30) days from the date of sale; (b) accounts
unpaid more than ninety (90) days from date of invoice; (c) all accounts of
any obligor with fifty percent (50%) or more of the outstanding balance
unpaid for more than ninety (90) days from the date of invoice; (d)
accounts which the obligor is an officer, director, shareholder, partner,
member, owner, employee. agent, parent, subsidiary, affiliate of, or is
related or has common shareholders, officers, directors, owners, partners
or members; (e) consignment sales; (f) accounts for which the payment is or
may be conditional; (g) accounts for which the obligor is not a commercial
or institutional entity or is not a resident of the United States or
Canada; (h) accounts with respect to which any warranty or representation
provided herein is not true and correct; (i) accounts which represent goods
or services purchased for a personal, family or household purpose; (j)
accounts which represent goods used for demonstration purposes or loaned by
Dealer to another party; (k) accounts which are progress payment, barter or
contra accounts; (l) accounts which are discounts, rebates, bonuses or
credits for returned goods owed to Dealer by any third party; (m) accounts
which are being financed by DFS pursuant to a Business Financing Agreement
or other compatible document between Dealer and DFS; and (n) any and all
other accounts which DFS deems to be ineligible.
The term 'Collateral Liquidation Value' is defined herein to mean: (i) one
hundred percent (100%) of the total aggregate wholesale invoice price of
all of Dealer's inventory financed by DFS that is unsold and in Dealer's
possession and control; (ii) fifty percent (50%) of the total aggregate
wholesale invoice price of all Dealer's inventory not financed by DFS that
is unsold, and in Dealer's possession and control; and (iii) eighty percent
(80%) of the total outstanding balance of Dealer's Eligible Accounts: in
each case as of the date of the Collateral Summary Report and to the extent
DFS has a first priority, fully perfected security interest
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therein. If Dealer from time to time is required to make immediate payment
to DFS of any past due obligation discovered during any Collateral audit,
upon review of a Collateral Summary Report or at any other time, Dealer
agrees that acceptance of such payment by DFS shall not be construed to
have waived or amended the terms of its financing program. The proceeds of
any Collateral received by Dealer will be held by Dealer in trust for DFS'
benefit, for application as provided in this Agreement. Dealer will send
all payments to DFS' branch office(s) responsible for Dealer's account.
DFS may apply: (i) payments to reduce finance charges first and then
principal, regardless of Dealer's instructions; and (ii) principal payments
to the oldest (earliest) invoice for Collateral financed by DFS, but, in
any event, all principal payments will first be applied to such Collateral
which is sold, lost, stolen, damaged, rented, leased, or otherwise disposed
of or unaccounted for. Any third party discount, rebate, bonus or credit
granted to Dealer for any Collateral will not reduce the debt Dealer owes
DFS until DFS has received payment therefor in cash. Dealer will: (1) pay
DFS even if any Collateral is defective or fails to conform to any
warranties extended by any third party; (2) not assert against DFS any
claim or defense Dealer has against any third party; and (3) indemnify and
hold DFS harmless against all claims and defenses asserted by any buyer of
the Collateral relating to the condition of, or any representations
regarding, any of the Collateral. Dealer waives all rights of offset and
counterclaims Dealer may have against DFS."
2. DFS and Dealer agree that the following paragraph is incorporated into the
Agreement as if fully and originally set forth therein:
"Dealer will maintain for the fiscal year ending December 31, 1996 and each
fiscal year thereafter:
(a) a Tangible Net Worth and Subordinated Debt in the combined amount of
not less than Three Million Seven Hundred Fifty Thousand Dollars
($3,750,000.00); and
(b) a ratio of Debt to Tangible Net Worth and Subordinated Debt of not
more than five to one (5.0: 1).
For purposes of this paragraph: (i) "Tangible Net Worth' means the book
value of Dealer's assets less liabilities, excluding from such assets all
Intangibles; (ii) 'Intangibles' means and includes general intangibles (as
that term is defined in the Uniform Commercial Code); accounts receivable
and advances due from officers, directors, employees, stockholders and
affiliates; leasehold improvements net of depreciation; licenses; good
will; prepaid expenses; escrow deposits; covenants not to compete; the
excess of cost over book value of acquired assets; franchise fees;
organizational costs; finance reserves held for recourse obligations;
3
<PAGE>
capitalized research and development costs; and such other similar items as
DFS may from time to time determine in DFS' sole discretion; (iii) 'Debt'
means all of Dealer's liabilities and indebtedness for borrowed money of
any kind and nature whatsoever, whether direct or indirect, absolute or
contingent, and including obligations under capitalized leases, guaranties,
or with respect to which Dealer has pledged assets to secure performance,
whether or not direct recourse liability has been assumed by Dealer, and
(iv) 'Subordinated Debt' means all of Dealer's Debt which is subordinated
to the payment of Dealer's liabilities to DFS by an agreement in form and
substance satisfactory to DFS. The foregoing terms shall be determined in
accordance with generally accepted accounting principles consistently
applied, and, if applicable, on a consolidated basis."
Dealer waives notice of DFS' acceptance of this amendment..
All other terms as they appear in the Agreement, to the extent
consistent with the foregoing, are ratified and remain unchanged and in full
force and effect.
IN WITNESS WHEREOF, Deal and DFS have executed this Amendment to
Agreement for Wholesale Financing this 17th day of September, 1996.
SYLVEST MANAGEMENT SYSTEMS CORPORATION
ATTEST: By: /s/ Gary Murray
--------------------------------
Title: President
-----------------------------
/s/ William Strang
- -----------------------
(Assistant) Secretary
DEUTSCHE FINANCIAL SERVICES CORPORATION
By: /s/ Kenneth Guest
-------------------------------------
Title: Regional Vice President
----------------------------------
4
<PAGE>
EXHIBIT 4.8
STAR AGREEMENT
(SHORT TERM ACCOUNTS RECEIVABLE PROGRAM)
This STAR Agreement is entered into by and between Sylvest Management
Systems Corporation ("Dealer") and Deutsche Financial Services Corporation
("DFS"), as of this 17th day of September, 1996
In the course of Dealer's business, Dealer sells various products
("Goods") to customers located within the United States ("Customers"). Dealer
has requested that DFS finance its acquisition of certain Goods, acceptable to
DFS in its sole discretion, and the accounts, contract rights and other forms of
obligations for the payment of money due or to become due, from the bona fide
sale and delivery of such Goods, in the regular course of Dealer's business, to
the Customers to be identified on STAR Assignment Agreements which Dealer
submits to DFS from time to time, ("the Receivables") on the following terms and
conditions:
1. ASSIGNMENT OF RECEIVABLES. Dealer hereby offers to assign the
Receivables to DFS, together with all of Dealer's rights and guaranties with
respect to the Receivables, including all rights of stoppage in transit, the
right to file mechanics' and materialman's liens in DFS' name, and the right to
sue for the unpaid balance due on the Receivables, together with the right, but
not the duty, to complete the performance of any contract at DFS' option, and
all other rights of an unpaid seller of Goods or services.
2. CREDIT APPROVAL. DFS' obligation to finance any of the Goods
and Receivables, and Dealer's assignment thereof, will be contingent upon DFS'
issuance to Dealer of a STAR approval number. DFS may withdraw the STAR
approval at any time prior to the "Shipment" of the Goods to a Customer.
Shipment will be deemed to occur at the time Dealer parts with possession of the
Goods in any way for the purpose of delivering them to a Customer, whether or
not DFS has already accepted the assignment of such Receivable. Any approval
number which DFS gives to a Dealer will be valid only for so long as the
information which Dealer submits to DFS in seeking such approval remains
unchanged. Any change in such information which has not had DFS' prior approval
will automatically cancel any approval given. Dealer will inform DFS at all
times of any changes of which Dealer may become aware in the status, address or
creditworthiness of any Customer whose Receivable has been assigned to DFS.
3. TRANSFER AND ACCEPTANCE OF RECEIVABLES. Dealer will execute
and submit STAR Assignment Agreements to DFS (which agreements DFS will provide
to Dealer from time to time) for DFS' acceptance or rejection thereof, in its
sole discretion. Dealer's acceptance of all the terms and conditions set out in
this Agreement will be deemed incorporated into each STAR Assignment Agreement
which Dealer executes and delivers to DFS. Dealer hereby waives notice of
acceptance of the STAR Assignment Agreements by DFS.
<PAGE>
4. WARRANTIES. With respect to each STAR Assignment Agreement,
Dealer represents and warrants that: (a) the information contained in the STAR
Assignment Agreement is correct and complete; (b) each Receivable assigned to
DFS represents an actual, existing, bona fide sale and Shipment of Goods to the
Customer, and will be legally enforceable against the Customer in full without
any right of set-off, contra-account, retention, or other abatement; (c) each
assigned Receivable is supported by a written purchase order from the Customer
or a written confirming memorandum evidencing the sale of the Goods or services;
(d) the contract with the Customer identifies the Goods and the quantity of the
Goods and the terms and currency of payment, which terms will not exceed sixty
(60) days from the date of delivery of the Goods, and that the contract is
assignable by Dealer; (e) the obligations of the Customer are not evidenced by
any note, chattel paper, or other negotiable instrument except as will be
endorsed and delivered by Dealer to DFS; (f) each original invoice and all
copies state Dealer's terms of sale and the required notice of assignment in the
form specified by DFS; (g) promptly upon Dealer's receiving notice of a bona
fide claim from the Customer or upon Dealer's receipt of returned Goods, Dealer
will issue a credit memorandum in respect thereof; (h) without prejudice to
anything contained herein, Dealer will pay any sum due from Dealer to the
Customer not later than the due date; (i) Dealer is solvent; (j) the Receivables
assigned to DFS have not been assigned or sold to any other person or entity,
and Dealer will not assign, pledge or hypothecate the assigned Receivables to
any other person or entity (k) Dealer will defend the assigned Receivables
against all claims and demands; (l) Dealer has no interest, direct or indirect,
in the Customer's business, nor has the Customer any interest in Dealer's
business; (m) there are no proceedings or actions known to Dealer which are
threatened or pending against Customer which might result in any material
adverse change in such Customer's financial condition; and (n) Dealer will
service the Goods in accordance with the terms of any agreement made with the
Customer and in accordance with the terms of any warranty or service guaranty
made by advertisement or otherwise.
5. SECURITY INTEREST. Dealer hereby grants to DFS a security
interest in, and right of set-off with respect to all of Dealer's inventory,
equipment, fixtures, accounts, contract rights, chattel paper, security
agreements, instruments, deposit accounts, reserves, documents, and general
intangibles, and all judgments, claims, insurance policies, and payments owed or
made to Dealer thereon; whether now owned or hereafter acquired, all
attachments, accessories, accessions, returns, repossessions, exchanges,
substitutions and replacements thereto, and all proceeds thereof. All of the
above assets are defined pursuant to the provisions of Article 9 of the Uniform
Commercial Code ("UCC") and hereinafter collectively referred to as the
"Collateral." All of the foregoing will secure payment and performance of all
of Dealer's obligations at any time owing to DFS, fixed or contingent, whether
arising under this or any other agreement or by operation of law or otherwise
(the "Obligations"). Dealer promises that the Receivables will be free from all
claims and liens superior to DFS when assigned to DFS and that Dealer will
obtain Subordination Agreements, in a form acceptable to DFS, from those
creditors designated by DFS. DFS is irrevocably authorized at any time to
charge to Dealer's account the amount of any or all of the Obligations. Dealer
will execute and deliver to DFS such other documents and instruments, including,
without limitation, UCC financing statements or amendments, as DFS may request
from time to time.
2
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6. CUSTOMERS' PAYMENTS RECEIVED. Any check, draft, note,
acceptance, or other money instrument or cash in payment of the Receivables
assigned to DFS which is received by Dealer or to Dealer's order will be
received by Dealer in trust for DFS and immediately turned over to DFS.
7. INVOICE AND DELIVERY. Dealer will provide to DFS, at Dealer's
expense, the evidence of the order for the Goods and the Shipment thereof and,
where appropriate, delivery and receipt of the Goods or of performance of the
services invoiced to the Customer. Dealer will pay all taxes, license fees,
assessments and charges on the Goods when due. Dealer will be responsible for
any loss to the Goods.
8. RECORDS AND ACCOUNTS. Dealer certifies to DFS that the
following address is the office at which Dealer's records relating to the
Receivables are kept: 10001 Derekwood Lane, Lanham, Maryland 20706. Dealer
will not change this address without first giving DFS prior written notice
thereof.
9. STAR ACCOUNTING PROCEDURE. Upon DFS' acceptance of the
Receivables for financing following Dealer's delivery to DFS of any supporting
documentation which DFS may require, including but not limited to, copies of
Customer's signed purchase order, Dealer's invoice, proof of delivery, and any
assignment notices and documents, DFS will remit to Dealer, upon DFS' receipt of
payment of good funds from the Customer, the face amount of the Receivables
assigned to DFS, less any taxes, freight, insurance and interest due DFS,
together with the unpaid balance owed DFS on the financed Goods. DFS may also
deduct from the amounts due Dealer any other amounts which Dealer owes to DFS.
Dealer will immediately pay to DFS the amount of any credit memorandums which
Dealer issues to a Customer.
10. RECOURSE. Dealer will pay to DFS upon demand the unpaid
balance due to DFS on any Receivable assigned to DFS if: (a) Customer fails to
pay DFS any amount owed to DFS with respect to such Receivable when due,
including, but not limited to, the payment of any disputed Receivable pursuant
to the provisions of Section 11 herein; or (b) Dealer breaches any warranty or
covenant which Dealer gives to DFS with respect to such Receivable in this
Agreement or any other agreement between Dealer and DFS. The unpaid balance due
DFS will equal the unpaid principal balance owed by the Customer plus any
accrued interest and expenses incurred by DFS including, but not limited to, all
attorneys' fees, court costs, collection charges, and all other expenses that
DFS may incur to enforce payment of any Receivables. In addition, Dealer will
pay interest to DFS at the STAR program rate, on any amount which Dealer owes to
DFS hereunder from the date of DFS' demand to the date of DFS' receipt of
Dealer's payment or DFS' deduction from any reserve or amounts which DFS owes to
Dealer. DFS may, without in any way discharging Dealer's liability to DFS under
this Section, grant time or other indulgence to or enter into any compromise
with a Customer. DFS' reasonable exercise of or failure to exercise any rights
or remedies under this Agreement or failure to collect any amounts due on the
assigned Receivables will not relieve Dealer of Dealer's Obligations. Any
obligation imposed on Dealer under this Section will not be affected by the
existence, validity,
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enforceability or perfection of any security interest lien, mortgage,
assignment, consent, waiver, subordination or document with respect to the
Customer nor the assertion of any dispute, set-off, counterclaim or deduction in
connection with any such Receivables. If Dealer discharges in full any
liability under this Section, DFS will reassign to Dealer the relevant
Receivables. Any sum which DFS receives in respect to such Receivable after
Dealer's payment will be remitted to Dealer or applied to any Obligations then
due DFS.
11. DISPUTES WITH CUSTOMERS AND DEDUCTION NOTICES. If a Customer
raises any dispute regarding its liability to pay an assigned Receivable or any
part thereof on its due date, DFS will send Dealer a letter describing the
Customer's dispute. If the claim or dispute remains unresolved for thirty (30)
calendar days following the date of DFS' letter, DFS will credit the Customer's
account and Dealer will pay to DFS the unpaid balance owed to DFS with respect
to such Receivable in accordance with Section 10 herein. Dealer will also
immediately remit to DFS the amount of any credits or adjustments which Dealer
gives to a Customer.
12. APPLICATION OF CUSTOMERS' PAYMENTS. DFS may apply payments
which DFS receives from Customers to reduce interest and other charges which
Dealer owes to DFS first, and then principal regardless of Dealer's
instructions. DFS may apply principal payments to the oldest (earliest)
Obligations or part thereof first. DFS' application of any Customer payment is
provisional and subject to review and reapplication until all Obligations to DFS
are paid in full.
13. POWER OF ATTORNEY. Dealer grants to DFS an irrevocable power
of attorney with full power at any time in the discretion of DFS to demand, sue
for, settle, extend, renew and discharge any sum payable by a Customer in
respect of the Receivables assigned to DFS, to execute financing statements, to
endorse in DFS' favor any negotiable instrument drawn in Dealer's favor in
payment of the Receivables assigned to DFS, to submit insurance claims, to
exercise any of Dealer's rights and remedies with respect to the collection of
any of the Receivables and to supply any omitted information and correct obvious
errors in any documents executed by or for Dealer. The power of attorney is for
value and coupled with an interest and is irrevocable so long as any Obligations
remain outstanding and by DFS exercising such right, DFS shall not waive any
right against Dealer until the Obligations are paid in full. Dealer agrees to
execute a separate document, in a form satisfactory to DFS, evidencing the power
of attorney granted to DFS herein.
14. MITIGATION OF LOSS. Dealer will, at DFS' request, take all
such steps as DFS may require for the protection of DFS' interests pursuant to
this Agreement and mitigation of any loss DFS may suffer.
15. WAIVERS. Dealer and DFS irrevocably waive all rights to claim
any punitive and/or exemplary damages. Any waiver or apparent waiver by Dealer
or DFS of any breach of any Obligation or provision contained in this Agreement,
or in any amendment, will not be deemed a general waiver or be construed as
implying or establishing consent to any subsequent breach.
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16. INDEMNIFICATION AND HOLD HARMLESS. Dealer will at all times
defend, indemnify and hold DFS harmless against all actions, proceedings,
defenses, claims, demands, losses, damages, or expenses, including legal fees,
that DFS may incur in any way in defending or prosecuting, settling, or
discontinuing any proceedings, actions, or claims in consequence of or arising
in any way out of claims relating to the Receivables or the Goods, whether for
breach of contract, failure to deliver Goods or services, rejection of Goods or
services for any reason whatsoever, damage, destruction or loss of Goods
(partial or total), breach of warranty (express or implied), or claims arising
out of purchases, sales, transportation, collections on insurance, care, or
custody of such Goods or services sold by Dealer from the time such Goods or
services were ordered until the same is finally paid for by a Customer. Dealer
will also indemnify DFS against any loss or liability resulting from any acts or
omissions of DFS or DFS' agents or employees in connection with the Goods and
services, or the sales thereof. DFS will in no way be liable for any damage to
or loss of any Goods in Dealer's possession, whatever may be the cause of such
damage or loss.
17. INSPECTION OF BOOKS AND RECORDS. DFS will have the right, but
not the obligation, from time to time, to verify that all Receivables have been
properly accounted for and this Agreement complied with, and to examine, check
and make copies of Dealer's books, records and files. Dealer will immediately
upon Dealer's assignment of any Receivables to DFS, make appropriate entries
upon Dealer's books disclosing such assignments, and will execute and deliver
all papers and instruments and do all things necessary to effectuate this
Agreement.
18. PARTIES. This Agreement will protect and bind DFS' and
Dealer's successors and assigns, and also any of DFS' existing or future
affiliates that may extend financing accommodations to Dealer.
19. NO ORAL AGREEMENTS. ORAL AGREEMENTS OR COMMITMENTS TO LOAN
MONEY, EXTEND CREDIT OR TO FORBEAR FROM ENFORCING REPAYMENT OF A DEBT INCLUDING
PROMISES TO EXTEND OR RENEW SUCH DEBTS ARE NOT ENFORCEABLE. TO PROTECT DEALER
AND DFS FROM MISUNDERSTANDING OR DISAPPOINTMENT, ALL AGREEMENTS COVERING SUCH
MATTERS ARE CONTAINED IN THIS WRITING, ANY STAR ASSIGNMENT AGREEMENTS, AND ANY
AGREEMENT FOR WHOLESALE FINANCING BETWEEN THE PARTIES, EXCEPT AS SPECIFICALLY
PROVIDED HEREIN OR AS THE PARTIES MAY LATER AGREE IN WRITING TO MODIFY IT.
THERE ARE NO UNWRITTEN AGREEMENTS BETWEEN THE PARTIES.
20. SEVERABILITY. If any provision of this Agreement or its
application is invalid or unenforceable, the remainder of the Agreement will not
be affected.
21. NOTICES. Except as otherwise stated herein, all notices,
arbitration claims, responses, requests and documents will be sufficiently given
or served if mailed or delivered: (a) to DFS at 655 Maryville Centre Drive, St.
Louis, Missouri 63141-5832, Attention: General Counsel; and
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(b) to Dealer at the address specified in Section 8 herein, or such other
address as the parties may hereafter specify in writing.
22. TERMINATION. Time is important in this Agreement. This
Agreement will be effective from the date of its acceptance at DFS' branch
office. Dealer acknowledges receipt of a true copy and waives formal acceptance
of it. If DFS advances funds under this Agreement, DFS will have accepted it
whether DFS has signed it or not. It will be in force until Dealer or DFS gives
notice to the other that it is terminated. Upon termination, all Dealer's
Obligations to DFS will be immediately due and payable, even if they are not yet
due under their terms. If terminated, Dealer will not be relieved from any
Obligation arising out of DFS' advances or commitments made before the effective
date of termination. DFS' rights under this Agreement and DFS' security
interest in Dealer's present and future assets will not be affected until
Dealer's debts to DFS are paid in full.
23. SECTION TITLES. The Section titles used in this Agreement are
for convenience only and do not define or limit the contents of any Section.
24. BINDING ARBITRATION.
24.1. ARBITRABLE CLAIMS. Except as otherwise specified below, all
actions, disputes, claims and controversies under common law,
statutory law or in equity of any type or nature whatsoever
(including, without limitation, all torts, whether regarding
negligence, breach of fiduciary duty, restraint of trade,
fraud, conversion, duress, interference, wrongful replevin,
wrongful sequestration, fraud in the inducement, usury or any
other tort, all contract actions, whether regarding express or
implied terms, such as implied covenants of good faith, fair
dealing, and the commercial reasonableness of any Collateral
disposition, or any other contract claim, all claims of
deceptive trade practices or lender liability, and all claims
questioning the reasonableness or lawfulness of any act),
whether arising before or after the date of this Agreement,
and whether directly or indirectly relating to: (a) this
Agreement and/or any amendments and addenda hereto, or the
breach, invalidity or termination hereof; (b) any previous or
subsequent agreement between DFS and Dealer; (c) any act
committed by DFS or by any parent company, subsidiary or
affiliated company of DFS (the "DFS Companies"), or by any
employee, agent, officer or director of a DFS Company whether
or not arising within the scope and course of employment or
other contractual representation of the DFS Companies provided
that such act arises under a relationship, transaction or
dealing between DFS and Dealer; and/or (d) any other
relationship, transaction or dealing between DFS and Dealer
(collectively the "Disputes"), will be subject to and resolved
by binding arbitration.
24.2. ADMINISTRATIVE BODY. All arbitration hereunder will be
conducted in accordance with the Commercial Arbitration Rules
of The American Arbitration
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Association ("AAA"). If the AAA is dissolved, disbanded or
becomes subject to any state or federal bankruptcy or
insolvency proceeding, the parties will remain subject to
binding arbitration which will be conducted by a mutually
agreeable arbitral forum. The parties agree that all
arbitrator(s) selected will be attorneys with at least five
(5) years secured transactions experience. The arbitrator(s)
will decide if any inconsistency exists between the rules of
any applicable arbitral forum and the arbitration provisions
contained herein. If such inconsistency exists, the
arbitration provisions contained herein will control and
supersede such rules. The site of all arbitration proceedings
will be in the Division of the Federal Judicial District in
which AAA maintains a regional office that is closest to
Dealer.
24.3. DISCOVERY. Discovery permitted in any arbitration proceeding
commenced hereunder is limited as follows. No later than
thirty (30) days after the filing of a claim for arbitration,
the parties will exchange detailed statement setting forth the
facts supporting the claim(s) and all defenses to be raised
during the arbitration, and a list of all exhibits and
witnesses. No later than twenty-one (21) days prior to the
arbitration hearing, the parties will exchange a final list of
all exhibits and all witnesses, including any designation of
any expert witness(es) together with a summary of their
testimony; a copy of all documents and a detailed description
of any property to be introduced at the hearing. Under no
circumstances will the use of interrogatories, requests for
admission, requests for the production of documents-or the
taking of depositions be permitted. However, in the event of
the designation of any expert witness(es), the following will
occur: (a) all information and documents relied upon by the
expert witness(es) will be delivered to the opposing party,
(b) the opposing party will be permitted to depose the expert
witness(es), (c) the opposing party will be permitted to
designate rebuttal expert witness(es), and (d) the arbitration
hearing will be continued to the earliest possible date that
enables the foregoing limited discovery to be accomplished.
24.4. EXEMPLARY OR PUNITIVE DAMAGES. The Arbitrator(s) will not
have the authority to award exemplary or punitive damages.
24.5. CONFIDENTIALITY OF AWARDS. All arbitration proceedings,
including testimony or evidence at hearings, will be kept
confidential, although any award or order rendered by the
arbitrator(s) pursuant to the terms of this Agreement may be
entered as a judgment or order in any state or federal court
and may be confirmed within the federal judicial district
which includes the residence of the party against whom such
award or order was entered. This Agreement concerns
transactions involving commerce among the several states. The
Federal
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Arbitration Act, Title 9 U.S.C. Sections 1 et seq., as amended
("FAA") will govern all arbitration(s) and confirmation
proceedings hereunder.
24.6. PREJUDGMENT AND PROVISIONAL REMEDIES. Nothing herein will be
construed to prevent DFS' or Dealer's use of bankruptcy,
receivership, injunction, repossession, replevin, claim and
delivery, sequestration, seizure, attachment, foreclosure,
dation and/or any other prejudgment or provisional action or
remedy relating to any Collateral for any current or future
debt owed by either party to the other. Any such action or
remedy will not waive DFS' or Dealer's right to compel
arbitration of any Dispute.
24.7. ATTORNEYS' FEES. If either Dealer or DFS brings any other
action for judicial relief with respect to any Dispute (other
than those set forth in SECTION 24.6), the party bringing such
action will be liable for and immediately pay all of the other
party's costs and expenses (including attorneys' fees)
incurred to stay or dismiss such action and remove or refer
such Dispute to arbitration. If either Dealer or DFS brings
or appeals an action to vacate or modify an arbitration award
and such party does not prevail, such party will pay all costs
and expenses, including attorneys' fees, incurred by the other
party in defending such action. Additionally, if Dealer sues
DFS or institutes any arbitration claim or counterclaim
against DFS in which DFS is the prevailing party, Dealer will
pay all costs and expenses (including attorneys' fees)
incurred by DFS in the course of defending such action or
proceeding.
24.8. LIMITATIONS. Any arbitration proceeding must be instituted:
(a) with respect to any Dispute for the collection of any debt
owed by either party to the other, within two (2) years after
the date the last payment was received by the instituting
party; and (b) with respect to any other dispute, within two
(2) years after the date the incident giving rise thereto
occurred, whether or not any damage was sustained or capable
of ascertainment or either party knew of such incident.
Failure to institute an arbitration proceeding within such
period will constitute an absolute bar and waiver to the
institution of any proceeding, whether arbitration or a court
proceeding, with respect to such Dispute.
24.9. Survival After Termination. The agreement to arbitrate will
survive the termination of this Agreement.
25. INVALIDITY/UNENFORCEABILITY OF BINDING ARBITRATION. IF THIS
AGREEMENT IS FOUND TO BE NOT SUBJECT TO ARBITRATION, ANY LEGAL PROCEEDING WITH
RESPECT TO ANY DISPUTE WILL BE TRIED IN A COURT OF COMPETENT JURISDICTION BY A
JUDGE WITHOUT A JURY. DEALER AND DFS WAIVE ANY RIGHT TO A JURY TRIAL IN ANY SUCH
PROCEEDING.
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26. GOVERNING LAW. Dealer acknowledges and agrees that this and
all other agreements between Dealer and DFS have been substantially negotiated,
and will be substantially performed, in the state of Maryland. Accordingly,
Dealer agrees that all Disputes will be governed by, and construed in accordance
with, the laws of such state, except to the extent inconsistent with the
provisions of the FAA which shall control and govern all arbitration proceedings
hereunder.
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THIS CONTRACT CONTAINS BINDING ARBITRATION, JURY WAIVER AND PUNITIVE
DAMAGE WAIVER PROVISIONS.
DATED: SEPTEMBER 17, , 1996
SYLVEST MANAGEMENT SYSTEMS CORPORATION
--------------------------------------
(Dealer)
ATTEST:
[SEAL]
By: /s/WILLIAM STRANG
----------------------------------------
Print Name: WILLIAM STRANG
--------------------------------
/s/ WILLIAM STRANG Title: EXECUTIVE VICE PRESIDENT
- --------------------- -------------------------------------
(Assistant) Secretary
DEUTSCHE FINANCIAL SERVICES CORPORATION
By:
----------------------------------------
Print Name:
--------------------------------
Title:
-------------------------------------
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STAR ASSIGNMENT AGREEMENT
(ONGOING STAR TRANSACTIONS)
WHEREAS, Sylvest Management Systems Corporation, Inc. ("Dealer") has
entered into and may from time to time enter into agreements with Boeing
Information Services, Inc. ("Customer") for the purchase of goods as evidenced
by a contract, invoice and/or purchase order entered into with or issued to
Customer. Purchases made outside the terms of a written contract will be
reflected on Dealer's books as an open account referencing the purchase order
number or invoice number; and
WHEREAS, monies are due or will become due Dealer from Customer as a
result of the purchases; and
WHEREAS, there is no prohibition in any agreement, contract, invoice
or purchase order forbidding the assignment herein made; and
WHEREAS, Dealer has not heretofore assigned any of its right, title or
interest in or to any current or future agreements, contracts, invoices,
purchase orders and/or any accounts, chattel paper, instruments, documents or
general intangibles evidenced thereby or arising therefrom.
NOW, THEREFORE, Dealer, for value received, hereby assigns, transfers
and sets over to Deutsche Financial Services Corporation ("DFS"), whose post
office address is P.O. Box # 489, Columbia, Maryland 21045 all of Dealer's
right, title and interest in and to all agreements, contracts, invoices,
purchase orders, accounts, contract rights, chattel paper, instruments,
documents and general intangibles, directly or indirectly relating to Customer,
whether currently existing or hereafter arising, together with all proceeds
therefrom and all monies which are due or hereafter become due Dealer with
respect thereto (collectively the "Receivables").
Dealer does hereby authorize DFS, either in the name of Dealer or in
the name of DFS, to: (a) collect and receive all monies which are due or may
become due under the Receivables; (b) prosecute any proceedings at law or
elsewhere for any monies which are now due or may become due under any
Receivables; and (c) execute any agreements, releases or other instruments,
which DFS may from time to time hereafter deem necessary or convenient in its
sole discretion in furtherance of or to effectuate the collection of said monies
or any part or parts thereof.
Dealer promises to execute from time to time hereafter all instruments
that DFS deems necessary or convenient to better evidence or effectuate the
assignment herein made or the collection of monies due or to become due under
any Receivables.
<PAGE>
Dealer represents and warrants to DFS that: (a) the facts recited in
this STAR Assignment Agreement are true; (b) the Receivables are genuine in all
things that they are purported to be hereunder; and (c) Dealer will fully and
faithfully perform all of its obligations hereunder according to the terms
hereof. This STAR Assignment Agreement --is subject to the terms and conditions
of the STAR Agreement entered into between DFS and Dealer.
This STAR Assignment Agreement is made with recourse to Dealer in
accordance with the terms of Section 10 of the STAR Agreement executed between
Dealer and DFS.
IN WITNESS WHEREOF, the undersigned has caused this STAR Assignment
Agreement to be executed for it by its duly authorized representative this 17th
day of September, 1996.
(SEAL) Sylvest Management Systems Corporation
--------------------------------------
(Name of Dealer)
ATTEST: By: /s/ William Strang
-----------------------------------
/s/ William Strang
- ------------------------------
Secretary Title: Executive Vice President
--------------------------------
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DEUTSCHE FINANCIAL SERVICES
A Deutsche Bank Company
September 17, 1996
Mr. Gary Murray, President
Sylvest Management Systems Corporation, Inc.
10001 Derekwood Lane, Suite #225
Lanham, Maryland 20706
Dear Mr. Murray:
Re: Boeing STAR
Deutsche Financial Services Corporation ("DFS") is pleased to inform
you that DFS has approved the financing of Boeing Company account through our
STAR financing program, on and subject to the terms of our Agreement for
Wholesale-Financing, STAR Agreement and the documents and instruments executed
in connection therewith ( collectively, the "Loan Documents"). DFS will charge
on this STAR facility an interest rate at the Prime Rate of interest ("the rate
at which Chase Manhattan Bank publicly announces ") as exists from time to time
based on the daily outstanding loan balance, and otherwise or and subject to the
terms of the Loan Documents. As we discussed, with subsidized vendors set up
with DFS, there will be no interest charge on the daily outstanding balance for
the first 30 days from invoice date, with the exception of subsidized purchases
from Ingram Alliance there will be no interest charge on the daily outstanding
balance for the first 40 days from invoice date.
If the foregoing meets with your approval, kindly indicate your
acceptance by signing below and returning an executed copy of this letter to our
Baltimore office. This letter shall constitute and be subject to the terms of
the Loan Documents. We are sincerely interested in developing a mutually
beneficial relationship with you.
Sincerely,
Deutsche Financial Services Corporation.
/s/ David Rubin
-----------------------------------
David Rubin, Regional Sales Manager
AGREED AND ACCEPTED:
Sylvest Management Systems Corporation
By: /s/ Gary Murray
--------------------------------
Gary Murray, President
Date: 17 September 1996
--------------------------
<PAGE>
DEUTSCHE FINANCIAL SERVICES
A Deutsche Bank Company
October 9, 1996
Sylvest Management Systems Corporation
10001 Derekwood Lane, Suite 225
Lanham, MD 20206
Attn: Mr. William Strang, Vice President
Dear Mr. Strang:
Please sign below indicating your understanding and acknowledgment
that your recently approved $7,000,000.00 inventory and STAR credit facility
will be managed by Deutsche Financial Services Corporation out of its Los
Angeles office and under its trade name, Resellers Credit Corp. This facility
will be governed by the documents you recently executed which reflect Deutsche
Financial Services Corporation as the lender (i.e., Agreement for Wholesale
Financing dated as of September 17, 1996, and all documentation executed in
connection therewith and in connection with your STAR facility), although you
understand that you will be receiving statements of transaction, billing
statements, correspondence and other documents under the name Resellers Credit
Corp.
Please sign below indicating your understanding and acknowledgment of
the terms of this letter and return it to the undersigned at your earliest
convenience.
Very truly yours,
DEUTSCHE FINANCIAL SERVICES CORPORATION
/s/ Mark V. Kulmacz
----------------------------------------
Mark V. Kulmacz, Regional Vice President
Acknowledged and agreed:
SYLVEST MANAGEMENT SYSTEMS CORPORATION
By: /s/ William S. Strang
------------------------------------------
Title: Executive Vice President
------------------------------------------
<PAGE>
EXHIBIT 4.11
SUBORDINATED NOTE
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED.
IT MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF REGISTRATION OR AN EXEMPTION
THEREFROM UNDER SAID ACT AND WITHOUT THE PRIOR WRITTEN CONSENT OF PAYOR.
FEDERAL DATA CORPORATION
9% INCREASING RATE SUBORDINATED NOTE
DUE __________ __, 2004
$_______________ __________ __, 1997
Federal Data Corporation, a Delaware corporation ("PAYOR"), for value
received, promises to pay ___________________________ ("PAYEE") the principal
amount of __________ DOLLARS ($________), together with accrued interest
thereon, each calculated and payable only as and to the extent set forth below,
including without limitation Section 5 hereof, in this Note (together with any
PIK Notes issued pursuant to Section 1.1 below, the "NOTES"). The principal and
interest on this Note is payable in lawful money of the United States of America
in immediately available funds at such place in the United States as Payee may
from time to time designate in writing to Payor.
This Note is made pursuant to that certain Agreement and Plan of
Merger (as amended, modified and supplemented from time to time, the
"AGREEMENT"), dated April 9, 1997, by and among Azmat Ali, Peter Belford, Arthur
Verbin, NYMA, Inc., a Maryland corporation ("NYMA"), NYMA Acquisition, Inc., a
Delaware corporation ("ACQUISITION"), and Peter Belford as the initial
Shareholder Representative (as hereinafter defined), pursuant
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to which Acquisition has merged with and into NYMA, with NYMA being the
surviving corporation, and is one of the "Subordinated Notes" referred to
therein. Payee is a former shareholder of NYMA and is receiving this
Subordinated Note pursuant to the Agreement. Payments under this Subordinated
Note are subject to the right of Payor to reduce amounts payable under this Note
as set forth in Section 5 below, which right shall be binding upon any holder of
this Subordinated Note. All capitalized terms used herein and not defined
herein shall have the meanings assigned to such terms in the Agreement.
1. PAYMENT OF PRINCIPAL AND INTEREST
1.1 CALCULATION AND PAYMENT OF INTEREST.
Interest on the principal balance of this Note outstanding from time
to time until paid in full shall accrue at the rate of (a) for the period from
the date hereof through ____________ __, ____, nine percent (9%) per annum, (b)
for the period from ____________ __, ____ through ____________ __, ____, eleven
percent (11%) per annum, and (c) thereafter, thirteen percent (13%) per annum,
in each case computed on the basis of a 365 or 366-day year, as appropriate, for
the actual number of days elapsed, commencing on the date hereof. Such interest
shall be payable semi-annually in arrears, beginning on ____________ __, ____
and thereafter on each ____________ __ and ____________ __ until the Maturity
Date (as defined herein); PROVIDED, HOWEVER, that any amount of cash interest
which is not paid as a result of the application of the provisions of Section
7.08 of the Credit Agreement or any similar provision contained in any documents
relating to the refinancing thereof (each, a "PAYMENT RESTRICTION") shall be
made by the issuance of a PIK Note and Payor shall be deemed to have issued a
PIK Note for any such interest regardless of whether Payor shall have actually
delivered any such PIK Note. Each Holder, by its acceptance
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hereof, acknowledges (i) that Payor is contractually bound hereunder to pay cash
interest only to the extent not prohibited by a Payment Restriction, (ii) that
any cash interest not so paid shall be paid in the form of a PIK Note, and (iii)
the failure to pay cash interest as a result of a Payment Restriction shall not
constitute a default or Event of Default under this Note.
1.2 PAYMENT ON MATURITY DATE. The principal balance of, and any accrued
and unpaid interest on, this Note shall be payable on the later of (a) to the
extent the term of the Credit Agreement has been extended in connection with a
default or anticipated default thereunder, the date which is six months after
the indefeasible payment in full in cash of all amounts owing under the Credit
Agreement, and (b) ____________ __, 2004 (as applicable, the "MATURITY DATE").
1.3 PREPAYMENT.
(a) Payor may, at its option at any time, without premium or
penalty, prepay all or any portion of this Note.
(b) Any prepayment of this Note shall be applied as follows:
FIRST, to payment of accrued interest; and SECOND, to payment of principal.
Upon any partial prepayment, at the request either of Payee or Payor, this Note
shall be surrendered to Payor in exchange for a substitute note, which shall set
forth the revised principal amount. In the event that this Note is prepaid in
its entirety, this Note shall be surrendered to Payor for cancellation as a
condition to any such prepayment. Any prepayment shall be made on a
substantially pro rata basis in multiples of $1,000 among the holders of
Subordinated Notes.
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1.4 PAYMENT ONLY ON BUSINESS DAYS. Any payment hereunder which, but for
this Section 1.4, would be payable on a day which is not a Business Day, shall
instead be due and payable on the Business Day next following such date for
payment.
2. EVENTS OF DEFAULT
The following shall constitute "EVENTS OF DEFAULT" under this Note:
(a) Subject to Section 4 below, failure by Payor to make any
payment or prepayment required under this Note when the same shall become due
and payable (whether at maturity, by acceleration or otherwise) and the
continuation of such failure for a period of thirty (30) days; or
(b) Payor breaches any covenant under Section 3.1 or Section 3.2
of this Note, which breach or failure, if curable, shall continue uncured for a
period of thirty (30) days after the date on which written notice specifying
such breach, and stating that such notice is a "Notice of Default" hereunder,
shall have been given by Payee to Payor; or
(c) Payor, pursuant to or within the meaning of any Bankruptcy
Law:
(A) commences a voluntary case or proceeding;
(B) consents to the entry of an order for relief
against it in an involuntary case or proceeding;
(C) consents to the appointment of a Custodian of it
or for all or any substantial portion of its property or assets;
(D) makes a general assignment for the benefit of the
creditors; or
(d) an involuntary case or proceeding is commenced against Payor
under any Bankruptcy Law and is not dismissed, bonded or discharged within
ninety (90) days
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thereafter, or a court of competent jurisdiction enters an order or decree under
any Bankruptcy Law that:
(A) is for relief against Payor in an involuntary
case or proceeding;
(B) appoints a Custodian of Payor for all or
substantially all of its properties; or
(C) orders the liquidation of Payor;
and in each case the order or decree remains unstayed and in effect for ninety
(90) days; or
(e) TC Group L.L.C. and its affiliates cease to control, directly
or indirectly, 53% (on a fully diluted basis) of the outstanding shares of
capital stock of Payor or Payor shall cease to own 100% of the outstanding
shares of capital stock of FDCT Corp., a Delaware corporation (each, a "CHANGE
IN CONTROL"); PROVIDED, HOWEVER, that there shall be no Change in Control if the
direct or indirect ownership of shares controlled by TC Group L.L.C. and its
affiliates controls, directly or indirectly, at least 37% (on a fully diluted
basis) of the capital stock of FDC and no other Person or "group" (as such term
is defined in Section 13(d) of the Securities Exchange Act) owns a greater
percentage of such shares; the parties hereto agree that, notwithstanding the
foregoing, if Section 8.10 of the Credit Agreement is amended or restated by the
parties thereto, such Section 8.10 as amended or restated from time to time
shall substitute and replace in its entirety this subsection (e).
If an Event of Default specified in Section 2(a), 2(b) or 2(e) shall have
occurred and be continuing and any Senior Debt shall then be outstanding,
subject to the provisions of Section 4 hereof, Payee may, at its option, by
notice in writing to Payor and to the Agent under the Senior Debt Documents (the
"ACCELERATION NOTICE"), declare the entire principal
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amount of this Note and the interest accrued thereon to be due and payable upon
the earlier of (i) one hundred fifty (150) days after the receipt of the
Acceleration Notice by Payor and the Agent under the Senior Debt Documents or
(ii) an acceleration under the Senior Debt Documents, and upon any such
declaration the same shall become due and payable at such time. If an Event of
Default specified in Section 2(a), 2(b) or 2(e) shall have occurred and be
continuing and no Senior Debt shall then be outstanding, Payee may, at its
option, declare the entire principal amount of this Note and the interest
accrued thereon to be due and payable upon the date which is five Business Days
after the date of delivery by Payee to Payor of a written notice of
acceleration, and upon any such declaration the same shall become due and
payable at such time. If an Event of Default specified in Section 2(c) or 2(d)
hereof occurs, the principal balance of and accrued interest on this Note shall
become due and payable immediately without any declaration or other act on the
part of Payee.
If any Event of Default shall have occurred and be continuing,
subject to the provisions of Sections 2 and 4 hereof, Payee may proceed to
protect and enforce its rights either by suit in equity or by action at law, or
both, whether for specific performance of any provision of this Note or in aid
of the exercise of any power granted to Payee under this Note.
3. COVENANTS.
3.1 AFFIRMATIVE COVENANTS. Payor covenants and agrees that for so long
as any indebtedness evidenced by this Note shall remain outstanding, unless
waived by Majority Holders, Payor shall:
(a) promptly give notice to Payee of (i) any default or Event of
Default hereunder or in connection with any Indebtedness having an aggregate
principal amount in
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excess of $2,500,000, other than the Senior Debt, (ii) any notice of an "Event
of Default" (as defined in the Senior Debt Documents) permitting the holder or
holders of the Senior Debt to accelerate such Senior Debt given to Payor by any
holder of Senior Debt or its agent or (iii) any acceleration of the Senior Debt
or any other Indebtedness of Payor having an aggregate principal amount in
excess of $2,500,000; and
(b) promptly deliver to Payee copies of any quarterly and annual
financial statements of Payor as well as a quarterly certificate of an officer
of Payor as to Payor's compliance with the terms hereof (or, if applicable,
detailing any noncompliance with the terms hereof and the course of action
proposed to be taken by Payor in connection with such noncompliance).
3.2 NEGATIVE COVENANTS. Payor covenants and agrees that for so long as
any indebtedness evidenced by this Note remains outstanding, Payor will not,
without the written consent of Majority Holders:
(a) liquidate, wind up or dissolve itself (or suffer any
liquidation or dissolution), or convey, sell, lease, transfer or otherwise
dispose of, in one transaction or a series of related transactions, all or
substantially all of its assets; PROVIDED, HOWEVER, that the foregoing shall not
apply in any way to the grant of a lien or security interest in, or the
foreclosure, sale or other disposition of, collateral pledged to secure Senior
Debt pursuant to any judicial proceeding or by or at the direction of the
holders of any Senior Debt or any agent or other representative acting on their
behalf; or
(b) consolidate with, or merge with or into, any Person unless
(i) Payor shall be the continuing Person, or the Person (if other than Payor)
formed by such consolidation or into which Payor is merged shall be a
corporation organized and existing
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under the laws of the United States or any state thereof or of the District of
Columbia and, in the event Payor is merged with or into any other Person, such
Person shall expressly assume, by an agreement executed and delivered to Payee,
the obligations of Payor under this Note, and (ii) the Payor on this Note
following the transaction shall be in compliance with Section 3.2(d) below.
Upon any consolidation or merger of Payor in accordance with this Section
3.2(b), the successor corporation formed by such consolidation or into which
Payor is merged shall succeed to, and be substituted for, and may exercise every
right and power of, Payor under this Note with the same effect as if such
successor corporation had been named as Payor herein; or
(c) declare or pay any dividends or distributions to its
stockholders, or redeem or otherwise purchase or acquire any of its Capital
Stock (other than the repurchase, redemption or similar transaction pursuant to
which Capital Stock owned by employees is reacquired or retired by the Payor),
directly or indirectly, whether in cash, property or in obligations of the
Payor; or
(d) incur, assume or suffer to exist any Indebtedness other than
(i) Senior Debt which is incurred in connection with the operation of the
business of the Payor or its subsidiaries, but is not incurred for the purpose
of acquiring any Person or business (other than the acquisition contemplated in
the Agreement), (ii) other Indebtedness, including without limitation Senior
Debt which is incurred for the purpose of acquiring any Person or business
(other than the acquisition contemplated in the Agreement), so long as the ratio
of (x) Total Indebtedness of Payor and its Subsidiaries on a consolidated basis,
as of the date such additional Indebtedness is incurred (and after giving effect
to such incurrence), to (y) EBITDA of Payor, on a consolidated basis and giving
pro forma effect to acquisitions and
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dispositions effected during such period (including without limitation the
transaction in connection with which such additional Indebtedness is incurred)
as if such transactions had occurred on the first day of such period, for the
latest four complete fiscal quarters of Payor, does not exceed 7.0:1, and (iii)
the Indebtedness under the Subordinated Notes, including additional issuances of
the Subordinated Notes contemplated by the Agreement.
4. SUBORDINATION
4.1 NOTE SUBORDINATED TO SENIOR DEBT. To the extent and in the manner
hereinafter set forth in this Section 4 and subject to the terms of Section 5
below, the indebtedness represented by this Note and the payment of the
principal of and the interest on this Note and any claim for rescission of the
purchase of this Note, and any claim which is the equivalent of or substitute
for principal of or interest on this Note, for damages arising from the purchase
of this Note or for reimbursement or contribution on account of such a claim,
and all other payments with respect to or on account of this Note (collectively,
the "SUBORDINATED DEBT") rank PARI PASSU in right of payment with the
subordinated notes issued by Federal Data Corporation, a Delaware corporation,
pursuant to that certain Agreement and Plan of Merger dated October 18, 1995, by
and among FDC Holdings, Inc., a Delaware corporation, Federal Data Corporation
and C. Robert Hanley as shareholder representative and are hereby expressly made
subordinate and subject in right of payment to the prior payment in full in cash
of all Senior Debt. This Section 4 constitutes a continuing offer to all
Persons who become holders of, or continue to hold, Senior Debt, each of whom is
an obligee hereunder and is entitled to enforce such holder's rights hereunder,
subject to the provisions hereof, without any act or notice of acceptance hereof
or reliance hereon. For purposes of this Section 4, Senior Debt shall not be
deemed to have been paid in full until
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the termination of all commitments or other obligations by any holder thereof
and unless all such holders shall have received indefeasible payment in full in
cash of all obligations under or in respect of Senior Debt (including, without
limitation, Post Petition Interest).
4.2 NO PAYMENT ON NOTE IN CERTAIN CIRCUMSTANCES.
(a) During the continuance of any default in the payment of any
Senior Debt, whether at maturity, upon redemption or pursuant to acceleration or
otherwise (each, a "PAYMENT DEFAULT"), no direct or indirect payment of any kind
(other than the payment of interest on the Notes in PIK Notes) shall be made,
asked for, demanded, accepted, received or retained with respect to principal,
interest or other amounts due under the Notes nor shall any holder thereof
exercise any remedies with respect thereto.
(b) Upon the occurrence of any default (other than a Payment
Default) under the Credit Agreement or any other Senior Debt Document which
would permit the Banks (or any other holder of Senior Debt) to accelerate the
maturity of the Senior Debt outstanding thereunder (whether after the giving of
notice, the lapse of time, or both or otherwise) (each, a "NON-PAYMENT
DEFAULT"), no payment or distribution (including any payment or distribution
that may be payable by reason of any other indebtedness of Payor being
subordinated to payment of the Subordinated Debt) shall be made by or on behalf
of Payor for or on account of or in respect of the Subordinated Debt until such
Non-Payment Default shall have been cured or waived or otherwise ceases to exist
pursuant to the terms of such Senior Debt, or the benefits of this sentence
shall have been waived by or on behalf of, and at the sole option of, the
holders of a majority of the principal amount of such Senior Debt.
Notwithstanding the foregoing, the suspension of payments described in the
preceding sentence shall terminate, and the Payor shall be obligated to make all
payments of principal
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and interest on this Note, including any payments not made by virtue of such
suspension, if any holder or holders of the relevant Senior Debt has not, on or
prior to the 180th day after the occurrence of the Non-Payment Default under the
Senior Debt, declared all unpaid principal and interest on such Senior Debt to
be immediately due and payable, unless such Non-Payment Default shall have been
cured or waived or otherwise ceases to exist pursuant to the terms of such
Senior Debt, or the benefits of the previous sentence shall have been waived by
or on behalf of, and at the sole option of, the holders of a majority of the
principal amount of such Senior Debt.
(c) Payee agrees that, so long as payments or distributions for
or on account of the Subordinated Debt are not permitted pursuant to this
Section 4, Payee will not take, sue for, ask or demand from Payor payment of all
or any amounts under or in respect of this Note, or commence, or join with any
creditor other than the holders of Senior Debt and their agents in commencing,
directly or indirectly cause Payor to commence, or assist Payor in commencing,
any proceeding referred to in Section 4.3, and Payee shall not take or receive
from Payor, directly or indirectly or on its behalf, in cash or other property
or by set-off (except in respect to Payor's rights as set forth in Section 5
below) or in any other manner, including, without limitation, from or by way of
collateral, payment of all or any amounts under or in respect of the
Subordinated Debt. In the event that notwithstanding the foregoing provisions
of this Section 4.2, any payment or distribution of any kind or character,
whether in cash, property or securities (including any payment or distribution
that may be payable by reason of any other indebtedness of Payor being
subordinated to payment of the Subordinated Debt), shall be received by Payee
for or on account of or in respect of the Subordinated Debt before all Senior
Debt is indefeasibly paid in full, such payment or
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distribution shall be received and held in trust for, and shall be paid over (in
the same form as so received, to the extent practicable, and with any necessary
endorsement) to the holders of the Senior Debt remaining unpaid or their
representative or representatives, or to the trustee or trustees under any such
indenture or agreement under which any Senior Debt may have been issued, for
application (in the case of cash) to, or as collateral (in the case of non-cash
property or securities) for the payment or prepayment of Senior Debt, until all
Senior Debt shall have been paid in full in cash, after giving effect to any
concurrent payment or distribution to the holders of such Senior Debt.
4.3 DISSOLUTION; LIQUIDATION; BANKRUPTCY; ACCELERATION. In the event of
(i) any insolvency or bankruptcy case or proceeding, or any receivership,
liquidation, reorganization or other similar proceeding in connection therewith,
relative to the Payor or any of its assets, or (ii) any liquidation, dissolution
or other winding up of the Payor, whether voluntary or involuntary or whether or
not involving insolvency or bankruptcy, or (iii) any assignment for the benefit
of creditors or any other marshalling of assets or liabilities of the Payor, or
(iv) the acceleration of the Senior Debt by reason of the occurrence of a
default or an event of default thereunder (each such event, if any, herein
sometimes referred to as a "PROCEEDING"):
(a) The holders of all Senior Debt shall first be entitled to
receive payment in full in cash of all Senior Debt before any direct or indirect
payment may be made for or on account of payments under or in respect of the
Subordinated Debt, whether in cash, property or securities of any kind;
(b) Any payment or distribution of any kind or character, whether
in cash, property or securities (including any payment or distribution that may
be payable by reason of any other indebtedness of Payor being subordinated to
payment of the Subordinated Debt),
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to which Payee would be entitled except for the provisions of this Section 4,
shall be paid by the liquidating trustee or agent or other person making such
payment or distribution, whether a trustee in bankruptcy, a receiver or
liquidating trustee or other trustee or agent, directly to the holders of Senior
Debt or their representative or representatives, or to the trustee or trustees
under any indenture under which any instrument evidencing any of such Senior
Debt may have been issued for application (in the case of cash) to, or as
collateral (in the case of non-cash property or securities) for the payment or
prepayment of Senior Debt, to the extent necessary to make payment in full of
all Senior Debt remaining unpaid, after giving effect to any concurrent payment
or distribution to the holders of such Senior Debt.
(c) The holders of Senior Debt are hereby irrevocably authorized
and empowered (in their own names or in the name of Payee or otherwise), but
shall have no obligation, to demand, sue for, collect and receive every payment
or distribution referred to in paragraph (b) above and give acquittance therefor
and to file claims and proofs of claim and take such other action (including,
without limitation, voting the amounts owing under the Subordinated Debt or
enforcing any security interest or other lien securing payment of the amounts
owing under the Subordinated Debt) as they may deem necessary or advisable for
the exercise or enforcement of any of the rights or interests of the holders of
Senior Debt hereunder.
(d) Payee shall duly and promptly take such action as the holders
of Senior Debt may reasonably request to execute and deliver to the holders of
Senior Debt such powers of attorney, assignments, or other instruments as the
holders of Senior Debt may request in order to enable the holders of Senior Debt
to enforce any and all claims with
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respect to, and any security interests and other liens securing payment of, the
amounts owing under the Subordinated Debt.
(e) In the event that notwithstanding the foregoing provisions of
this Section 4.3, any payment or distribution of any kind or character, whether
in cash, property or securities (including any payment or distribution that may
be payable by reason of any other indebtedness of Payor being subordinated to
payment of the Subordinated Debt), shall be received by Payee for or on account
of or in respect of the Subordinated Debt before all Senior Debt is indefeasibly
paid in full, such payment or distribution shall be received and held in trust
for, and shall be paid over (in the same form as so received, to the extent
practicable, and with any necessary endorsement) to the holders of the Senior
Debt remaining unpaid or their representative or representatives, or to the
trustee or trustees under any such indenture or agreement under which any Senior
Debt may have been issued, for application (in the case of cash) to, or as
collateral (in the case of non-cash property or securities) for the payment or
prepayment of Senior Debt, until all Senior Debt shall have been paid in full in
cash, after giving effect to any concurrent payment or distribution to the
holders of such Senior Debt.
4.4 SUBROGATION. Upon the final payment in full in cash of all Senior
Debt, Payee shall be subrogated to the rights of the holders of Senior Debt to
receive payments or distributions of cash, property or securities of Payor
applicable to the Senior Debt until the principal of and interest on and all
other amounts payable under the Subordinated Debt shall be paid in full, and for
the purposes of such subrogation, no payments or distributions to the holders of
the Senior Debt of any cash, property or securities to which Payee would be
entitled except for the provisions of this Section 4 and no payment over
pursuant to the
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provisions of this Section 4 to the holders of Senior Debt by Payee shall, as
between Payor, its creditors other than holders of Senior Debt, and Payee, be
deemed to be a payment by Payor to or on account of the Senior Debt. It is
understood that the provisions of this Section 4 are and are intended solely for
the purpose of defining the relative rights of Payee, on the one hand, and the
holders of the Senior Debt, on the other hand.
4.5 OBLIGATIONS OF PAYOR UNCONDITIONAL. Nothing contained in this
Section 4 or elsewhere in this Note is intended to or shall impair, as among
Payor, its creditors other than the holders of Senior Debt, and Payee, the
obligation of Payor, which is absolute and unconditional, to pay to Payee the
principal of and interest on and all other amounts due under this Note in
accordance with its terms, or is intended to or shall affect the relative rights
of Payee and creditors of Payor other than the holders of the Senior Debt, nor
shall anything herein prevent Payee from exercising all remedies otherwise
permitted by applicable law upon default under this Note, subject to the
provisions of this Section 4 and to the rights of holders of Senior Debt to
receive distributions and payments otherwise payable to Payee.
4.6 RELIANCE ON JUDICIAL ORDER OR CERTIFICATE OF LIQUIDATING AGENT.
Upon any payment or distribution of assets of Payor referred to in this Section
4, Payee shall be entitled to rely upon any order or decree made by any court of
competent jurisdiction in which bankruptcy, dissolution, winding-up, liquidation
or reorganization proceedings are pending, or a certificate of the receiver,
trustee in bankruptcy, liquidating trustee, agent or other person making such
payment or distribution, delivered to Payee, for the purpose of ascertaining the
persons entitled to participate in such distribution, the holders of the Senior
Debt and other indebtedness of Payor, the amount thereof or payable thereon, the
amount or
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amounts paid or distributed thereon and all other facts pertinent thereto or to
Section 4 of this Note. Such reliance shall not affect the rights of the
holders of the Senior Debt.
4.7 SUBORDINATION RIGHTS NOT IMPAIRED BY ACTS OR OMISSIONS OF PAYOR OR
HOLDERS OF SENIOR DEBT. No right of any present or future holders of any Senior
Debt to enforce subordination as provided herein will at any time in any way be
prejudiced or impaired by any act or failure to act on the part of Payor or by
any act or failure to act by any such holder, or by any act, failure to act or
noncompliance by Payor, the holders of Senior Debt or their respective agents
with the terms of this Note, regardless of any knowledge thereof which any such
holder or Payor may have or otherwise be charged with. No amendment, waiver or
other modification of this Note shall in any way adversely affect the rights of
the holders of any Senior Debt under this Section 4 unless such holders of
Senior Debt consent in writing to such amendment, waiver or modification. The
provisions of this Section 4 are intended for the benefit of and shall be
enforceable directly by the holders of the Senior Debt.
4.8 FURTHER ASSURANCES. Payee and Payor each will, at Payor's expense
and at any time and from time to time, promptly execute and deliver all further
instruments and documents, and take all further action, that may be necessary or
desirable, or that the holders of Senior Debt may request, in order to protect
any right or interest granted or purported to be granted hereby or to enable the
holders of Senior Debt to exercise and enforce their rights and remedies
hereunder.
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4.9 AGREEMENTS IN RESPECT OF SUBORDINATED DEBT.
(a) Payor agrees that it will not make any payment for or on
account of or in respect of this Note, or take any other action, in
contravention of the provisions of this Section 4.
(b) Payee shall promptly notify the holders of Senior Debt, at
Banque Indosuez, New York Branch, 1211 Avenue of the Americas, New York, New
York, 10036, or such other address of which Payee has been notified in writing,
of the occurrence of any default under this Note of which Payee shall obtain
knowledge.
4.10 OBLIGATIONS HEREUNDER NOT AFFECTED. All rights and interests of the
holders of Senior Debt hereunder, and all agreements and obligations of Payee
and Payor under this Section 4, shall remain in full force and effect
irrespective of:
(i) any lack of validity or enforceability of the
Payor Guaranty or any successor guaranty of the Credit Agreement or
any other Senior Debt Document;
(ii) any change in the time, manner or place of
payment of, or in any other term of, all or any of the Senior Debt, or
any other amendment or waiver of or any consent to any departure from
the Credit Agreement or the Payor Guaranty or any successor guaranty
or any other Senior Debt Document, including, without limitation, any
increase in the Senior Debt resulting from the extension of additional
credit to Payor or any of its Subsidiaries or otherwise;
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(iii) any taking, exchange, release or non-perfection
of any other collateral, or any taking, release, amendment or waiver
of or consent to departure from any guaranty, for all or any of the
Senior Debt;
(iv) any manner of application of collateral, or
proceeds thereof, to all or any of the Senior Debt, or any manner of
sale or other disposition of any collateral for all or any of the
Senior Debt or any other assets of Payor or any of its Subsidiaries;
(v) any change, restructuring or termination of the
corporate structure or existence of Payor or any of its Subsidiaries;
or
(vi) any other circumstance which might otherwise
constitute a defense available to, or a discharge of, Payor or a
subordinated creditor.
The provisions of this Section 4 shall continue to be effective or be
reinstated, as the case may be, if at any time any payment of any of the Senior
Debt is rescinded or must otherwise be returned by the holders of Senior Debt
upon the insolvency, bankruptcy or reorganization of Payor or otherwise, all as
though such payment had not been made.
4.11 WAIVER. Payee and Payor each hereby waives promptness, diligence,
notice of acceptance and any other notice with respect to any of the Senior Debt
and this Section 4 and any requirement that the holders of Senior Debt protect,
secure, perfect or insure any security interest or lien on any property subject
thereto or exhaust any right or take any action against Payor or any other
person or entity or any collateral.
4.12 NO WAIVER; REMEDIES. No failure on the part of the holders of
Senior Debt to exercise, and no delay in exercising, any right hereunder shall
operate as a waiver thereof; nor shall any single or partial exercise of any
right hereunder preclude any other or further
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exercise thereof or the exercise of any other right. The remedies herein
provided are cumulative and not exclusive of any remedies provided by law.
4.13 CONTINUING AGREEMENT; ASSIGNMENTS UNDER SENIOR DEBT AGREEMENTS. The
provisions of this Section 4 constitute a continuing agreement and shall (i)
remain in full force and effect until the indefeasible payment in full in cash
of the Senior Debt, (ii) be binding upon Payee, Payor and their respective
successors and assigns, and (iii) inure to the benefit of, and be enforceable
by, the holders of Senior Debt and their successors, transferees and assigns.
Without limiting the generality of the foregoing clause (iii), the holders of
Senior Debt may assign or otherwise transfer all or any portion of their rights
and obligations under the Credit Agreement or any other Senior Debt Document, as
applicable, to any other person or entity, and such other person or entity shall
thereupon become vested with all the rights in respect thereof granted to the
holders of Senior Debt herein or otherwise.
5. RIGHT TO REDUCE AMOUNTS PAYABLE UNDER THIS NOTE. If Payee is a Majority
Holder or a permitted assign of a Majority Holder, Payee hereby agrees, by its
acceptance of this Note, as follows:
5.1 (a) Payor may reduce the principal amount of this Note following
the Closing for any amounts due Surviving Corporation or any Acquisition
Indemnitee (as defined in the Agreement) under the Agreement, including, without
limitation, Post-Closing Adjustments pursuant to Section 2.5 of the Agreement,
Claims pursuant to Article XIII of the Agreement and any obligations or
liabilities with respect to Taxes pursuant to Article XIV of the Agreement. Any
such adjustment is intended as, and shall be treated by the parties as, an
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adjustment to the Total Consideration. Articles II, XIII and XIV of the
Agreement are expressly incorporated by reference herein.
(b) In the event of any permitted assignment of the Note by Payee
(i.e., with the prior written consent of Payor), the successor Payee shall be
deemed to have agreed to all the terms and conditions of this Note, including,
without limitation, the reductions referenced in Section 5.1(a) above.
5.2 The representations, warranties, covenants, agreements and
indemnifications of Payor and of Payee set forth in the Agreement and/or this
Note, as applicable (collectively, the "REPRESENTATIONS") shall survive as
follows:
(a) Representations contained in Section 4.12 of the Agreement
shall survive until NYMA receives notice of the completion of the 1997 DCAA
audit, and the Representations contained in the Agreement relating to Tax
matters shall survive for the period set forth in Section 6501(a) of the
Code (as defined in the Agreement) plus 90 calendar days, provided that if
such period is voluntarily extended, the Representations shall survive
through the period of such extension plus 90 calendar days, and provided
further that matters described in Sections 6501(c)(1)-(9), 6501(e), and
6501(f) of the Code shall survive for five (5) years;
(b) All other Representations shall survive the Closing for a
period of three (3) years.
5.3 (a) Subject to Article XII of the Agreement, Peter Belford shall
act as Payee's agent and representative (the "SHAREHOLDER REPRESENTATIVE") with
respect to the provisions of this Section 5.
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(b) The Shareholder Representative shall have full power, authority
and discretion to act on behalf of Payee and all the Holders with regard to the
provisions of this Section 5 and Payee shall be bound by the actions of the
Shareholder Representative or any replacement Shareholder Representative, even
if Payee does not vote for such replacement Shareholder Representative.
5.4 No delay or omission by Payor or any Acquisition Indemnitee in
exercising any right or remedy under this Section 5, or under any similar
provisions with any other Holder shall operate as a waiver of any right or
remedy, and no single or partial exercise of any right or remedy under this Note
or under or with respect to any of the foregoing shall preclude any other or
further exercise of any rights or remedies of Payor or any Acquisition
Indemnitee. All rights and remedies of the Payor and the Acquisition
Indemnitees under this Section 5 are cumulative. With the sole exception of the
notifications expressly provided for herein, neither Payor nor any Acquisition
Indemnitee shall be required to give any notice to or take any action against
any Holder prior to exercising, or otherwise in connection with the exercise of,
any rights or remedies under this Section 5. The agency conferred by Payee upon
the Shareholder Representative (or any replacement Shareholder Representative
appointed as provided in Section 5.3(b)) is coupled with an interest and is
irrevocable, and shall survive any incapacity, death, dissolution, merger or
unavailability of Payee.
5.4 Reductions under this Section 5 shall be treated and reported for
all Tax purposes as adjustments to the Total Consideration.
5.5 All statements of a Person contained in the schedules attached to
the Agreement or in any certificate, schedule, exhibit or instrument or
conveyance delivered by or on behalf of a Person pursuant to the Agreement or in
connection with the transactions
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contemplated thereby shall be deemed to be Representations. The Representations
contained therein shall survive the consummation of the transactions
contemplated thereby and the Closing Date in accordance with the terms of
Section 5.2 hereof, without regard to any investigation made by any Person
(unless such Person knew or had reason to know of any misrepresentation or
breach of warranty or covenant at the time of Closing).
6. CERTAIN DEFINITIONS
"AGENT" means Banque Indosuez, New York Branch, as agent for the
lenders under the Credit Agreement, and its successors and assigns.
"BANKRUPTCY LAW" means Title 11, United States Code, or any similar
federal, state or foreign law for the relief of debtors or any arrangement,
reorganization, assignment for the benefit of creditors or any other marshalling
of the assets and liabilities of Payor.
"BUSINESS DAY" means each day other than Saturdays, Sundays and days
when commercial banks are authorized or required by law to be closed for
business in New York, New York.
"CAPITAL STOCK" means, with respect to any Person, any and all
shares, interests, participations, warrants, options or other equivalents
(however designated) of capital stock of such Person (if a corporation) and any
and all equivalent ownership interests in such Person (if other than a
corporation), in each case whether now outstanding or hereafter issued.
"CONSOLIDATED NET INCOME" means, with respect to any person, such
Person's consolidated net income determined in accordance with GAAP.
"CREDIT AGREEMENT" means the Credit Agreement dated December 1, 1995
among the Payor, Banque Indosuez, New York Branch, as agent and collateral agent
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thereunder, and the other parties thereto, together with the related documents
thereto (including without limitation any guarantee agreements and security
documents), in each case as such agreement or document may be amended, modified
or supplemented from time to time, including without limitation any agreement or
document extending the maturity of, refinancing, replacing or otherwise
restructuring all or any part of the Indebtedness under such agreement or
document or any replacement or successor agreement or document and whether by
the same or any other agent, lender or group of lenders.
"CUSTODIAN" means any receiver, trustee, assignee, liquidator,
custodian or similar official under any Bankruptcy Law.
"EBITDA" means, with respect to any Person for any period, the
consolidated Net Income, plus, consolidated tax expense, plus consolidated tax
expense, plus consolidated interest expense, plus consolidated depreciation and
amortization expenses, plus all other non-cash charges deducted in computing
Consolidated Net Income, in each case for such Person for such period,
calculated in accordance with GAAP.
"EVENT OF DEFAULT" means any of the occurrences specified under
Sections 2(a) through 2(e) of this Note.
"INDEBTEDNESS" of any Person means all obligations of such Person
for borrowed money or evidenced by bonds, notes, debentures or similar
instruments, excluding notes and capital leases issued in connection with
offsetting lease assets and excluding all other capitalized lease obligations.
"INDEMNIFICATION AGREEMENT" means, collectively, the Indemnification
and Contribution Agreements entered into among Payor, the Shareholder
Representative and the Holders party thereto.
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"MAJORITY HOLDERS" means one or more holders of Subordinated Notes
having an aggregate principal amount in excess of 50% of the aggregate principal
amount of all outstanding Subordinated Notes.
"PERSON" means any individual, corporation, partnership, joint
venture, association, joint-stock company, trust, unincorporated organization or
government or any agency or political subdivision thereof.
"PIK NOTES" means the PIK Notes issued pursuant to Section 1.1
hereof in lieu of cash interest and containing terms substantially identical to
this Note.
"REFINANCING DEBT" means any indebtedness incurred to repay,
refinance or otherwise replace indebtedness or obligations (including, without
limitation, commitments) under the Credit Agreement.
"SECURITIES ACT" means the Securities Act of 1933, as amended.
"SENIOR DEBT" means all obligations of Payor (including without
limitation contingent obligations with respect to undrawn letters of credit
issued under the Credit Agreement, any obligations owed with respect to
indemnification obligations, interest rate protection incurred to satisfy the
requirements of the Credit Agreement and commitment fees and agency fees payable
thereunder or pursuant thereto) (i) under the Credit Agreement or (ii) for
Indebtedness to the extent such Indebtedness is incurred to acquire, or in
connection with the acquisition of, a Person or business or assets, or (iii)
with respect to Refinancing Debt (including in each such case fees, expenses,
claims, charges, indemnity obligations and interest at the contract rate
(including any rate applicable upon default) accrued or accruing after the
commencement of a Proceeding whether or not such interest is an allowed claim
enforceable against the debtor in a bankruptcy case under Title 11 of the United
States Code
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or whether or not such interest accrues after the filing of such petition for
purposes of such Title ("POST PETITION INTEREST")). Senior Debt outstanding
under or in respect of Senior Debt Documents shall continue to constitute Senior
Debt notwithstanding that such Senior Debt may be disallowed, avoided or
subordinated pursuant to any Bankruptcy Law or other applicable insolvency law
or equitable principles.
"SENIOR DEBT DOCUMENTS" means the Credit Agreement and any other
agreement, indenture, mortgage, guaranty, pledge, security agreement or
instrument evidencing or securing Senior Debt or pursuant to which Senior Debt
is incurred.
"SUBORDINATED NOTE" means each of this Note and each other
subordinated promissory note made by Payor pursuant to the Agreement, including
without limitation, in each case, any PIK Notes issued pursuant to the terms
thereof.
"SUBSIDIARY" means, with respect to any Person, any corporation or
other entity, whether such corporation or entity now exists or shall hereafter
be created, of which a majority of the Capital Stock or other ownership
interests having ordinary voting power to elect a majority of the board of
directors or other persons performing similar functions are at the time directly
or indirectly owned by such Person.
"UNAFFILIATED ENTITY" is an entity which is not an Affiliate of
Payor or The Carlyle Group, L.P.
7. MISCELLANEOUS
7.1 SECTION HEADINGS. The section headings contained in this Note are
for reference purposes only and shall not affect the meaning or interpretation
of this Note.
7.2 AMENDMENT AND WAIVER. Subject to Section 7.10 hereof, no provision
of this Note may be amended or waived unless Payor shall have obtained the
written agreement of
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Payee and (unless there are no amounts and no commitments outstanding under the
Credit Agreement) the Agent under the Credit Agreement. No failure or delay in
exercising any right, power or privilege hereunder shall imply or otherwise
operate as a waiver of any rights of Payee, nor shall any single or partial
exercise thereof preclude any other or future exercise thereof or the exercise
of any other right, power or privilege.
7.3 SUCCESSORS, ASSIGNS AND TRANSFERORS. This Note may not be assigned
or transferred by Payee to (x) any competitor, customer or supplier of Payor or
any of its Subsidiaries or (y) to any other Person if such assignment or
transfer would cause any interest payments due under this Note to become
non-deductible as an expense for any tax purposes. Payor may not assign its
obligations under this Note without the prior written consent of Payee except in
connection with a transaction permitted under Section 3.2(b) hereof. Subject to
the foregoing, the obligations of Payor and Payee under this Note shall be
binding upon, and inure to the benefit of, and be enforceable by, Payor and
Payee, and their respective successors and permitted assigns, whether or not so
expressed.
7.4 GOVERNING LAW. This Note shall be governed by, and construed in
accordance with, the laws of the State of New York without giving effect to any
conflicts of laws principles thereof that would otherwise require the
application of the law of any other jurisdiction.
7.5 LOST, STOLEN, DESTROYED OR MUTILATED NOTE. Upon receipt of evidence
reasonably satisfactory to Payor of the loss, theft, destruction or mutilation
of this Note and of indemnity arrangements reasonably satisfactory to Payor from
or on behalf of the holder of this Note, and upon surrender or cancellation of
this Note if mutilated, Payor shall make
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and deliver a new note of like tenor in lieu of such lost, stolen, destroyed or
mutilated Note, at Payee's expense.
7.6 WAIVER OF PRESENTMENT, ETC. Except as otherwise provided herein,
presentment, demand, protest, notice of dishonor and all other notices are
hereby expressly waived by Payor.
7.7 USURY. Nothing contained in this Note shall be deemed to establish
or require the payment of a rate of interest in excess of the maximum rate
legally enforceable. If the rate of interest called for under this Note at any
time exceeds the maximum rate legally enforceable, the rate of interest required
to be paid hereunder shall be automatically reduced to the maximum rate legally
enforceable. If such interest rate is so reduced and thereafter the maximum
rate legally enforceable is increased, the rate of interest required to be paid
hereunder shall be automatically increased to the lesser of the maximum rate
legally enforceable and the rate otherwise provided for in this Note.
7.8 NOTICES. Any notice, request, instruction or other document to be
given hereunder by either party to the other shall be in writing and shall be
deemed given when received and shall be (i) delivered personally or (ii) mailed
by certified mail, postage prepaid, return receipt requested or (iii) delivered
by Federal Express or a similar overnight courier or (iv) sent via facsimile
transmission to the fax number given below, as follows:
IF TO PAYOR, ADDRESSED TO:
Federal Data Corporation
5800 Hampden Lane
Hampden, MD 20814
Attention: James M. Dean
Fax Number: (301) 961-3892
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WITH A COPY TO:
The Carlyle Group
1001 Pennsylvania Avenue, N.W.
Suite 220 South
Washington, DC 20004
Attention: Raymond A. Whiteman
Fax Number: (202) 347-1818
AND
Latham & Watkins
1001 Pennsylvania Avenue, N.W.
Suite 1300
Washington, DC 20004-2505
Attention: Eric A. Stern
Fax Number: (202) 637-2201
IF TO PAYEE, ADDRESSED TO:
_________________________
_________________________
_________________________
Attention: _______________
Fax Number:
WITH A COPY TO:
__________________
__________________
__________________
Attention: ________________
Fax Number:
or to such other place and with such other copies as either party may designate
as to itself by written notice to the other party.
In the event that any notice under this Note is required to be made
on or as of a day which is not a Business Day, then such notice shall not be
required to be made until the first day thereafter which is a Business Day.
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<PAGE>
7.9 REPRESENTATIONS AND WARRANTIES OF PAYOR. Payor hereby represents
and warrants to Payee that: (a) Payor is duly incorporated, validly existing and
in good standing under the laws of the State of Delaware; (b) Payor has duly
authorized, executed and delivered this Note; and (c) this Note constitutes a
legally valid and binding obligation of Payor, enforceable against Payor in
accordance with its terms, subject to the effect of bankruptcy, insolvency,
reorganization, moratorium or other similar laws now or hereafter in effect
relating to or affecting the rights or remedies of creditors and the effect of
general principles of equity, whether enforcement is considered in a proceeding
in equity or at law, and the discretion of the court before which any proceeding
therefor may be brought.
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<PAGE>
7.10 ACTION BY MAJORITY HOLDERS. Subject to the provisions of this
Section 7.10, Majority Holders and Payor may enter into agreements for the
purpose of adding or modifying provisions of the Subordinated Notes or changing
in any manner the rights of the Payee or Payor hereunder or waiving any
covenant, default or Event of Default hereunder; PROVIDED, HOWEVER, that no
supplemental agreement shall, without the consent of the Payee: (a) extend the
stated maturity of this Note or reduce the principal amount hereof, or reduce
the rate or change the time of payment of interest due on this Note; or (b)
reduce the percentage specified in the definition of Majority Holders; or (c)
amend this Section 7.10; or (d) effect any change in the terms of this Note
which is not also applicable to each other Subordinated Note; and PROVIDED,
FURTHER, that no change may be made to this Note which would either modify the
subordination provisions hereof or would otherwise adversely affect the rights
of the holders of Senior Debt without the written consent, prior to the
indefeasible repayment thereof in full in cash, of the Required Banks (as
defined in the Credit Agreement) and thereafter the holders of a majority in
principal amount of Senior Debt.
IN WITNESS WHEREOF, Payor has executed and delivered this Note as of
the date hereinabove first written.
Federal Data Corporation
By:
----------------------------------
Name:
Title:
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<PAGE>
ACKNOWLEDGMENT
_______________________, Payee under the attached 9% Subordinated
Promissory Note, dated as of ____________ __, ____ (the "NOTE") hereby
acknowledges the provisions of Section 4, Section 5 and Section 7.10 of the Note
and agrees to be bound by the provisions thereof.
________________________________
By:_____________________________
Name:
Title:
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<PAGE>
EXHIBIT 4.12
SUBORDINATED NOTE
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED.
IT MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF REGISTRATION OR AN EXEMPTION
THEREFROM UNDER SAID ACT AND WITHOUT THE PRIOR WRITTEN CONSENT OF PAYOR.
FEDERAL DATA CORPORATION
9% INCREASING RATE SUBORDINATED NOTE
DUE ________ __, 2004
$______ ______ __, 1997
Federal Data Corporation, a Delaware corporation ("PAYOR"), for
value received, promises to pay to the order of Myron P. Erkiletian,
("PAYEE") the principal amount of Seventy-five Thousand Dollars ($_________),
together with accrued interest thereon, each calculated and payable only as
and to the extent set forth below, including without limitation Section 5
hereof, in this Note (together with any PIK Notes issued pursuant to Section
1.1 below, the "NOTES" or "SUBORDINATED NOTES"). The principal and interest
on this Note is payable in lawful money of the United States of America in
immediately available funds at such place in the United States as Payee may
from time to time designate in writing to Payor.
<PAGE>
This Note is made pursuant to that certain Stock Purchase Agreement
(the "AGREEMENT"), dated June 18, 1997, by and among Federal Data Corporation
(the "BUYER"), Sylvest Management Systems Corporation, a Maryland corporation
(the "TARGET"), and Gary S. and Areather T. Murray, William S. Strang, Holton B.
Shipman, Jr., James K. White, Peter A. Perucci, and Myron P. Erkiletian (the
"SELLERS") pursuant to which Buyer has purchased from Sellers all the issued and
outstanding shares of Target, and is one of the "Notes" referred to therein.
Payee is a former shareholder of Seller and is receiving this Subordinated Note
pursuant to the Agreement. Payments under this Note are subject to the right of
Payor to reduce amounts payable under this Note as set forth in Section 5 below,
which right shall be binding upon any holder of the Subordinated Notes. All
capitalized terms used herein and not defined herein shall have the meanings
assigned to such terms in the Agreement.
1. PAYMENT OF PRINCIPAL AND INTEREST
1.1 CALCULATION AND PAYMENT OF INTEREST.
Interest on the principal balance of this Note outstanding from time
to time until paid in full shall accrue at the rate of (a) for the period from
the date hereof through ____ __, ____, nine percent (9%) per annum, (b) for the
period from ____ _, ____ through ____ __, ____, eleven percent (11%) per annum,
and (c) thereafter, thirteen percent (13%) per annum, in each case computed on
the basis of a 365 or 366-day year, as appropriate, for the actual number of
days elapsed, commencing on the date hereof. Such interest shall be payable
semi-annually in arrears, beginning on ________ __, ____ and thereafter on each
____ __ and ________ __ until the Maturity Date (as defined herein); PROVIDED,
HOWEVER, that any amount
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of cash interest which is not paid as a result of the application of the
provisions of Section 7.08 of the Credit Agreement or any similar provision
contained in any documents relating to the refinancing thereof (each, a "PAYMENT
RESTRICTION") shall be made by the issuance of a PIK Note and Payor shall be
deemed to have issued a PIK Note for any such interest regardless of whether
Payor shall have actually delivered any such PIK Note. Each Holder, by its
acceptance hereof, acknowledges (i) that Payor is contractually bound hereunder
to pay cash interest only to the extent not prohibited by a Payment Restriction,
(ii) that any cash interest not so paid shall be paid in the form of a PIK Note,
and (iii) the failure to pay cash interest as a result of a Payment Restriction
shall not constitute a default or Event of Default under this Note.
1.2 PAYMENT ON MATURITY DATE. The principal balance of, and any accrued
and unpaid interest on, this Note shall be payable on the later of (a) to the
extent the term of the Credit Agreement has been extended in connection with a
default or anticipated default thereunder, the date which is six months after
the indefeasible payment in full in cash of all amounts owing under the Credit
Agreement, and (b) ____ __, 2004 (as applicable, the "MATURITY DATE").
1.3 PRO RATA PAYMENT. All payments and prepayments of interest and
principal on the Subordinated Notes shall be made pro rata among the
Subordinated Notes held by the former Shareholders of Target in proportion to
the original principal amounts thereof.
1.4 [INTENTIONALLY OMITTED]
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<PAGE>
1.5 OPTIONAL PREPAYMENT.
(a) Payor may, at its option at any time, without premium or
penalty, prepay all or any portion of this Note.
(b) Any prepayment of this Note shall be applied as follows:
FIRST, to payment of accrued interest; and SECOND, to payment of principal.
Upon any partial prepayment, at the request either of Payee or Payor, this Note
shall be surrendered to Payor in exchange for a substitute note, which shall set
forth the revised principal amount but otherwise identical to this Note. In the
event that this Note is prepaid in its entirety, this Note shall be surrendered
to Payor for cancellation as a condition to any such prepayment.
1.6 PAYMENT ONLY ON BUSINESS DAYS. Any payment hereunder which, but for
this Section 1.6, would be payable on a day which is not a Business Day, shall
instead be due and payable on the Business Day next following such date for
payment.
2. EVENTS OF DEFAULT
The following shall constitute "EVENTS OF DEFAULT" under this Note:
(a) Subject to Section 4 below, failure by Payor to make any
payment or prepayment required under this Note when the same shall become due
and payable (whether at maturity, by acceleration or otherwise) and the
continuation of such failure for a period of thirty (30) days; or
(b) Payor breaches any covenant under Section 3.1 or Section 3.2 of
this Note, which breach or failure, if curable, shall continue uncured for a
period of thirty (30) days after the date on which written notice specifying
such breach, and stating that such notice is a "Notice of Default" hereunder,
shall have been given by Payee to Payor; or
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<PAGE>
(c) Payor, pursuant to or within the meaning of any Bankruptcy Law:
(A) commences a voluntary case or proceeding;
(B) consents to the entry of an order for relief against
it in an involuntary case or proceeding;
(C) consents to the appointment of a Custodian of it or
for all or any substantial portion of its property or assets;
(D) makes a general assignment for the benefit of the
creditors; or
(d) an involuntary case or proceeding is commenced against Payor
under any Bankruptcy Law and is not dismissed, bonded or discharged within
ninety (90) days thereafter, or a court of competent jurisdiction enters an
order or decree under any Bankruptcy Law that:
(A) is for relief against Payor in an involuntary case or
proceeding;
(B) appoints a Custodian of Payor for all or
substantially all of its properties; or
(C) orders the liquidation of Payor;
and in each case the order or decree remains unstayed and in effect for ninety
(90) days; or
(e) the occurrence of a "change of control" as defined in Section
8.01 of the Credit Agreement, as such section may be amended or restated by the
parties thereto.
If an Event of Default specified in Section 2(a), 2(b) or 2(e) shall have
occurred and be continuing and any Senior Debt shall then be outstanding,
subject to the provisions of Section
5
<PAGE>
4 hereof, Payee may, at its option, by notice in writing to Payor and to the
Agent under the Senior Debt Documents (the "ACCELERATION NOTICE"), declare the
entire principal amount of this Note and the interest accrued thereon to be due
and payable upon the earlier of (i) one hundred fifty (150) days after the
receipt of the Acceleration Notice by Payor and the Agent under the Senior Debt
Documents or (ii) an acceleration under the Senior Debt Documents, and upon any
such declaration the same shall become due and payable at such time. If an
Event of Default specified in Section 2(a), 2(b) or 2(e) shall have occurred and
be continuing and no Senior Debt shall then be outstanding, Payee may, at its
option, declare the entire principal amount of this Note and the interest
accrued thereon to be due and payable upon the date which is five Business Days
after the date of delivery by Payee to Payor of a written notice of
acceleration, and upon any such declaration the same shall become due and
payable at such time. If an Event of Default specified in Section 2(c) or 2(d)
hereof occurs, the principal balance of and accrued interest on this Note shall
become due and payable immediately without any declaration or other act on the
part of Payee.
If any Event of Default shall have occurred and be continuing,
subject to the provisions of Sections 2 and 4 hereof, Payee may proceed to
protect and enforce its rights either by suit in equity or by action at law, or
both, whether for specific performance of any provision of this Note or in aid
of the exercise of any power granted to Payee under this Note.
3. COVENANTS.
3.1 AFFIRMATIVE COVENANTS. Payor covenants and agrees that for so long
as any indebtedness evidenced by this Note shall remain outstanding, unless
waived by Majority Holders, Payor shall:
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<PAGE>
(a) promptly give notice to Payee of (i) any default or Event of
Default hereunder or in connection with any Indebtedness having an aggregate
principal amount in excess of $2,500,000, other than the Senior Debt, (ii) any
notice of an "Event of Default" (as defined in the Senior Debt Documents)
permitting the holder or holders of the Senior Debt to accelerate such Senior
Debt given to Payor by any holder of Senior Debt or its agent or (iii) any
acceleration of the Senior Debt or any other Indebtedness of Payor having an
aggregate principal amount in excess of $2,500,000; and
(b) promptly deliver to Payee copies of any quarterly and annual
financial statements of Payor as well as a quarterly certificate of an officer
of Payor as to Payor's compliance with the terms hereof (or, if applicable,
detailing any noncompliance with the terms hereof and the course of action
proposed to be taken by Payor in connection with such noncompliance).
3.2 NEGATIVE COVENANTS. Payor covenants and agrees that for so long as
any indebtedness evidenced by this Note remains outstanding, Payor will not,
without the written consent of Majority Holders:
(a) liquidate, wind up or dissolve itself (or suffer any
liquidation or dissolution), or convey, sell, lease, transfer or otherwise
dispose of, in one transaction or a series of related transactions, all or
substantially all of its assets; PROVIDED, HOWEVER, that the foregoing shall not
apply in any way to the grant of a lien or security interest in, or the
foreclosure, sale or other disposition of, collateral pledged to secure Senior
Debt pursuant to any judicial proceeding or by or at the direction of the
holders of any Senior Debt or any agent or other representative acting on their
behalf; or
7
<PAGE>
(b) consolidate with, or merge with or into, any Person unless (i)
Payor shall be the continuing Person, or the Person (if other than Payor) formed
by such consolidation or into which Payor is merged shall be a corporation
organized and existing under the laws of the United States or any state thereof
or of the District of Columbia and, in the event Payor is merged with or into
any other Person, such Person shall expressly assume, by an agreement executed
and delivered to Payee, the obligations of Payor under this Note, and (ii) the
Payor on this Note following the transaction shall be in compliance with Section
3.2(d) below. Upon any consolidation or merger of Payor in accordance with this
Section 3.2(b), the successor corporation formed by such consolidation or into
which Payor is merged shall succeed to, and be substituted for, and may exercise
every right and power of, Payor under this Note with the same effect as if such
successor corporation had been named as Payor herein; or
(c) declare or pay any dividends or distributions to its
stockholders, or redeem or otherwise purchase or acquire any of its Capital
Stock (other than the repurchase, redemption or similar transaction pursuant to
which Capital Stock owned by employees is reacquired or retired by the Payor),
directly or indirectly, whether in cash, property or in obligations of the
Payor; or
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<PAGE>
(d) incur, assume or suffer to exist any Indebtedness other than
(i) Senior Debt which is incurred in connection with the operation of the
business of the Payor or its subsidiaries, but is not incurred for the purpose
of acquiring any Person or business (other than the acquisition contemplated in
the Agreement), (ii) other Indebtedness, including without limitation Senior
Debt which is incurred for the purpose of acquiring any Person or business
(other than the acquisition contemplated in the Agreement), so long as the ratio
of (x) Total Indebtedness of Payor and its Subsidiaries on a consolidated basis,
as of the date such additional Indebtedness is incurred (and after giving effect
to such incurrence), to (y) EBITDA of Payor, on a consolidated basis and giving
pro forma effect to acquisitions and dispositions effected during such period
(including without limitation the transaction in connection with which such
additional Indebtedness is incurred) as if such transactions had occurred on the
first day of such period, for the latest four complete fiscal quarters of Payor,
does not exceed 7.0:1, and (iii) the Indebtedness under the Subordinated Notes,
including additional issuances of the Subordinated Notes contemplated by the
Agreement.
4. SUBORDINATION
4.1 NOTE SUBORDINATED TO SENIOR DEBT. To the extent and in the manner
hereinafter set forth in this Section 4 and subject to the terms of Section 5
below, the indebtedness represented by this Note and the payment of the
principal of and the interest on this Note and any claim for rescission of the
purchase of this Note, and any claim which is the equivalent of or substitute
for principal of or interest on this Note, for damages arising from the purchase
of
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<PAGE>
this Note or for reimbursement or contribution on account of such a claim,
and all other payments with respect to or on account of this Note
(collectively, the "SUBORDINATED DEBT") (a) rank pari passu in right of
payment with the subordinated notes issued by Federal Data Corporation, a
Delaware corporation, (i) pursuant to that certain Agreement and Plan of
Merger dated October 18, 1995, by and among FDC Holdings, Inc., and C. Robert
Hanley, as shareholder representative and (ii) pursuant to that certain
Agreement and Plan of Merger dated April 9, 1997 by and among Azmat Ali,
Peter Belford, Arthur Vebin, NYMA, Inc. and NYMA Acquisition, Inc., and Peter
Belford as the initial shareholder representative, and (b) are hereby
expressly made subordinate and subject in right of payment to the prior
payment in full in cash of all other Senior Debt. This Section 4 constitutes
a continuing offer to all Persons who become holders of, or continue to hold,
Senior Debt, each of whom is an obligee hereunder and is entitled to enforce
such holder's rights hereunder, subject to the provisions hereof, without any
act or notice of acceptance hereof or reliance hereon. For purposes of this
Section 4, Senior Debt shall not be deemed to have been paid in full until
the termination of all commitments or other obligations by any holder thereof
and unless all such holders shall have received indefeasible payment in full
in cash of all obligations under or in respect of Senior Debt (including,
without limitation, Post Petition Interest).
4.2 NO PAYMENT ON NOTE IN CERTAIN CIRCUMSTANCES.
(a) During the continuance of any default in the payment of any
Senior Debt, whether at maturity, upon redemption or pursuant to acceleration or
otherwise (each, a "PAYMENT DEFAULT"), no direct or indirect payment of any kind
(other than the payment of interest on the Notes in PIK Notes) shall be made,
asked for, demanded, accepted, received or
10
<PAGE>
retained with respect to principal, interest or other amounts due under the
Notes nor shall any holder thereof exercise any remedies with respect thereto.
"PRIME RATE" shall mean the prime rate as published in the Money Rates Column of
the Eastern Edition of the WALL STREET JOURNAL (or the average of such rates if
more than one rate is indicated), in effect on the date of incurrence of such
Claim.
(b) Upon the occurrence of any default (other than a Payment
Default) under the Credit Agreement or any other Senior Debt Document which
would permit the Banks (or any other holder of Senior Debt) to accelerate the
maturity of the Senior Debt outstanding thereunder (whether after the giving of
notice, the lapse of time, or both or otherwise) (each, a "NON-PAYMENT
DEFAULT"), no payment or distribution (including any payment or distribution
that may be payable by reason of any other indebtedness of Payor being
subordinated to payment of the Subordinated Debt) shall be made by or on behalf
of Payor for or on account of or in respect of the Subordinated Debt until such
Non-Payment Default shall have been cured or waived or otherwise ceases to exist
pursuant to the terms of such Senior Debt, or the benefits of this sentence
shall have been waived by or on behalf of, and at the sole option of, the
holders of a majority of the principal amount of such Senior Debt.
Notwithstanding the foregoing, the suspension of payments described in the
preceding sentence shall terminate, and the Payor shall be obligated to make all
payments of principal and interest on this Note, including any payments not made
by virtue of such suspension, if any holder or holders of the relevant Senior
Debt has not, on or prior to the 180th day after the occurrence of the Non-
Payment Default under the Senior Debt, declared all unpaid principal and
interest on such Senior Debt to be immediately due and payable, unless such Non-
Payment Default shall have
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<PAGE>
been cured or waived or otherwise ceases to exist pursuant to the terms of such
Senior Debt, or the benefits of the previous sentence shall have been waived by
or on behalf of, and at the sole option of, the holders of a majority of the
principal amount of such Senior Debt.
(c) Payee agrees that, so long as payments or distributions for or
on account of the Subordinated Debt are not permitted pursuant to this Section
4, Payee will not take, sue for, ask or demand from Payor payment of all or any
amounts under or in respect of this Note, or commence, or join with any creditor
other than the holders of Senior Debt and their agents in commencing, directly
or indirectly cause Payor to commence, or assist Payor in commencing, any
proceeding referred to in Section 4.3, and Payee shall not take or receive from
Payor, directly or indirectly or on its behalf, in cash or other property or by
set-off (except in respect to Payor's rights as set forth in Section 5 below) or
in any other manner, including, without limitation, from or by way of
collateral, payment of all or any amounts under or in respect of the
Subordinated Debt. In the event that notwithstanding the foregoing provisions
of this Section 4.2, any payment or distribution of any kind or character,
whether in cash, property or securities (including any payment or distribution
that may be payable by reason of any other indebtedness of Payor being
subordinated to payment of the Subordinated Debt), shall be received by Payee
for or on account of or in respect of the Subordinated Debt before all Senior
Debt is indefeasibly paid in full, such payment or distribution shall be
received and held in trust for, and shall be paid over (in the same form as so
received, to the extent practicable, and with any necessary endorsement) to the
holders of the Senior Debt remaining unpaid or their representative or
representatives, or to the trustee or trustees under any such indenture or
agreement under which any Senior Debt may have been issued, for
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application (in the case of cash) to, or as collateral (in the case of non-cash
property or securities) for the payment or prepayment of Senior Debt, until all
Senior Debt shall have been paid in full in cash, after giving effect to any
concurrent payment or distribution to the holders of such Senior Debt.
4.3 DISSOLUTION; LIQUIDATION; BANKRUPTCY; ACCELERATION. In the event of
(i) any insolvency or bankruptcy case or proceeding, or any receivership,
liquidation, reorganization or other similar proceeding in connection therewith,
relative to the Payor or any of its assets, or (ii) any liquidation, dissolution
or other winding up of the Payor, whether voluntary or involuntary or whether or
not involving insolvency or bankruptcy, or (iii) any assignment for the benefit
of creditors or any other marshalling of assets or liabilities of the Payor, or
(iv) the acceleration of the Senior Debt by reason of the occurrence of a
default or an event of default thereunder (each such event, if any, herein
sometimes referred to as a "PROCEEDING"):
(a) The holders of all Senior Debt shall first be entitled to
receive payment in full in cash of all Senior Debt before any direct or indirect
payment may be made for or on account of payments under or in respect of the
Subordinated Debt, whether in cash, property or securities of any kind;
(b) Any payment or distribution of any kind or character, whether
in cash, property or securities (including any payment or distribution that may
be payable by reason of any other indebtedness of Payor being subordinated to
payment of the Subordinated Debt), to which Payee would be entitled except for
the provisions of this Section 4, shall be paid by the liquidating trustee or
agent or other person making such payment or distribution, whether a trustee in
bankruptcy, a receiver or liquidating trustee or other trustee or agent,
directly to the
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holders of Senior Debt or their representative or representatives, or to the
trustee or trustees under any indenture under which any instrument evidencing
any of such Senior Debt may have been issued for application (in the case of
cash) to, or as collateral (in the case of non-cash property or securities) for
the payment or prepayment of Senior Debt, to the extent necessary to make
payment in full of all Senior Debt remaining unpaid, after giving effect to any
concurrent payment or distribution to the holders of such Senior Debt.
(c) The holders of Senior Debt are hereby irrevocably authorized
and empowered (in their own names or in the name of Payee or otherwise), but
shall have no obligation, to demand, sue for, collect and receive every payment
or distribution referred to in paragraph (b) above and give acquittance therefor
and to file claims and proofs of claim and take such other action (including,
without limitation, voting the amounts owing under the Subordinated Debt or
enforcing any security interest or other lien securing payment of the amounts
owing under the Subordinated Debt) as they may deem necessary or advisable for
the exercise or enforcement of any of the rights or interests of the holders of
Senior Debt hereunder.
(d) Payee shall duly and promptly take such action as the holders
of Senior Debt may reasonably request to execute and deliver to the holders of
Senior Debt such powers of attorney, assignments, or other instruments as the
holders of Senior Debt may request in order to enable the holders of Senior Debt
to enforce any and all claims with respect to, and any security interests and
other liens securing payment of, the amounts owing under the Subordinated Debt.
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(e) In the event that notwithstanding the foregoing provisions of
this Section 4.3, any payment or distribution of any kind or character, whether
in cash, property or securities (including any payment or distribution that may
be payable by reason of any other indebtedness of Payor being subordinated to
payment of the Subordinated Debt), shall be received by Payee for or on account
of or in respect of the Subordinated Debt before all Senior Debt is indefeasibly
paid in full, such payment or distribution shall be received and held in trust
for, and shall be paid over (in the same form as so received, to the extent
practicable, and with any necessary endorsement) to the holders of the Senior
Debt remaining unpaid or their representative or representatives, or to the
trustee or trustees under any such indenture or agreement under which any Senior
Debt may have been issued, for application (in the case of cash) to, or as
collateral (in the case of non-cash property or securities) for the payment or
prepayment of Senior Debt, until all Senior Debt shall have been paid in full in
cash, after giving effect to any concurrent payment or distribution to the
holders of such Senior Debt.
4.4 SUBROGATION. Upon the final payment in full in cash of all Senior
Debt, Payee shall be subrogated to the rights of the holders of Senior Debt to
receive payments or distributions of cash, property or securities of Payor
applicable to the Senior Debt until the principal of and interest on and all
other amounts payable under the Subordinated Debt shall be paid in full, and for
the purposes of such subrogation, no payments or distributions to the holders of
the Senior Debt of any cash, property or securities to which Payee would be
entitled except for the provisions of this Section 4 and no payment over
pursuant to the provisions of this Section 4 to the holders of Senior Debt by
Payee shall, as between Payor, its creditors other than holders of Senior Debt,
and Payee, be deemed to be a payment by Payor to or on
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account of the Senior Debt. It is understood that the provisions of this
Section 4 are and are intended solely for the purpose of defining the relative
rights of Payee, on the one hand, and the holders of the Senior Debt, on the
other hand.
4.5 OBLIGATIONS OF PAYOR UNCONDITIONAL. Nothing contained in this
Section 4 or elsewhere in this Note is intended to or shall impair, as among
Payor, its creditors other than the holders of Senior Debt, and Payee, the
obligation of Payor, which is absolute and unconditional, to pay to Payee the
principal of and interest on and all other amounts due under this Note in
accordance with its terms, or is intended to or shall affect the relative rights
of Payee and creditors of Payor other than the holders of the Senior Debt, nor
shall anything herein prevent Payee from exercising all remedies otherwise
permitted by applicable law upon default under this Note, subject to the
provisions of this Section 4 and to the rights of holders of Senior Debt to
receive distributions and payments otherwise payable to Payee.
4.6 RELIANCE ON JUDICIAL ORDER OR CERTIFICATE OF LIQUIDATING AGENT. Upon
any payment or distribution of assets of Payor referred to in this Section 4,
Payee shall be entitled to rely upon any order or decree made by any court of
competent jurisdiction in which bankruptcy, dissolution, winding-up, liquidation
or reorganization proceedings are pending, or a certificate of the receiver,
trustee in bankruptcy, liquidating trustee, agent or other person making such
payment or distribution, delivered to Payee, for the purpose of ascertaining the
persons entitled to participate in such distribution, the holders of the Senior
Debt and other indebtedness of Payor, the amount thereof or payable thereon, the
amount or amounts paid or distributed thereon and all other facts pertinent
thereto or to Section 4 of this Note. Such reliance shall not affect the rights
of the holders of the Senior Debt.
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4.7 SUBORDINATION RIGHTS NOT IMPAIRED BY ACTS OR OMISSIONS OF PAYOR OR
HOLDERS OF SENIOR DEBT. No right of any present or future holders of any Senior
Debt to enforce subordination as provided herein will at any time in any way be
prejudiced or impaired by any act or failure to act on the part of Payor or by
any act or failure to act by any such holder, or by any act, failure to act or
noncompliance by Payor, the holders of Senior Debt or their respective agents
with the terms of this Note, regardless of any knowledge thereof which any such
holder or Payor may have or otherwise be charged with. No amendment, waiver or
other modification of this Note shall in any way adversely affect the rights of
the holders of any Senior Debt under this Section 4 unless such holders of
Senior Debt consent in writing to such amendment, waiver or modification. The
provisions of this Section 4 are intended for the benefit of and shall be
enforceable directly by the holders of the Senior Debt.
4.8 FURTHER ASSURANCES. Payee and Payor each will, at Payor's expense
and at any time and from time to time, promptly execute and deliver all further
instruments and documents, and take all further action, that may be necessary or
desirable, or that the holders of Senior Debt may request, in order to protect
any right or interest granted or purported to be granted hereby or to enable the
holders of Senior Debt to exercise and enforce their rights and remedies
hereunder.
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4.9 AGREEMENTS IN RESPECT OF SUBORDINATED DEBT.
(a) Payor agrees that it will not make any payment for or on
account of or in respect of this Note, or take any other action, in
contravention of the provisions of this Section 4.
(b) Payee shall promptly notify the holders of Senior Debt, at
Banque Indosuez, New York Branch, 1211 Avenue of the Americas, New York, New
York, 10036, or such other address of which Payee has been notified in writing,
of the occurrence of any default under this Note of which Payee shall obtain
knowledge.
4.10 OBLIGATIONS HEREUNDER NOT AFFECTED. All rights and interests of the
holders of Senior Debt hereunder, and all agreements and obligations of Payee
and Payor under this Section 4, shall remain in full force and effect
irrespective of:
(i) any lack of validity or enforceability of the
Payor Guaranty or any successor guaranty of the Credit Agreement or
any other Senior Debt Document;
(ii) any change in the time, manner or place of
payment of, or in any other term of, all or any of the Senior Debt, or
any other amendment or waiver of or any consent to any departure from
the Credit Agreement or the Payor Guaranty or any successor guaranty
or any other Senior Debt Document, including, without limitation, any
increase in the Senior Debt resulting from the extension of additional
credit to Payor or any of its Subsidiaries or otherwise;
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(iii) any taking, exchange, release or non-
perfection of any other collateral, or any taking, release, amendment
or waiver of or consent to departure from any guaranty, for all or any
of the Senior Debt;
(iv) any manner of application of collateral, or
proceeds thereof, to all or any of the Senior Debt, or any manner of
sale or other disposition of any collateral for all or any of the
Senior Debt or any other assets of Payor or any of its Subsidiaries;
(v) any change, restructuring or termination of
the corporate structure or existence of Payor or any of its
Subsidiaries; or
(vi) any other circumstance which might otherwise
constitute a defense available to, or a discharge of, Payor or a
subordinated creditor.
The provisions of this Section 4 shall continue to be effective or be
reinstated, as the case may be, if at any time any payment of any of the Senior
Debt is rescinded or must otherwise be returned by the holders of Senior Debt
upon the insolvency, bankruptcy or reorganization of Payor or otherwise, all as
though such payment had not been made.
4.11 WAIVER. Payee and Payor each hereby waives promptness, diligence,
notice of acceptance and any other notice with respect to any of the Senior Debt
and this Section 4 and any requirement that the holders of Senior Debt protect,
secure, perfect or insure any security interest or lien on any property subject
thereto or exhaust any right or take any action against Payor or any other
person or entity or any collateral.
4.12 NO WAIVER; REMEDIES. No failure on the part of the holders of Senior
Debt to exercise, and no delay in exercising, any right hereunder shall operate
as a waiver thereof; nor
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shall any single or partial exercise of any right hereunder preclude any other
or further exercise thereof or the exercise of any other right. The remedies
herein provided are cumulative and not exclusive of any remedies provided by
law.
4.13 CONTINUING AGREEMENT; ASSIGNMENTS UNDER SENIOR DEBT AGREEMENTS. The
provisions of this Section 4 constitute a continuing agreement and shall (i)
remain in full force and effect until the indefeasible payment in full in cash
of the Senior Debt, (ii) be binding upon Payee, Payor and their respective
successors and assigns, and (iii) inure to the benefit of, and be enforceable
by, the holders of Senior Debt and their successors, transferees and assigns.
Without limiting the generality of the foregoing clause (iii), the holders of
Senior Debt may assign or otherwise transfer all or any portion of their rights
and obligations under the Credit Agreement or any other Senior Debt Document, as
applicable, to any other person or entity, and such other person or entity shall
thereupon become vested with all the rights in respect thereof granted to the
holders of Senior Debt herein or otherwise.
5. RIGHT TO REDUCE AMOUNTS PAYABLE UNDER THIS NOTE. Payee hereby agrees, by
acceptance of this Note, that Payor may reduce the principal amount of this Note
following the Closing pursuant to Section 9(g) of the Agreement, subject to such
other terms and conditions as are set forth in the Agreement. Any such
adjustment is intended as, and shall be treated by the parties as, an adjustment
to the Purchase Price. If the principal amount of the Note is reduced pursuant
to Subsection 9(g) of the Agreement, such reduction shall be deemed to be made
effective as of the Closing Date and all interest that may have accrued on the
principal amount so cancelled shall also be deemed to be retroactively
cancelled, effective as of the later of (i) the date hereof and (ii) the date
such Claim arose. Upon any reduction of the principal
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amount of the Note, Payee, shall, upon request of the Payor, surrender this Note
and Payor shall issue a replacement Note to Payee, upon such surrender, to
reflect such decrease in principal amount but otherwise identical to this Note.
6. INCREASE IN AMOUNTS PAYABLE UNDER THIS NOTE. In the event that June 30
EBIT (as defined in, and determined in accordance with the provisions of, the
Agreement) is equal to or exceeds Two Million Five Hundred Fifty Thousand
Dollars ($2,550,000), the principal amount of this Note shall automatically, and
without any action by Payor or Payee shall increase by an amount equal to
Twenty-five Thousand Dollars ($25,000.00). Such increase shall be deemed
effective as of the original date of this Note, and interest shall accrue
thereon from such date. Upon demand from Payee, a replacement Note to reflect
such increase in principal amount but otherwise identical to this Note shall be
issued to Payee, upon surrender of this Note to Payor.
7. CERTAIN DEFINITIONS
"AGENT" means Banque Indosuez, New York Branch, as agent for the
lenders under the Credit Agreement, and its successors and assigns.
"BANKRUPTCY LAW" means Title 11, United States Code, or any similar
federal, state or foreign law for the relief of debtors or any arrangement,
reorganization, assignment for the benefit of creditors or any other marshalling
of the assets and liabilities of Payor.
"BUSINESS DAY" means each day other than Saturdays, Sundays and days
when commercial banks are authorized or required by law to be closed for
business in New York, New York.
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"CAPITAL STOCK" means, with respect to any Person, any and all
shares, interests, participations, warrants, options or other equivalents
(however designated) of capital stock of such Person (if a corporation) and any
and all equivalent ownership interests in such Person (if other than a
corporation), in each case whether now outstanding or hereafter issued.
"CONSOLIDATED NET INCOME" means, with respect to any Person, such
Person's consolidated net income determined in accordance with GAAP
"CREDIT AGREEMENT" means the Credit Agreement dated December 1, 1995
among the Payor, Banque Indosuez, New York Branch, as agent and collateral agent
thereunder, and the other parties thereto, together with the related documents
thereto (including without limitation any guarantee agreements and security
documents), in each case as such agreement or document may be amended, modified
or supplemented from time to time, including without limitation any agreement or
document extending the maturity of, refinancing, replacing or otherwise
restructuring all or any part of the Indebtedness under such agreement or
document or any replacement or successor agreement or document and whether by
the same or any other agent, lender or group of lenders.
"CUSTODIAN" means any receiver, trustee, assignee, liquidator,
custodian or similar official under any Bankruptcy Law.
"EBITDA" means, with respect to any Person for any period, the
consolidated Net Income, plus, consolidated tax expense, plus consolidated tax
expense, plus consolidated interest expense, plus consolidated depreciation and
amortization expenses, plus all other non-cash charges deducted in computing
Consolidated Net Income, in each case for such Person for such period,
calculated in accordance with GAAP.
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"EVENT OF DEFAULT" means any of the occurrences specified under
Sections 2(a) through 2(e) of this Note.
"INDEBTEDNESS" of any Person means all obligations of such Person for
borrowed money or evidenced by bonds, notes, debentures or similar instruments,
excluding notes and capital leases issued in connection with offsetting lease
assets and excluding all other capitalized lease obligations.
"PERSON" means any individual, corporation, partnership, joint
venture, association, joint-stock company, trust, unincorporated organization or
government or any agency or political subdivision thereof.
"PIK NOTES" means the PIK Notes issued pursuant to Section 1.1 hereof
in lieu of cash interest and containing terms substantially identical to this
Note.
"REFINANCING DEBT" means any indebtedness incurred to repay,
refinance or otherwise replace indebtedness or obligations (including, without
limitation, commitments) under the Credit Agreement.
"SECURITIES ACT" means the Securities Act of 1933, as amended.
"SENIOR DEBT" means all obligations of Payor (including without
limitation contingent obligations with respect to undrawn letters of credit
issued under the Credit Agreement, any obligations owed with respect to
indemnification obligations, interest rate protection incurred to satisfy the
requirements of the Credit Agreement and commitment fees and agency fees payable
thereunder or pursuant thereto) (i) under the Credit Agreement or (ii) for
Indebtedness to the extent such Indebtedness is incurred to acquire, or in
connection with the acquisition of, a Person or business or assets, or (iii)
with respect to Refinancing Debt
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(including in each such case fees, expenses, claims, charges, indemnity
obligations and interest at the contract rate (including any rate applicable
upon default) accrued or accruing after the commencement of a Proceeding whether
or not such interest is an allowed claim enforceable against the debtor in a
bankruptcy case under Title 11 of the United States Code or whether or not such
interest accrues after the filing of such petition for purposes of such Title
("POST PETITION INTEREST")). Senior Debt outstanding under or in respect of
Senior Debt Documents shall continue to constitute Senior Debt notwithstanding
that such Senior Debt may be disallowed, avoided or subordinated pursuant to any
Bankruptcy Law or other applicable insolvency law or equitable principles.
"SENIOR DEBT DOCUMENTS" means the Credit Agreement and any other
agreement, indenture, mortgage, guaranty, pledge, security agreement or
instrument evidencing or securing Senior Debt or pursuant to which Senior Debt
is incurred.
"SUBORDINATED NOTE" means each of this Note and each other
subordinated promissory note made by Payor pursuant to the Agreement, including
without limitation, in each case, any PIK Notes issued pursuant to the terms
thereof.
"SUBSIDIARY" means, with respect to any Person, any corporation or
other entity, whether such corporation or entity now exists or shall hereafter
be created, of which a majority of the Capital Stock or other ownership
interests having ordinary voting power to elect a majority of the board of
directors or other persons performing similar functions are at the time directly
or indirectly owned by such Person.
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"UNAFFILIATED ENTITY" is an entity which is not an Affiliate of Payor
or The Carlyle Group, L.P.
7. MISCELLANEOUS
7.1 SECTION HEADINGS. The section headings contained in this Note are
for reference purposes only and shall not affect the meaning or interpretation
of this Note.
7.2 AMENDMENT AND WAIVER. Subject to Section 7.10 hereof, no provision
of this Note may be amended or waived unless Payor shall have obtained the
written agreement of Payee and (unless there are no amounts and no commitments
outstanding under the Credit Agreement) the Agent under the Credit Agreement.
No failure or delay in exercising any right, power or privilege hereunder shall
imply or otherwise operate as a waiver of any rights of Payee, nor shall any
single or partial exercise thereof preclude any other or future exercise thereof
or the exercise of any other right, power or privilege.
7.3 SUCCESSORS, ASSIGNS AND TRANSFERORS. This Note may not be assigned
or transferred by Payee without the express written consent of Payor and may not
be assigned or transferred to (x) any competitor, customer or supplier of Payor
or any of its Subsidiaries or (y) to any other Person if such assignment or
transfer would cause any interest payments due under this Note to become non-
deductible as an expense for any tax purposes. Payor may not assign its
obligations under this Note without the prior written consent of Payee except in
connection with a transaction permitted under Section 3.2(b) hereof. Subject to
the foregoing, the obligations of Payor and Payee under this Note shall be
binding upon, and inure to the benefit of, and be enforceable by, Payor and
Payee, and their respective successors and permitted assigns, whether or not so
expressed.
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7.4 GOVERNING LAW. This Note shall be governed by, and construed in
accordance with, the laws of the State of New York without giving effect to any
conflicts of laws principles thereof that would otherwise require the
application of the law of any other jurisdiction.
7.5 LOST, STOLEN, DESTROYED OR MUTILATED NOTE. Upon receipt of evidence
reasonably satisfactory to Payor of the loss, theft, destruction or mutilation
of this Note and of indemnity arrangements reasonably satisfactory to Payor from
or on behalf of the holder of this Note, and upon surrender or cancellation of
this Note if mutilated, Payor shall make and deliver a new note of like tenor in
lieu of such lost, stolen, destroyed or mutilated Note, at Payee's expense.
7.6 WAIVER OF PRESENTMENT, ETC. Except as otherwise provided herein,
presentment, demand, protest, notice of dishonor and all other notices are
hereby expressly waived by Payor.
7.7 USURY. Nothing contained in this Note shall be deemed to establish
or require the payment of a rate of interest in excess of the maximum rate
legally enforceable. If the rate of interest called for under this Note at any
time exceeds the maximum rate legally enforceable, the rate of interest required
to be paid hereunder shall be automatically reduced to the maximum rate legally
enforceable. If such interest rate is so reduced and thereafter the maximum
rate legally enforceable is increased, the rate of interest required to be paid
hereunder shall be automatically increased to the lesser of the maximum rate
legally enforceable and the rate otherwise provided for in this Note.
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<PAGE>
7.8 NOTICES. Any notice, request, instruction or other document to be
given hereunder by either party to the other shall be in writing and shall be
deemed given when received and shall be (i) delivered personally or (ii) mailed
by certified mail, postage prepaid, return receipt requested or (iii) delivered
by Federal Express or a similar overnight courier or (iv) sent via facsimile
transmission to the fax number given below, as follows:
IF TO PAYOR, ADDRESSED TO:
Federal Data Corporation
5800 Hampden Lane
Hampden, MD 20814
Attention: James M. Dean
Fax Number: (301) 961-3892
WITH A COPY TO:
The Carlyle Group
1001 Pennsylvania Avenue, N.W.
Suite 220 South
Washington, DC 20004
Attention: Peter Clare
Fax Number: (202) 347-1818
AND
Latham & Watkins
1001 Pennsylvania Avenue, N.W.
Suite 1300
Washington, DC 20004-2505
Attention: Eric A. Stern
Fax Number: (202) 637-2201
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<PAGE>
IF TO PAYEE, ADDRESSED TO:
Myron Erkiletian
c/o Erkiletian Construction Co.
4501 Ford Avenue, Suite 240
Alexandria, VA 22302
With a copy to:
Shaw, Pittman, Potts & Trowbridge
2300 N Street, N.W.
Washington, D.C. 20037
Attention: Victoria J. Perkins, Esq.
Fax Number: (202) 663-8007
or to such other place and with such other copies as either party may designate
as to itself by written notice to the other party.
In the event that any notice under this Note is required to be made
on or as of a day which is not a Business Day, then such notice shall not be
required to be made until the first day thereafter which is a Business Day.
7.9 REPRESENTATIONS AND WARRANTIES OF PAYOR. Payor hereby represents and
warrants to Payee that: (a) Payor is duly incorporated, validly existing and in
good standing under the laws of the State of Delaware; (b) Payor has duly
authorized, executed and delivered this Note; and (c) this Note constitutes a
legally valid and binding obligation of Payor,
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<PAGE>
enforceable against Payor in accordance with its terms, subject to the effect of
bankruptcy, insolvency, reorganization, moratorium or other similar laws now or
hereafter in effect relating to or affecting the rights or remedies of creditors
and the effect of general principles of equity, whether enforcement is
considered in a proceeding in equity or at law, and the discretion of the court
before which any proceeding therefor may be brought.
7.10 ACTION BY MAJORITY HOLDERS. Subject to the provisions of this
Section 7.10, Majority Holders and Payor may enter into agreements for the
purpose of adding or modifying provisions of the Subordinated Notes or changing
in any manner the rights of the Payee or Payor hereunder or waiving any
covenant, default or Event of Default hereunder; PROVIDED, HOWEVER, that no
supplemental agreement shall, without the consent of the Payee: (a) extend the
stated maturity of this Note or reduce the principal amount hereof, or reduce
the rate or change the time of payment of interest due on this Note; or (b)
reduce the percentage specified in the definition of Majority Holders; or (c)
amend this Section 7.10; or (d) effect any change in the terms of this Note
which is not also applicable to each other Subordinated Note; and PROVIDED,
FURTHER, that no change may be made to this Note which would either modify the
subordination provisions hereof or would otherwise adversely affect the rights
of the holders of Senior Debt without the written consent, prior to the
indefeasible repayment thereof in full in cash, of the Required Banks (as
defined in the Credit Agreement) and thereafter the holders of a majority in
principal amount of Senior Debt.
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IN WITNESS WHEREOF, Payor has executed and delivered this Note as of
the date hereinabove first written.
FEDERAL DATA CORPORATION
By:
---------------------------
Name:
---------------------------
Title:
---------------------------
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<PAGE>
ACKNOWLEDGMENT
Myron P. Erkiletian, Payee under the attached 9 % Subordinated
Promissory Note, dated as of June 30, 1997 (the "NOTE") hereby acknowledges the
provisions of Section 4, Section 5 and Section 7.10 of the Note and agrees to be
bound by the provisions thereof.
By:
-----------------------------
Name:
STATE OF _______________________
ss
COUNTY OF ______________________
On the ___ day of June, 1997, before me personally came
____________________________ to be known and known to me to be the individual
describe in and who executed the foregoing Acknowledgement and acknowledged to
me that he executed the same.
Signed and sworn before me SEAL
on ________________, 1997
_________________________ My commission expires:__________
Notary Public
<PAGE>
EXHIBIT 10.1
EMPLOYMENT AGREEMENT
THIS AGREEMENT ("Agreement") is made as of this 30 day of April 1997
between NYMA, INC. (the "Company" and the "Employer"), and Peter C. Belford
(the "Employee").
WITNESSETH:
WHEREAS, the Employee has heretofore for many years served in an
executive capacity with the Company and as a consequence thereof has acquired
significant management skills and experience; and
WHEREAS, the Company has entered into that certain Agreement and Plan
of Merger (the "Merger Agreement") dated as of even date herewith with NYMA
Acquisition, Inc. and certain stockholders of the Company pursuant to which
NYMA Acquisition, Inc. has merged with and into the company, with the Company
being the surviving corporation.
WHEREAS, the Company desires to continue to employ the Employee as
its President, for the term of employment stated herein subject to the
conditions hereof; and
WHEREAS, the Employee is willing and able to undertake employment
with the Company subject to the terms and conditions started herein.
NOW, THEREFORE, the Company and the Employee each agree as follows:
1. The Company hereby employs the Employee and the Employee accepts
continued employment as President, for the company. In such capacity, the
Employee shall perform such duties and exercise such powers for the Company and
its subsidiaries (if any) as the Chairman of the Board of Directors (the
"Chairman"), or his designee, may assign to or vest in him from time to time
commensurate with his position, including, without limitation, the duties and
services described in attachment Exhibit A. During the period of employment
with the Company, the Employee will devote his best efforts to the interest of
the Company and will not engage in other employment or in any activities
detrimental to the best interests of the Company without the prior written
consent of the Chairman.
2. This Agreement shall be for a term of Three (3) years,
commencing on the 30th day of April, 1997 and ending on the 29th day of April,
2000, unless the term is terminated earlier in accordance with this Agreement.
This Agreement shall be automatically extended from year to year thereafter for
additional one (1) year periods under the same terms and conditions, unless
either the Company or the Employee notifies the other party, in accordance with
this Agreement, no later than six (6) months prior to the expiration of the
term of the Agreement, or of any extension thereof, of its intent to terminate
the Agreement.
This Agreement may be terminated (a) by the Company (i) by giving, in
accordance with this Agreement, six (6) months notice of such termination, or
(ii) in accordance with Section 11 of this Agreement, or (b) by the Employee
giving to the Company, in accordance with this Agreement, six (6) months notice
of termination at any time the Agreement is in force. In the event this
Agreement
<PAGE>
is terminated by the Company pursuant to Section 2(a)(i) above, the Company
hereby undertakes to continue to pay to the Employee his then current base
salary during the shorter of the notice period or the remaining term of this
Agreement.
3. While this Agreement is in effect, the Company will pay to the
Employee as compensation for this services a base salary of $20,833 per month
($250,000 annualized). Such base salary shall be subject to review annually by
the Board of Directors. The Employee shall participate in an executive
compensation plan maintained by the Company. The terms, conditions,
objectives, and incentive amount shall be communicated in writing annually to
the Employee by the Company.
4. The Company shall reimburse the Employee for all reasonable and
necessary expenses, including, but not limited to, travel expenses incurred by
him in the performance of his duties under this Agreement. The Company
understands that the Employee has no other special or routine expense payments
made on his behalf as the date of this Agreement other than the allotment of a
monthly car allowance, which shall continue at up to $600 per month during the
term hereof.
5. If the Board of Directors shall determine that Employee is
unable to carry out his duties under this Agreement because of a disabling
illness or injury, other than any illness or injury resulting from chronic
alcoholism or drug dependence (as provided in Section 11 of this Agreement),
compensation during such disability period shall be paid as specified in any
relevant written employment/benefit policies and procedures of the Company as
may be in effect from time to time.
6. The Employee will be entitled to paid holidays and vacation as
specified by local Company practice and policy, except that the Employee shall
be granted the maximum amount of actual leave/vacation offered to employees by
the company.
7. The Employee shall not at any time, either during or after
termination of employment of the Company, disclose in any manner any Inventions
or Confidential Information (as defined below), or any financial, marketing, or
trading information relating to the Company or any of its Affiliates (unless
ordered to do so by the Company or a court of competent jurisdiction), until
such information becomes generally known, so long as such information does not
become generally known as a result of a breach of this Agreement by the
Employee. The Employee further agrees not to make copies of such Confidential
Information except in the scope of this employment, and upon termination of
this employment or upon earlier request of the Company shall return or deliver
to the company all tangible forms of such Confidential Information in his
possession or control, including but not limited to drawings, specifications,
documents, records, computer media, devices, models, or any other material and
copies or reproductions thereof.
The term "Inventions" means designs, trademarks, discoveries,
formulae, processes, manufacturing techniques, trade secrets, invention,
improvement, ideas or copyrightable works, including all rights to obtain,
register, perfect and enforce these proprietary interests.
The term "Confidential Information" means information of a
proprietary, secret or confidential nature pertaining to any aspects of the
business of the Company or its Affiliates or its customers or suppliers, where
of a technical nature or otherwise. The Employee recognizes and acknowledges
that the list of the Company's customers and prospects, as it may exist from
time to time,
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is a valuable, special and unique asset of the Company's business. As such,
the Employee will not, during or after the term of his employment, disclose
the list of the Company's customers and prospects or any part thereof to any
person, firm, corporation, association, or other entity for any reasons or
purpose whatsoever. In the event of a breach or threatened breach by the
Employee of this paragraph, the Company shall be entitled to an injunction
restraining the Employee from such disclosure.
8. The Employee agrees that, during the term of this employment, he
will not solicit or encourage any employee of the Company to either terminate
his employment with the Company or to accept employment with any other employer
with whom the Employee might become affiliated subsequent to his termination.
9. The Employee agrees that during his employment, he shall not be
engaged or involved in any business in any capacity, other than the business of
the Company and its subsidiaries, except with the express prior written consent
of the Company.
10. The Employee shall disclose to the Company any improvements,
discoveries, inventions, or secret processes made, discovered or developed by
the Employee, either solely or jointly with others, while the Employee works
for the Company, and which improvements, discoveries, inventions or secret
processes in any affect or relate to the business of the Company or its
subsidiaries. Any such improvements, discoveries, inventions or secret
processes shall be the sole and exclusive property of the Company.
The Employee further agrees to perform, during or after termination
of his employment, all acts deemed necessary or desirable by the company to
permit and assist it, at its expense, in obtaining and enforcing the full
benefits, enjoyment, rights and title throughout the world of any Inventions
assigned to the Company as set forth above. Such acts may include, but are not
limited to, execution of documents and assistance or cooperation in legal
proceedings. In order to achieve such ends, the Employee appoints the Company
as his attorney in fact with full power and authority to do and perform all
matters and things necessary to accomplish such actions. The Company may
appoint, remove at will or substitute any person as attorney in fact for the
Employee.
11. Notwithstanding the provisions of Section 2 of this Agreement,
the employment of the Employee may also be terminated (a) on the death of the
Employee; or (b) for cause (as defined below). Termination for cause under
this Section shall be effective as of the date of the Company gives notice to
the Employee in accordance with this Agreement. Termination for cause shall be
generally limited to the following acts by, or conditions with respect to, the
Employee, as shall be determined by the Board of Directors, acting in their
reasonable discretion:
a. chronic alcoholism;
b. drug addiction;
c. conviction for commission of a felony;
d. fraud or dishonesty for material personal gain at the
expense of Company or its Affiliates; or
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e. committing acts amounting to gross negligence of willful
misconduct to the detriment of the Company or its Affiliates.
In the case of events (a) or (b) above, the Company, as a severance
payment, shall continue to pay the Employee for a period of three (3) months
following such termination at his monthly salary then in effect.
12. The Employee shall be entitled to participate in all benefit
plans in effect from time to time at the Company (a) for which he qualifies or
(b) for which he could qualify in due course, at such time as he does so
qualify. The Company reserves the right to discontinue or to amend such plans
to conform to legal requirements or for other reasons, as determined by the
Company to be in the best interest of the business.
13. Upon termination of his employment, the Employee shall
immediately resign any directorships, offices or other positions which he may
hold in the Company or any of its Affiliates.
14. For a period of (a) three (3) years following the date the
Employee gave notice during the initial term of this Agreement in Accordance
with Section 2(b); (b) six (6) months following the date the Company gave
notice in Accordance with this Agreement Section 2(a)(i); (c) three (3) months
following the date the company gave notice in Accordance with this Agreement
with this Agreement Section 1l(a) and 1l(b) or (d); one (1) month following the
date the Company gave notice in Accordance with this Agreement Section 11(c),
11(d) or 11(e); employee shall not, without the express prior written consent
of the Company, directly or indirectly, anywhere in the United States, whether
for himself or for any other person or entity, and whether as a proprietor,
principal, shareholder (other than the holder of not more than five percent
(5%) of the stock of a corporation), lender, partner, agent director, officer,
employee, consultant, independent contractor, joint venturer or any other
capacity whatsoever, at any time during the period of time described above, (i)
enter into or engage in any business or other enterprise, or render, offer or
attempt to render or solicit the rendition of services to, any business,
individual or other enterprise, in direct competition with any business which
is being engaged in or which is contemplated to be engaged in by the Company or
its Affiliates at the date after termination, (ii) solicit for employment or
employ to or for the benefit of the Employee or any other person or entity, any
employee of the Company or its Affiliates, or (iii) urge, directly or
indirectly, any client or referrer of clients, customers, or accounts of the
Company or its Affiliates to discontinue, in whole or in part, business with
the Company or any Affiliate, as the case may be, or not to do business with
the Company or such Affiliate. The term "Affiliate" means any person or entity,
directly or indirectly, controlled by or under common control with the Company.
15. This Agreement sets forth the entire understanding between the
parties as to the subject matter of this Agreement and merges and supersedes
all prior (but not contemporaneous) agreements, commitments, representations
writing and discussions between them; and neither of the parties shall be bound
by any obligations, conditions, warranties or representations, with respect to
the subject matter of this Agreement, other than as expressly provided in this
Agreement or as duly set forth on or subsequent to the date hereof in writing
and signed by the proper and duly authorized representative of the party to be
bound hereby.
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16. All notices, approvals, consents, requests or demands required
or permitted to be given under this Agreement shall be in writing and shall be
deemed sufficiently given when deposited in the mail, registered or certified,
postage prepaid, and addressed to the party entitled to receive such notice at
the following address or other such addressed as the parties may subsequently
designate:
The Company/Employer: NYMA, Inc.
7501 Greenway Center Drive
Suite 1200
Greenbelt, MD 20770
with a copy to: FDC Technologies, Inc.
4800 Hampton Lane
Bethesda, MD 20814
The Employee: Peter C. Belford
8312 Turnberry Court
Potomac, MD 20854
If notice is given by any other method, it shall be deemed effective when the
written notice is actually received.
17. No party shall be deemed to have waived any right, power or
privilege under this Agreement or any provisions hereof unless such waiver
shall have been duly executed in writing and acknowledged by the party to be
charged with such waiver. The failure of any party at any time to insist upon
performance of any of the provisions of this Agreement shall in no way be
construed to be a waiver of such provisions, nor in any way effect the validity
of this Agreement or any part hereof. No waiver of any breach of this
Agreement shall be held to be a waiver of any subsequent breach.
18. This Agreement shall be governed by, and construed and enforced
in accordance with, the laws of the State of Maryland.
19. Each party hereto irrevocably and unconditionally agrees that
any suit, action or other legal proceeding arising out of this Agreement may be
brought only in the County of Montgomery, State of Maryland.
20. The Prevailing party in any action to interpret or enforce this
Agreement shall receive its costs and expenses (including, without limitation,
reasonable attorney's fees) from the losing party in such action.
21. This Agreement is binding on the Employee and on the Company and
its successors and assigns (whether by assignment, by operation of law or
otherwise).
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement
as of the day and year first written above.
/s/ Peter C. Belford
______________________________
Peter C. Belford
NYMA, INC.
By:____________________________
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EXHIBIT A
PETER C. BELFORD
DUTIES AND RESPONSIBILITIES
Whereas NYMA, Inc. (the "Company") shall operate initially as a subsidiary of
FDCT Corp., the Employee shall serve as President of this subsidiary and be
responsible and accountable for:
- Financial management of the Company, including achieving
annual objectives for revenue and profit;
- Complete and satisfactory performance of all contractual
obligations of the Company to its customers, teaming partners,
subcontractors, and suppliers; Growth of the Company by
winning new contracts, direct sales, and other necessary new
business activities;
- Effectively leading and managing the employees of the Company
so as to maintain high employee morale, minimize employee
turnover and vacant positions, and assure the availability of
the skills necessary for the success of Company's business;
- Working in a cooperative and supportive manner with other
parts of FDC Technologies, Inc. and its Affiliates so as to
enhance the overall profitability, growth, competitiveness,
planning, and image of the Company as well as FDC
Technologies, Inc. and its Affiliates;
- Effectively communicating the status, plans, issues, concerns,
requirements, risks, accomplishments, and shortcomings of the
Company to the senior management of the Company FDC
Technologies, Inc.
- Performing other duties as assigned by the senior management of
the Company and FDC Technologies, Inc.
Over time, the Employer may elect to restructure the Company and/or its
relationship to FDC Technologies, Inc. Such change may result in changes to the
duties and responsibilities of the Employee. Changes in the Employee's duties
and responsibilities will be communicated to the Employee in writing as a
revision to this EXHIBIT A.
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EXHIBIT 10.4
AGREEMENT OF LEASE
Between
COMMUNITY MOTOR PROPERTY
ASSOCIATES LIMITED PARTNERSHIP (Landlord)
and
FEDERAL DATA CORPORATION (Tenant)
4800 Hampden Lane
Bethesda, Maryland 20814
<PAGE>
AGREEMENT OF LEASE
4800 HAMPDEN LANE
BETHESDA, MARYLAND 20814
THIS AGREEMENT OF LEASE (hereinafter referred to as this "Lease"),
made this 5th day of December, 1984 by and between COMMUNITY MOTORS PROPERTY
ASSOCIATES LIMITED PARTNERSHIP, a Maryland limited partnership having its
principal office in Montgomery County, State of Maryland (the "Landlord"), and
FEDERAL DATA CORPORATION, a corporation organized and existing under the laws of
the District of Columbia, having an address at 4601 N. Park Avenue, Chevy Chase,
Maryland 20815 (the ("Tenant").
ARTICLE 1. PREMISES
SECTION 1.1. Landlord hereby leases to Tenant, and Tenant hereby
leases from Landlord, subject to the terms and conditions hereinafter set forth,
to each of which Landlord and Tenant hereby agree, all of that real property,
situated and lying in Montgomery County, Maryland which consists of the space
containing approximately 65,722 square feet of Rentable Area (hereinafter
defined), located on the second (2nd), third (3rd), tenth (10th), eleventh
(11th) and twelfth (12th) floors shown outlined in red on the plans attached
hereto as Exhibit A (the "Premises") and located in an office building to be
known as 4800 Hampden Lane, Bethesda, Maryland 20814 (the "Building"), that
Landlord shall construct on a tract of land (the "Land") situated in Montgomery
County, Maryland and described in Schedule I attached hereto and made a part
hereof (the Premises, the remainder of the Building and the Land being referred
to collectively as the "Property"), together with the right to use, in common
with others, the lobbies, entrances, stairs, elevators, off-street loading areas
and other common areas of the Building. For purposes of this Lease, the term
"Building" means the office tower in which the Premises will be located, as well
as the retail areas, concourses, lobbies, plazas, walkways, open spaces,
landscaped areas, common areas and garage located on, above, beneath or
immediately adjacent to the Building, and any truck accessways, loading docks,
or other facilities, if any, which serve the office tower, but excluding the
residential space in the Building and any areas and facilities exclusively
serving the residential space.
Section 1.2.
1.2.1. Prior to the expiration of thirty (30) days after the
Commencement Date (hereinafter defined), Landlord shall deliver to Tenant a
certificate from Landlord's architect for the Building (the "Building
Architect") certifying the rentable area ("Rentable Area"), as determined in
accordance with the Washington Board of Realtors standard method of measurement,
for (i) the Premises (the "Rentable Area of the Premises") and (ii) the Building
(the "Rentable Area of the Building"), excluding space below the ground floor
level. A similar certificate from the Building Architect shall be delivered to
Tenant within thirty (30) days after any increase or decrease in the size of the
Premises or
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the Building for any reason whatsoever. Tenant shall have the right to have an
architect ("Tenant's Architect") selected by Tenant verify the information
contained in the certificate submitted by the Building Architect hereunder by
measuring the Rentable Area of the Premises and/or the Rentable Area of the
Building. In the event there is a discrepancy between the information contained
in the certificate submitted by the Building Architect and the Rentable Area of
the Premises and/or the Rentable Area of the Building determined by Tenant's
Architect, and in the event that Landlord and Tenant do not mutually agree upon
the Rentable Area of the Premises and the Rentable Area of the Building, the
dispute shall be submitted to arbitration in accordance with the provisions of
Article 21 hereof.
1.2.2. If (a) the Rentable Area of the Building or the
Rentable Area of the Premises, as the case may be, is changed and Tenant pays
Rent (hereinafter defined) for any period prior to the final determination of
any such Rentable Area or (b) Tenant makes any payment of Rent prior to the
final determination of the initial Rentable Area of the Premises or the initial
Rentable Area of the Building and any such Rentable Area is subsequently
adjusted, the Rent shall be retroactively adjusted to reflect such Rentable Area
as of the date of such change. If the amount of Rent payable for such period
exceeds the amount theretofore paid by Tenant, Tenant shall promptly pay the
amount of such excess to Landlord. If the amount of Rent payable for such
period is less than the amount theretofore paid by Tenant, Landlord shall
promptly pay the amount of such overpayment to Tenant, Landlord shall promptly
pay the amount of such overpayment to Tenant, or credit the same to the next
payments of Rent due hereunder.
1.2.3. As may be reasonably required by either party, the
parties shall, from time to time, execute instruments confirming the Rentable
Area of the Premises and the Rentable Area of the Building.
ARTICLE 2. TERM
SECTION 2.1. The term of this Lease (the "Term") shall commence on a
date (the "Commencement Date") which is the earlier of (a) five (5) days after
the date on which the Premises are deemed ready for occupancy in accordance with
the terms of Section 2.2 hereof but in no event earlier than April 1, 1986; or
(b) the date of Tenant's occupancy of all of the Premises for the regular
conduct of its business operations. In the event that tenant takes occupancy of
a part but less than all of the Premises prior to the Commencement Date, Tenant
shall pay to Landlord as rent for each day during such period of partial
occupancy prior to the Commencement Date an amount equal to one three hundred
sixty-fifth (1/365th) of the Base Rent (defined in Section 4.1.1) multiplied by
a fraction whose numerator is the number of square feet of Rentable Area
occupied by Tenant and whose denominator is the total number of square feet of
Rentable Area of the Premises. Unless sooner terminated, the Term shall
terminate on the last day of the calendar month during which the tenth (10th)
anniversary of the Commencement Date occurs (the "Expiration Date"). For
purposes of this Lease, if the Commencement Date occurs on the first day of a
calendar month, the first Lease Year is the twelve (12)-month period commencing
on such day, and if the Commencement Date occurs on other than the first day of
a calendar month, the first Lease Year is the twelve (12)-month period
commencing on the first day of the first calendar month
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after the Commencement Date. Each subsequent Lease year shall begin on the
annual anniversary of the commencement of the first Lease Year.
SECTION 2.2.
2.2.1. The Premises shall be deemed ready for occupancy when
all of the following shall have occurred:
(a) there shall have been issued by the appropriate authorities
in Montgomery Country, Maryland such certificate or certificates as may be
required in order that the Premises may be lawfully occupied by Tenant;
(b) the Leasehold Improvements and Building Shell Work (as each
is defined in Exhibit B) shall have been Substantially Completed; provided, that
the Premises are accessible and fully usable and that the non-completion of any
work to be done does not adversely affect Tenant's use, occupancy and enjoyment
of the Premises for the normal conduct of Tenant's business operations.
Landlord shall diligently complete all such incomplete work as soon as
reasonably practicable;
(c) the Premises are free from debris and broom clean;
(d) all exterior scaffolding, debris chutes located on the
facades of the Building and construction machinery situated in public areas, the
exterior of the Building and the floors to be occupied by Tenant shall have been
removed, the Building's ground floor lobby, public areas on the ground floor
(including the Building's entrance areas ) and all floors to be occupied by
Tenant are substantially completed and presentable, with all finish items
substantially completed, and such floors shall be free of construction debris
and available for use by the public, and all loading docks and those portions of
the Building parking garage to be used by Tenant shall have been substantially
completed and be accessible and usable for loading and parking purposes;
(e) the HVAC, passenger and freight elevators and utility and
plumbing systems (including telephone trunk lines to the Premises) for the
Premises, the lobby and all common and public areas of floors to be occupied by
Tenant are Substantially Completed and operating in accordance with the Plans
and Specifications referred to in Section 6.1 that have been approved by Tenant,
subject, however, to such balancing as may be necessary for the HVAC systems,
and to Landlord's right to use one (1) elevator exclusively for construction
work in the Building when needed, so long as the number of elevators available
are adequate to serve Tenant's needs;
(f) all facilities and systems serving the Building and passing
through the Premises or any part thereof shall have been enclosed and no access
through the Premises which will interfere with Tenant's use thereof for the
purposes intended is required to complete the same, and the work remaining to be
done in the Building shall be of such nature as will not materially interfere
with Tenant's use and occupancy of the Premises for the normal conduct of
Tenant's business operations;
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(g) the permanent roof system of the Building shall have been
installed and sealed, and all windows in the Premises shall have been installed
and sealed;
(h) all walls exposed to elevator lobbies on all floors to be
occupied in whole or in part by Tenant and other public or common areas on such
floors shall have been Substantially Completed;
(i) all rooms located in the Building core on all floors to be
occupied in whole or in part by Tenant, including mechanical rooms, toilet
rooms, electrical closets, janitor closets, freight elevator anterooms, lobbies
and elevator cars, and stairways, shall have been Substantially Completed with
the Building Standard (as defined in Exhibit B) finishes, fixtures and
accessories corresponding to each particular core area;
(j) Landlord shall have delivered to Tenant the certificate of
the Building Architect certifying the matters set forth in subparagraphs (b),
(c), (d), (e), (f), (g), (h) and (i) above, except that the Building Architect
shall not be required to certify as to whether any incomplete work would
adversely affect Tenant's use, occupancy and enjoyment of the Premises, but only
as to what incomplete work exists;
(k) Landlord shall have given Tenant at least sixty (60) days
prior written notice of the date on which Landlord anticipates that the
Completion Date (hereinafter defined) will occur and Landlord shall provide
Tenant with access to the Premises in accordance with Section 6.2 for a
substantially continuous period of forty-five (45) days prior to the anticipated
Completion Date for purposes of performing Tenant's Finish Work (hereinafter
defined); provided, that (i) if the Completion Date does not occur as
anticipated, the Completion Date shall not occur before the date which is thirty
(30) days after Landlord's notice to Tenant notifying Tenant of the revised
Completion Date and (ii) in no event shall the Completion Date be earlier than
sixty (60) days after the date that Landlord sends the initial sixty (60) day
notice. The Completion Date shall be the date on which all of the conditions
set forth in paragraphs (a)-(j) of this subsection 2.2.1 are satisfied.
2.2.2. In the event the Building's landscaping has not been
completed prior to the Completion Date, Landlord shall complete landscaping as
soon a possible (taking into consideration planting seasons).
2.2.3. For purposes of this Section 2.2, "Substantially Completed"
means full completion, except for minor or insubstantial details of
construction, decoration, mechanical adjustment or installation.
2.2.4. In addition to the sixty (60)-day notice given by Landlord
to Tenant pursuant to the provisions of paragraph (k) of subsection 2.2.1,
Landlord shall give Tenant ninety (90) days prior written notice of the date on
which Landlord anticipates the Completion Date will occur, which date Landlord
represents and warrants shall be no earlier than fifteen (15) days before and no
later than fifteen (15) days after the date on which the Completion Date
actually occurs.
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SECTION 2.3. When the Completion Date has occurred, Landlord
shall, in accordance with the foregoing, fix the Commencement Date and shall
notify Tenant of the date so fixed. If Tenant shall dispute the fixing of the
Commencement Date by Landlord, Tenant shall so notify Landlord within thirty
(30) days after Landlord's notice. If the parties fail to agree upon the
Commencement Date within ten (10) days of Tenant's notice in accordance with the
previous sentence, either party may submit the dispute to arbitration in
accordance with the provisions of Article 21 hereof, but Tenant agrees not to
delay payment of Rent based upon the Commencement Date asserted by Tenant. When
the Commencement Date has been determined as herein provided, the parties shall
within fifteen (15) days thereafter, at either party's request, execute a
written instrument in the form of Exhibit C confirming the Commencement Date and
the Expiration Date. Any failure of the parties to execute such written
instrument shall not affect the validity of the Commencement Date as fixed and
determined as aforesaid.
ARTICLE 3. USE
SECTION 3.1. The Tenant shall throughout the Term occupy and use the
Premises only for purposes permitted by applicable zoning laws; provided,
however, that Tenant shall not use the Premises for the purpose of operating a
medical clinic, employment agency or school that will use any part of the
Premises for classroom purposes without obtaining Landlord's prior written
consent, which may be withheld in Landlord's sole discretion.
SECTION 3.2. The conduct of Tenant's business in the Premises
shall not violate any applicable law, ordinance or regulation existing on the
date hereof or enacted in the future.
SECTION 3.3. Except for the parking of automobiles in the ordinary
course of business, the Tenant shall not place or permit its agents or employees
to place any trash or other objects anywhere within the Building or the rest of
the Property (other than within the Premises) without first obtaining Landlord's
express written consent thereto.
ARTICLE 4. RENT
SECTION 4.1. As rent for the Premises (all of which is referred to
collectively as "Rent"), Tenant shall pay to Landlord all of the following:
4.1.1. An annual base rent ("Base Rent") of One Million Six Hundred
Forty-Three Thousand Fifty and 00/100 Dollars ($1,643,050.00) for each Lease
Year during the Term, payable in equal monthly installments of One Hundred
Thirty-Six Thousand Nine Hundred Twenty and 83/100 Dollars ($136,920.83) each,
subject to adjustment pursuant to Section 1.2, which amount shall be equal to
Twenty-Five Dollars ($25.00) multiplied by the Rentable Area of the Premises,
subject to the credit set forth in Section 4.3.4 hereof. If the Term commences
on a day other than the first (1st) day of a calendar month, for the first month
of the first Lease Year the monthly installment of Base Rent shall be a fraction
of the Base Rent, the numerator of which shall be the number of days of such
calendar month
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failing within the Term, and the denominator of which shall be three hundred
sixty-five (365); and
4.1.2. Additional rent ("Additional Rent") in the amount of any
payment to be made by Tenant to Landlord referred to as such in any provision of
this Lease which accrues while this Lease is in effect.
SECTION 4.2. Commencing on the first day of the second (2nd) Lease
Year and on the first day of each Lease Year thereafter, the Base Rent shall be
increased by the greater of:
(a) An amount equal to the lesser of:
(i) An amount equal to the product of the Base Rent multiplied
by a fraction, the denominator of which shall be the CPI-U (as hereinafter
defined) for the second month preceding the Commencement Date, and the numerator
of which shall be the CPI-U for the second month preceding such Lease Year and
then multiplying the product obtained by thirty percent (30%). The CPI-U shall
be defined as the Consumer Price Index for All Urban Consumers, All Items
Washington, D.C. SMSA Base, 1967 = 100, published by the Bureau of Labor
Statistics of the Department of Labor. In the event the CPI-U is replaced by a
successor index established by the Department of Labor, such successor index
shall be substituted and if the CPI-U ceases to exist with no such successor
index, then the parties shall agree upon a similar substitute. If the parties
cannot agree, then the matter shall be submitted to arbitration in accordance
with Article 21 hereof of determine adjustments in Base Rent; or
(ii) An amount equal to four percent (4%) multiplied by the Base
Rent payable by Tenant for the immediately preceding Lease Year;
or
(b) An amount equal to one and one-half percent (1-1/2%) multiplied
by the Base Rent payable by Tenant for the immediately preceding Lease Year.
SECTION 4.3.
4.3.1. As used herein, the term "Annual Operating Costs" shall mean
the actual costs to Landlord (net of discounts, credits, rebates or
reimbursements from insurance or payments from any party) of operating and
maintaining the Building during each calendar year of the Term computed on an
accrual basis. Annual Operating Costs shall be determined according to
generally accepted accounting principles which shall be consistently applied,
and shall include, by way of example rather than of limitation, (a) Real Estate
Taxes (defined in Section 4.4); provided, however, that if, by law, any
assessment of Real Estate Taxes may be divided and paid in installments, then,
for the purposes of this subsection 4.3.1, (i) such assessment shall be deemed
to have been so divided, (ii) such assessment shall be deemed payable in the
maximum number of installments permitted by law, and (iii) there shall be
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deemed included in Annual Operating Costs for each calendar year the
installment(s) of such assessment becoming payable during such calendar year,
together with interest payable during such calendar year on such installment(s)
and on all installments thereafter becoming due as provided by law, all as if
such assessment had been so divided; (b) charges or fees for, and taxes on, the
furnishing of water, sewer service, gas, fuel, or other utility services to the
Building, provided, however, that with respect to electricity, only the cost
incurred by Landlord for providing electricity to common or public areas of the
Building and in connection with the HVAC system of the Building shall be
included in Annual Operating Costs; (c) costs of elevator service, and charges
or fees for the maintenance and repair of common areas and mechanical and
electrical systems of the Building and structural members of the Building such
as exterior walls, roof, and load-bearing walls and for grounds maintenance,
janitorial service and trash removal; (d) charges or fees for any necessary
government permits, except such permits as are required in connection with the
construction of the Building or any capital improvements thereto; (e) a
management fee in an amount not to exceed the prevailing market rate charged in
arms' length transactions; (f) premiums for hazard, liability, rent insurance,
workmens' compensation or similar insurance upon the Building or portions
thereof which Landlord is required to carry under this Lease or under any
applicable mortgage or deed of trust; (g) costs arising under service contracts
with independent contractors for services provided to the Building and
benefitting all tenants other than those tenants providing their own services;
(h) accountants' fees and expenses incurred for the computation of the Annual
Operating Costs and preparation of the Operating Costs Statement (hereinafter
defined); and (i) legal fees incurred in order to reduce Annual Operating Costs
or to review contracts for the provision of services or items included in Annual
Operating Costs to the extent that such fees are not reimbursed to Landlord
pursuant to subsection 4.4.2; and (j) minor equipment not exceeding One Thousand
Dollars ($1,000) each calendar year and supplies.
4.3.2. Notwithstanding anything in subsection 4.3.1 to the contrary,
Annual Operating Costs shall not include (a) the costs of repairs, alterations,
capital improvements and other items which under generally accepted accounting
principles are properly classified as capital expenditures (except to the extent
otherwise provided in Section 4.3.10); (b) painting or decorating other than in
common or public areas of the Building; (c) any tenant work performed or
alteration of space leased to Tenant or other tenants or occupants of the
Building, whether such work or alteration is performed for the initial occupancy
by such tenant or occupant or thereafter; (d) any cash or other consideration
paid by Landlord on account of, with respect to or in lieu of the tenant work or
alterations described in clause (c) above; (e) repairs, replacements, or
improvements made prior to the Commencement Date; (f) repairs arising from
defects in the initial construction of the Building within the Warranty Period
(hereinafter defined); (g) repairs necessitated by the negligence of Landlord or
required to cure violations of laws in effect on the Commencement Date; (h)
costs of enforcement of leases; (i) interest and amortization of indebtedness or
any costs of financing or refinancing, depreciation or ground rent; (j)
management fees in excess of the amount permitted under subsection 4.3.1(e); (k)
compensation paid to general partners, officers or executives of Landlord (other
than the management fee referred to in subsection 4.3.1(e)); (1) leasing
commissions and advertising (other than advertising for building employees) and
promotional expenses; (m) legal fees, accounting fees (other than legal and
accounting fees
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referred to in subsections 4.3.1(h) and 4.3.1(i)); (n) taxes, other than as
described in subsection 4.3.1(a); (o) the cost of electricity provided to any
areas of the Building occupied or to be occupied by tenants (that is all
portions of the Building other than common areas); (p) the cost of performing
additional services (icluding operation of the Building beyond the days and
hours specified in Section 8.1.1 and beyond start-up time related thereto) or
installations to or for tenants to the extent that such service exceeds that
provided by Landlord to Tenant without charge hereunder; (q) "takeover expenses"
(I.E., expenses incurred by Landlord with respect to space located in another
building of any kind or nature in connection with the leasing of space in the
Building); (r) any amounts payable by Landlord by way of indemnity, or for
damages or which constitute a fine, interest or penalty; (s) any improvement
installed or work performed or any other cost or expense incurred by Landlord in
order to comply with the requirements for obtaining any permanent or temporary
certificate of occupancy for the Building or any space therein or the renewal of
any temporary certificate of occupancy; (t) any cost representing an amount paid
for services or materials to a person, firm or entity related to Landlord or any
general partner of Landlord to the extent such amount exceeds the amount that
would be paid for such services or materials at the then-existing market rates
to an unrelated person, firm or corporation; and (u) costs attributable to the
ownership, operation or maintenance of the Building parking garage and any
residential space, other than real estate taxes related to the parking garage.
4.3.3. Landlord shall, at Landlord's cost and expense, install and
maintain check meters (not to exceed two for all space leased by Tenant,
including Expansion Space) to measure Tenant's electrical consumption in the
Premises. Tenant shall pay to Landlord monthly, as Additional Rent, the product
("Tenant's Electrical Consumption Costs") of Tenant's electrical consumption (as
measured by such meters) for the preceding month of the Term multiplied by the
Rate (hereinafter defined). Within a reasonable time after the end of each
calendar month during the Term, Landlord shall deliver to Tenant a statement
(the "Electrical Consumption Costs Statement") setting forth Tenant's Electrical
Consumption Costs for such month, which Electrical Consumption Costs Statement
shall be accompanied by copies of the bills for the electrical consumption in
the Premises received by Landlord from the public utility providing electricity
to the Building. Within fifteen (15) days after Tenant's receipt of the
Electrical Consumption Costs Statement, Tenant shall pay Tenant's Electrical
Consumption Costs. For purposes hereof, "Rate" means the actual cost incurred
by Landlord for electrical service to the Building in any period per kilowatt
hour (or other measuring method adopted by the applicable public utility
company).
4.3.4. Included in the Base Rent is (i) an amount equal to the
product obtained by multiplying Four Dollar and Ten Cents ($4.10) (the
"Operating Costs Factor") by the Rentable Area of the Premises, representing
Landlord's estimate of the cost to Landlord for the first Lease Year for
providing to or for the benefit of the Premises all of the services or other
items whose costs are included in Annual Operating Costs, and (ii) an amount
equal to the product obtained by multiplying One Dollar and Sixty Five Cents
($1.65) (the "Electrical Consumption Factor") by the Rentable Area of the
Premises, representing Landlord's estimate of the cost of providing electricity
to the Premises for the first Lease Year (which cost is to be paid by Tenant
pursuant to the provisions of subsection 4.3.3 hereof). Since Landlord shall
not be paying the Electrical Consumption Factor by reason of the provisions
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of section 4.3.3, Tenant shall be entitled to a credit against each monthly
installment of Base Rent throughout the Term in an amount equal to the quotient
obtained by dividing by twelve (12) the product of the Electrical Consumption
Factor multiplied by the Rentable Area of the Premises.
4.3.5. After the end of each calendar year during the Term,
Landlord shall compute the total of the Annual Operating Costs incurred during
such calendar year, and shall allocate such costs to the Rentable Area of the
Building by dividing such Annual Operating Costs by the Rentable Area of the
Building, thereby deriving the cost of such categories of services and items per
square foot of such Rentable Area; provided, that anything contained in the
foregoing provisions of this Section 4.3 to the contrary notwithstanding, if
during all or part of any calendar year of the Term, Landlord shall not furnish
any particular item of work or service (which would constitute an item of Annual
Operating Costs hereunder) to one hundred percent (100%) of the Rentable Area of
the Building because (i) less than all of the Building is occupied, or (ii) any
tenant is itself obtaining and providing such item of work or service, then an
adjustment shall be made in computing the Annual Operating Costs for such
calendar year so that the Annual Operating Costs shall be increased for that
calendar year to the amount that would have been reasonably incurred had
Landlord provided such item of work or service to one hundred percent (100%) of
the Rentable Area of the Building for the entire calendar year. Within the
first ninety (90) days after the end of each calendar year during the Term
(beginning with the first calendar year following the calendar year in which the
Commencement Date occurs), or as soon thereafter as reasonably practical,
Landlord shall furnish to Tenant a detailed statement (the "Operating Costs
Statement") of the actual Annual Operating Costs for the previous calendar year
certified to be true and accurate by Landlord to its knowledge and belief and
accompanied by a statement from an independence accounting firm that such firm
has reviewed such Operating Costs Statement and is not aware of any inaccuracies
therein.
4.3.6. Tenant shall, within thirty (30) days after delivery of the
Operating Costs Statement, pay to Landlord as Additional Rent the amount
("Tenant's Operating Costs Amount") obtained by multiplying (a) the Rentable
Area of the Premises by (b) the amount by which (i) the Annual Operating Costs
per square foot of the Rentable Area of the Premises for such calendar year (as
derived under the provisions of subsection 4.3.5) exceeds (ii) the Operating
Costs Factor.
4.3.7. If only part of any calendar year falls within the term,
Tenant's Operating Costs Amount shall be prorated in proportion to the portion
of such calendar year falling within the Term (but the expiration of the Term
before the end of such calendar year shall not impair the Tenant's obligation
hereunder to pay such prorated portion of Tenant's Operating Costs Amount with
respect to that portion of such year falling within the Term, which shall be
paid on demand, as aforesaid). If the Rentable Area of the Premises or the
Rentable Area of the Building changes, Tenant's proportionate share of the
Annual Operating Costs shall be adjusted as of the effective date of any such
change and Tenant's obligation for payment of Tenant's Operating Costs Amount
for the calendar year in which such change occurs shall be based on the daily
weighted average of Tenant's aforesaid proportionate share during such calendar
year.
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4.3.8. Landlord may, at its discretion, furnish from time to time
during the Term, but in any event no more than once during a calendar year, a
reasonable estimate ("Tenant's Estimated Operating Costs Amount") of Tenants's
Operating Costs Amount with respect to any calendar year after the first (1st)
full calendar year of the Term; provided, however, that in no event shall the
estimate furnished by Landlord exceed one hundred ten percent (110%) of Tenant's
Operating Costs Amount for the immediately preceding calendar year. Landlord
may require Tenant to pay to Landlord with respect to each calendar month during
such year, after the month in which Landlord furnishes Tenant's Estimated
Operating Costs Amount, one-twelfth (1/12th) of such Tenant's Estimated
Operating Cost Amount, at the time and in the manner that Tenant is required
hereunder to pay the monthly installment of Base Rent for such month, and Tenant
shall also pay to Landlord, within fifteenth (15) days after receipt of
Landlord's estimate, any deficiency between the monthly payments of Tenant's
Operating Costs Amount for the current calendar year previously paid by Tenant
and the amounts payable by Tenant based upon such estimate. If Tenant's
Operating Costs Amount as determined in accordance with the provisions of
subsection 4.3.6 for any calendar year is less than the aggregate monthly
payments made by Tenant hereunder during such calendar year based upon Tenant's
Estimated Operating Costs Amount for such calendar year, Landlord shall refund
promptly any excess to Tenant after delivery of the Operating Costs Statement,
together with interest on such excess payment as if such excess accrued in equal
installments each month during such calendar year at a rate of two percent (2%)
above the prime rate charged by Citibank, New York City, with such interest
computed from the respective dates of payment by Tenant of the monthly payments
of Tenant's Estimated Operating Costs Amount for such calendar year to the date
on which such interest is paid by Landlord to Tenant.
4.3.9. Within one year after delivery of an Operating Costs
Statement, Tenant shall notify Landlord if it intends to examine Landlord's
books and records with respect to such Operating Costs Statement. If Tenant so
notifies Landlord then Tenant and its representatives shall have the right, at
Tenant's expense, during normal business hours, to examine Landlord's books and
records relating to the Building for the three (3) most recent calendar years
and to make copies thereof. If as a result of such examination, Tenant disputes
such Operating Costs Statement, Tenant shall notify Landlord that it disputes
such Operating Costs Statement setting forth the reasons therefor (a "Notice of
Dispute"). If Landlord and Tenant do not agree on the proper amount for
Tenant's Operating Costs Amount within thirty (30) days after Tenant's Notice of
Dispute to Landlord, either party may refer the dispute to arbitration in
accordance with the provisions of Article 21 hereof. If Landlord shall have
overstated Tenant's Operating Costs Amount for any calendar year, Landlord shall
promptly refund such excess to Tenant, together with interest thereon at a rate
of two percent (2%) above the prime rate charged by Citibank, New York City,
computed from the date such Tenant Operating Costs Amount excess was paid by
Tenant to the date of refund of such excess to Tenant. If Tenant's Operating
Costs Amount shall have been overstated by more than three percent (3%),
Landlord shall reimburse Tenant for the cost of such examination.
4.3.10. In the event that after the expiration of one year after the
Commencement Date Landlord installs any energy saving capital improvement (the
"Energy
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Saving Capital Improvement") that is designed to reduce Operating Costs, there
shall be included in Operating Costs for each calendar year after the
installation of such Energy Saving Capital Improvement an amount equal to the
lesser of (a) the annual amortized cost of such Energy Saving Capital
Improvement amortized over the useful life of such Energy Saving Capital
Improvement or (b) the annual reduction in Operating Costs resulting from the
installation of such Energy Saving Capital Improvement.
4.3.11. Notwithstanding any other provision of this Lease, the Base
Rent payable for the first four (4) full months of the term of this Lease is
hereby abated and payment thereof is waived by Landlord.
SECTION 4.4.
4.4.1. If the Real Estate Taxes (hereinafter defined) for any tax
year increase by more than seven and one-half percent (7-1/2%) above the Real
Estate Taxes payable during the immediately preceding tax year, Landlord shall,
upon timely written request from Tenant, within the time prescribed by law for
such purpose, take and diligently pursue any such action appropriate to contest
the amount of Real Estate Taxes. "Real Estate Taxes" for any tax year shall
mean all taxes and assessments, general and special, ordinary and extraordinary,
foreseen or unforeseen, including sanitary commission charges, including front
foot benefit charges, and assessments for public improvements or betterments,
assessed, levied, or imposed and due and payable during such tax year, with
respect to the Building and the Land. Landlord shall send promptly to Tenant
copies of all real estate tax assessments and real estate tax bills received by
Landlord during the term of this Lease.
4.4.2. In the event that at any time the Building and the Land are
not assessed separately for real estate tax purposes from any other real
property (the "Additional Real Property"), then Landlord shall pay (or cause to
be paid ) the real estate taxes and assessments attributable to the Additional
Real Property (which shall not be included in Operating Costs ) and for purposes
of this Lease, Real Estate Taxes shall include only such portion of such real
estate taxes and assessments that are attributable to the Land and Building.
For purposes hereof, the amount of any such real estate taxes and assessments
attributable to the Additional Real Property shall be based upon the allocation
thereof made by the applicable taxing authority. In the event that any real
estate taxes or assessments are assessed upon the Additional Real Property and
the Land and Building as an entirety without any allocation thereof between the
Additional Real Property, on the one hand, and the Land and Building, on the
other hand, such real estate taxes and assessments shall be allocated between
the Additional Real Property and the Land and Building in proportion to their
respective fair market values as of the valuation dates of the assessments.
4.4.3. Notwithstanding anything in Section 4.3 to the contrary, if
any Real Estate Taxes paid by Landlord and previously included in Annual
Operating Costs are refunded, Landlord shall promptly pay to Tenant Tenant's
proportionate share of such refund (less the reasonable expenses incurred by
Landlord in obtaining such refund to the extent not otherwise included in Annual
Operating Costs) based upon the proportion that the Real Estate Taxes paid by
Tenant as part of Tenant's Operating Costs Amount for the period to which
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such refund relates bears to the total amount of Real Estate Taxes included in
Annual Operating Costs during the calendar year to which such refund relates.
Section 4.5. If during the Term any governmental authority shall
impose a sales, sue or other excise tax on the rentals payable by Tenant
hereunder, Tenant shall pay such tax (or reimburse Landlord for any such tax
paid by Landlord) as Additional Rent within thirty (30) days after written
request therefor by Landlord to Tenant.
SECTION 4.6. Each installment of Rent shall be paid in advance
without deduction, demand, or set off except as otherwise provided in this
Lease, on the first (1st) day of each calendar month during the Term; provided,
that if the Commencement Date is not the first day of a calendar month, the
installment of Rent payable with respect to the period beginning on the
Commencement Date and ending on the last day of the calendar month in which the
Commencement Date occurs shall be appropriately prorated on a daily basis and
shall be payable on the Commencement Date.
SECTION 4.7. All Rent and other charges due from Tenant to Landlord
hereunder shall be paid to Landlord at Suite 1135, 5530 Wisconsin Avenue, Chevy
Chase, Maryland, 20815, or to any other party or at any other address which
Landlord may specify to Tenant by written notice.
ARTICLE 5. ASSIGNMENT AND SUBLETTING
SECTION 5.1. Tenant shall, at all times during the Term hereof, have
the unrestricted right to assign or transfer this Lease or sublet any portion or
all of the Premises, provided, however, that (a) no more than fifty percent
(50%) of the Rentable Area of the Premises may be sublet or the subject of any
assignment or transfer during the first three (3) years of the Term, and (b) no
such action shall in any way relieve or release Tenant from liability for the
timely performance of all of Tenant's obligations hereunder, and (c) Tenant
shall not assign or transfer this Lease or sublet all or any portion of the
Premises to any governmental agency, medical clinic, employment agency or school
that will use any part of the Premises for classroom purposes without obtaining
Landlord's prior written consent, which may be withheld in Landlord's sole
discretion.
SECTION 5.2. Anything contained in the foregoing provisions of this
Section to the contrary notwithstanding, neither Tenant nor any other person
having an interest in the possession, use, occupancy or utilization of the
Premises or any other portion of the Property shall enter into any sublease,
license, concession or other agreement for the use, occupancy or utilization of
space in the Premises or any other portion of the Property which provides for
any rental or other payment for such use, occupancy or utilization based in
whole or in part upon the net income or profits derived by any person from the
space in the Premises or other portion of the Property so subleased, used,
occupied or utilized (other than any amount based on a fixed percentage or
percentages of receipts or sales).
SECTION 5.3. In the event that any assignment or sublease is executed
by Tenant, Tenant shall deliver a copy thereof to Landlord. No such assignment
or sublease
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shall contain any provision that would result in Tenant being in noncompliance
with any of the provisions of this Lease.
ARTICLE 6. CONSTRUCTION OF BUILDING AND PREMISES
SECTION 6.1. Landlord shall continuously and diligently prosecute to
completion in a good and workmanlike manner in accordance with all laws, orders,
ordinances, and regulations of federal, state, county, municipal and other
authorities (collectively, "Legal Requirements") having jurisdiction over the
Premises the following: (a) the Leasehold Improvements to the Premises required
by Exhibit B; (b) the work described in Section 2.2; and (c) the Building, in
accordance with the plans and specifications described in Exhibit D attached
hereto and other plans and specifications subsequently submitted to and approved
by Tenant (the "Plans and Specifications").
SECTION 6.2. Landlord shall permit Tenant and its contractors,
mechanics and workmen to enter the Premises, as provided in Section 2.2.1(k),
prior to the Commencement Date in order that Tenant may perform any work,
alterations or installations which are not being performed by Landlord hereunder
("Tenant's Finish Work"), notwithstanding that Landlord's contractors or
subcontractors are working in the Premises. The scheduling and coordination of
Tenant's contractors and their workmen and mechanics will be subject to
regulation by Landlord or Landlord's Contractor (as defined in Exhibit B) to
avoid interferences with labor employed by Landlord, Landlord's Contractor or
their mechanics or subcontractors and their workmen or mechanics. The foregoing
license to enter prior to the Commencement Date, however, is conditioned upon
Tenant's workmen and mechanics working in harmony and not interfering with the
labor employed by Landlord, Landlord's mechanics or contractors or by any other
tenant or its contractors, and providing to Landlord evidence of comprehensive
general liability insurance in amounts required by Section 12.2 naming Landlord
as an additional insured and worker's compensation insurance. Any such entry
before the Commencement Date shall be subject to all terms of this Lease, except
the covenant to pay Rent; provided, that no such early entry shall be deemed to
constitute occupancy by Tenant or change the Commencement Date or the Expiration
Date, and Tenant shall indemnify and hold harmless Landlord from any damage to
the Property or any persons caused by Tenant or Tenant's contractors during such
period of early entry in the event and to the extent any such damage is not
covered by and insurance carried by Landlord.
SECTION 6.3. The terms of Exhibit B hereto shall govern the
construction and installation of all Leasehold Improvements.
SECTION 6.4. In the event that (i) Landlord fails to apply for an
excavation permit by February 1, 1985 (as evidenced by a copy of such
application delivered to Tenant on or before such date); (ii) Landlord fails to
commence excavation and sheeting and shoring (collectively, "Groundbreaking") by
April 1, 1985; (iii) Landlord fails to have completed construction work by July
1, 1985 having a direct construction cost of at least $600,000; (iv) "topping
out" of the Building does not occur by April 1, 1986; or (v) the Completion Date
does not occur by August 1, 1986 (the "Outside Completion Date"), Tenant may
elect to terminate this Lease by sending Landlord written notice of termination
prior to the expiration
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of thirty (30) days after the occurrence of the applicable date, and if Tenant
fails to give such termination notice within such thirty (30) day period, this
Lease shall continue in full force and effect and Tenant shall be entitled to
exercise its termination rights (if any) under this Section 6.4 in the event of
any subsequent failure of Landlord to comply with the schedule set forth in this
Section 6.4. Notwithstanding the foregoing, in the event that the Completion
Date has not occurred by August 1, 1986 but on or before August 1, 1986 the
Building shall have been substantially completed except for the Leasehold
Improvements and other tenant work and Landlord shall have delivered to Tenant
the sixty (60) day notice referred to in Section 2.2.1(k), the Outside
Completion Date shall be extended to September 1, 1986. In the event this Lease
is terminated as herein set forth, neither party shall be liable to the other
for the performance of any obligations hereunder, nor shall either party be
liable to the other for any losses or damage incurred or sustained by the other
as a result of such failure; provided, however that Landlord shall reimburse
Tenant for the expenses incurred by Tenant for space planning work for the
Premises and expenses for Leasehold Improvement Work performed by Landlord's
Contractor or for or i connection with termination expenses in respect of
cancellation of orders for any of such items or services for Leasehold
Improvement Work performed by Landlord's Contractor aggregating Ten Thousand
Dollars ($10,000) and, in addition, Landlord shall pay Tenant as fixed, agreed
and liquidated damages, the sum of Fifty Thousand Dollars ($50,000) in the event
that Tenant terminates this Lease pursuant to clause (i), (ii) or (iii) of this
Section 6.4, and the sum of One Hundred Thousand Dollars ($100,000) if Tenant
terminates this Lease pursuant to clause (iv) or (v) of this Section 6.4,
payable within thirty (30) days after the date of termination. Tenant's rights
under this Section 6.4 shall be in addition to and not in limitation of any
rights granted Tenant under Articles 23 and 25 hereof.
ARTICLE 7. FIRE AND OTHER CASUALTY
SECTION 7.1.
7.1.1. If the Premises and/or the Building are damaged by fire or any
other casualty during the Term, Landlord shall restore the Premises and/or the
Building with reasonable promptness (taking into account the time required by
Landlord to effect a settlement with, and to procure any insurance proceeds
from, any insurer against such casualty and any delays caused by acts of God,
strikes, and similar causes beyond Landlord's reasonable control), to
substantially their condition immediately before such casualty, including any
work required pursuant to the provisions to Section 2.2 hereof, and may
temporarily enter and possess any or all of the Premises for such purpose
(provided, that Landlord shall not be obligated to repair, restore or replace
any fixture, improvement, alteration, furniture or other property owned,
installed or made by Tenant). Landlord shall diligently commence and
continuously prosecute such restoration to completion, provided, however, that
if such restoration is not accomplished within one hundred eighty (180) days
from the date of such casualty, plus an additional period of time, not to exceed
sixty (60) days, for any delays caused by acts of God, strikes and similar
causes beyond Landlord's control, Tenant may terminate this Lease by giving
written notice thereof to Landlord prior to the expiration of two hundred
seventy (270) days after the date of such casualty.
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7.1.2. In the event that any or all of the Premises are rendered
unsuitable for occupancy by Tenant on account of any casualty, the Base Rent and
any Additional Rent payable under the provisions of Article 4 shall be abated in
proportion to the number of square feet of the Premises rendered unsuitable for
unsuitable for occupancy by Tenant by such casualty, unless, because of any such
damage, the undamaged portion of the Premises is made unsuitable for the conduct
of the business operations then conducted on the Premises and Tenant ceases
conducting its business operations therein, in which event the Base Rent and any
such Additional Rent shall be abated entirely during such period of
unsuitability.
SECTION 7.2. Anything contained in the foregoing provisions of this
Article to the contrary notwithstanding, if during the Term the Building and/or
the Premises are so damaged by fire or any other casualty that the Premises is
rendered unsuitable for the conduct of the business operations then conducted on
the Premises and if the Building and/or the Premises cannot be restored as
required hereunder within one hundred eighty (180) days, either party may elect
to terminate this Lease as of the date of occurrence of such damage, by giving
written notice thereof to the other party hereto within sixty (60) days after
the date of such casualty; provided, however, that Landlord may exercise such
option to terminate this Lease only if Landlord decides to demolish the Building
and Landlord terminates all leases in the Building. In such event, (a) Tenant
shall pay to Landlord the Base Rent and any Additional Rent (apportioned, where
applicable) to the time of such termination, and (b) Landlord shall pay to
Tenant any and all prepaid Rent for periods beyond such termination.
ARTICLE 8. MAINTENANCE AND SERVICES
SECTION 8.1.
8.1.1. Landlord shall furnish the Premises with (a) electricity seven
(7) days per week, twenty four (24) hours per day, (b) heating and air
conditioning for the comfortable use and occupancy of the Premises between 7:00
o'clock A.M. and 7:00 o'clock P.M., Monday through Friday, and 8:00 o'clock A.M.
and 1:00 o'clock P.M. on Saturday [except for the legal holidays ("Holidays")
set forth in Exhibit E] of each week during the Term, (c) janitorial service in
accordance with Exhibit F attached hereto, (d) trash removal from the Premises,
(e) passenger elevator service in common with other tenants for access to and
from the Premises (consisting of the number of elevators shown on the Plans and
Specifications); provided, however, that Landlord may reasonably limit the
number of elevators to be operated at night after normal business hours on
Saturdays, Sundays and Holidays, (f) potable water at those points of supply
provided for normal use by tenants in the Building, (g) replacement, as
necessary, of all lamps and ballasts in Building Standard light fixtures, and
(h) electric lighting for common and public areas and special service areas of
the Building, all at Landlord's expense. If Tenant requires air conditioning or
heating outside the hours and days specified above, Landlord shall furnish it
upon prior oral or written notice from Tenant given prior to noon the day such
additional services are requested if such day is not a Saturday, Sunday or
Holiday (or prior to noon of the first weekday preceding such Saturday, Sunday
or Holiday) (provided, however, that Landlord shall use its best efforts to
furnish heating or air conditioning if Tenant requests such service after such
time), and Tenant will pay for such services an amount equal to Landlord's
actual cost of
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providing such services, multiplied by the quotient of (i) the Rentable Area of
the Premises to which such services are supplied, divided by (ii) the Rentable
Area to which such services are supplied (including the Premises) of all tenants
requesting such srvices during the time for which Tenant requests such services.
8.1.2. Prior to the Commencement Date, risers, feeders and all
other necessary equipment and facilities will be installed in the Building by
Landlord to furnish electrical services in accordance with the Plans and
Specifications. At all times Tenant agrees that its use of electric current
will never exceed the level which Landlord reasonably determines (and advises
Tenant) to be the capacity of existing feeders to the Building or the risers or
wiring installations. Landlord warrants that said capacity shall not be less
than that set forth in the Plans and Specifications. Any riser or risers or
wiring to meet Tenant's excess electrical requirements will, upon Tenant's
written request, be installed by Landlord at Tenant's sole cost (if the same
will not cause permanent damage or injury to the Building or to the Premises or
cause or create a dangerous or hazardous condition or prevent Landlord from
providing adequate service to other tenants of the Building).
8.1.3 Should any malfunction of the Building improvements or
facilities or any interruption in any of the foregoing services occur, Landlord
shall not have any liability to Tenant by reason of any such malfunctioning or
interruption in services, but Landlord shall promptly and with due diligence
repair such malfunction and/or effect the restoration of such services and shall
give Tenant reasonable notice, where practicable, of the commencement or
stoppage of any of Landlord's services. If there is an interruption,
curtailment or suspension of Landlord's services or a malfunction of Building
improvements or facilities and any such services shall be discontinued for a
period longer than twenty (20) consecutive days, the Rent payable hereunder for
any portion of the Premises not receiving such service shall be abated until the
date on which such service is resumed.
SECTION 8.2.
8.2.1 Except for any work Landlord is obligated to perform under
this Lease, Tenant shall maintain the non-structural parts of the interior of
the Premises in good repair and condition, except for damage by causes
reasonably beyond Tenant's control (other than to the extent such damage is
covered by Tenant's insurance) and ordinary wear and tear. Tenant shall
maintain the areas of the Premises that are visible from the common areas or the
exterior of the Building in presentable condition.
8.2.2. Tenant shall have the right to make any alteration, addition
or improvement (collectively referred to as "Alterations") in or to the Premises
which Tenant deems appropriate, provided, however, that Landlord's prior written
consent shall be required for any such Alterations which will affect the
structure of the Building or the exterior appearance of the Building or which
will adversely affect the functioning of its electrical or HVAC systems. Any
Alterations made or installed by Tenant hereunder shall be made at Tenant's sole
expense (and Tenant shall hold Landlord harmless from any cost incurred on
account thereof). Tenant shall send to Landlord, prior to commencing any
Alterations, copies of all plans and specifications for any Alterations whether
or not
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Landlord's approval therefor is required hereunder. In the event that Tenant
requests Landlord's approval of any Alterations and Landlord fails to disapprove
the proposed Alterations and advise Tenant of Landlord's reasons for such
disapproval within thirty (30) days after Landlord receives the plans and
specifications for such Alterations, such Alterations shall be deemed approved
by Landlord.
SECTION 8.3.
8.3.1. Landlord shall operate the Building as a first-class office
building in the metropolitan Washington, D.C. area. Landlord at its cost and
expense, shall keep and maintain the Building, and its fixtures, appurtenances,
systems and facilities (including the Building parking garage), and the
sidewalks, plazas and landscaped areas located on the Property in good working
order, condition and repair and shall, subject to Article 7, make all repairs,
structural and otherwise, interior and exterior, ordinary or extraordinary, as
and when needed in or about the Property except those repairs for which Tenant
is responsible pursuant to the provisions of subsection 8.2.1 hereof.
8.3.2. Landlord, at its cost and expense, shall:
(i) keep the sidewalks, plazas and landscaped areas adjoining
the Building and any other horizontal structural surfaces adjoining or forming
any part of the Property (other than horizontal surfaces above the ground floor)
free of accumulation of snow and ice, dirt, refuse, rubbish and unlawful
obstructions;
(ii) keep the lobbies and the common and public areas of the
Building clean and presentable;
(iii) care for and maintain the shrubbery, planting and
landscaping, if any, on the plaza or plazas adjacent to the Building or other
public areas of the Property;
(iv) provide a Building security system comparable to other
first-class office buildings in the metropolitan Washington, D.C. area, provided
that upon commencement of the Term Landlord shall provide a card or key access
Building entry Kastle security system or its equivalent; and
(v) provide Tenant, its employees and invitees prompt access (in
a manner befitting a first-class office building in the metropolitan Washington,
D.C. area) into the Building (through the lobby), the Premises and the Building
parking garage 24 hours each day, 7 days per week. Notwithstanding the
foregoing, invitees shall not have access to the parking garage during hours
when valet parking is not available except through the use of garage access
cards or keys made available by Tenant.
8.3.3. Landlord, at its cost and expense,shall repair or replace
all materials, workmanship, fixtures or equipment incorporated by Landlord in
the Premises (whether as Leasehold Improvements or otherwise) which shall prove
to be defective during a period of twelve (12) months after the Commencement
Date (the "Warranty Period"). Landlord shall
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assign to Tenant all warranties (if assignable) from subcontractors and material
suppliers for such materials, workmanship, fixtures or equipment in effect after
the expiration of the Warranty Period; provided, however, that if any such
warranties are not assignable, Landlord shall, at Tenant's request, use its best
efforts to enforce for the benefit of Tenant, at Tenant's expense, such
non-assignable warranties. In performing any warranty work pursuant to Section
8.3.3, Landlord and its contractors and subcontractors shall perform such work
in such manner and at such times as will cause as little inconvenience and
disruption to Tenant as is practicable under the circumstances, and in the event
that Tenant cannot reasonably occupy any portion of the Premises during the
period of such warranty work and Tenant's personnel cannot be temporarily
relocated from such non-occupiable portions to other portions of the Premises,
there shall be an abatement of the Rent on a proportionate basis during any such
period that Tenant is deprived of reasonable occupancy of any portion of the
Premises. Tenant shall notify Landlord within ten (10) days after space becomes
non-occupiable as aforesaid that Tenant intends to abate the Rent by reason
thereof, and if Tenant fails to notify Landlord within such ten (10) day period,
such claim for abatement of Rent shall be waived.
ARTICLE 9. DEFAULTS BY TENANT
SECTION 9.1. As used in the provisions of this Lease, each of the
following events shall constitute, and is hereinafter referred to as, as "Event
of Default":
9.1.1. If Tenant fails to pay the Rent or any other sum which Tenant
is obligated to pay by any provision of this Lease, when and as it is due and
payable hereunder and without demand therefor; or
9.1.2. If Tenant violates any of the terms, conditions or covenants
set forth in the provisions of this Lease; or
9.1.3. If in a Liquidation Bankruptcy Proceeding (hereafter
defined), (a) Tenant applies for or consents to the appointment of a trustee
or files a voluntary petition in bankruptcy, or files an answer admitting all
the material allegations of a petition filed against the Tenant, or (b) an
order, judgment or decree is entered by the court adjudicating the Tenant a
bankrupt or an insolvent, or appointing a trustee, or an involuntary petition
for relief is filed against Tenant, and if such order, judgment, decree or
petition continues unstayed for more than ninety (90) consecutive days after
the expiration of any stay thereof and prior to the expiration of such ninety
(90) day period the case is not converted to a proceeding under a chapter
other than Chapter 7 of the Bankruptcy Code (11 U.S.C. Sections 101-151326).
For purposes hereof, a Liquidation Bankruptcy Proceeding shall mean a
proceeding pursuant to which a petition for relief under Chapter 7 of the
Bankruptcy Code has been filed and not converted to a proceeding under a
chapter other than Chapter 7 of the Bankruptcy Code.
SECTION 9.2. Anything contained in the provisions of this Article to
the contrary notwithstanding, upon the occurrence of an Event of Default
Landlord shall not be entitled to exercise any right or remedy which it holds
under any provision of this Lease or
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under applicable law unless and until Landlord has given written notice thereof
to Tenant, and Tenant has failed, (a) if such Event of Default consists of the
failure to pay money, within fifteen (15) days thereafter to pay all of such
money, or (b) if such Event of Default consists of something other than the
failure to pay money and can be cured by Tenant within thirty (30) days after
such written notice, within thirty (30) days thereafter, or if such non-monetary
Event of Default cannot be cured by Tenant within such thirty (30) day period,
to commence to cure such Event of Default within said thirty (30)- day period
and thereafter diligently prosecute the correction of same to completion.
SECTION 9.3. Upon the occurrence of any Event of Default and the
expiration of the grace period for curing such default set forth in Section 9.2
without such default having been cured, or in the case of an Event of Default
set forth in Section 9.1.3, Landlord may:
9.3.1. terminate this Lease on three (3) days notice to Tenant, in
which event Tenant shall immediately surrender the Premises to Landlord and it
Tenant fails to do so, Landlord may, without further notice, re-enter (forcibly
if necessary) and repossess the Premises and any and all improvements thereon
and additions thereto;
9.3.2. collect any unpaid Rent or other damages in any manner not
inconsistent with applicable law;
9.3.3. relet any or all of the Premises for Tenant's account for any
or all of the remainder of the Term as hereinabove defined, or for a period
exceeding such remainder, in which event Tenant shall pay to Landlord any
deficiency in the Base Rent and any Additional Rent resulting, with respect to
such remainder, from such reletting, as well as the reasonable costs to Landlord
or any attorneys' fees and court costs, leasing commissions or of any repairs or
other action (including those taken in exercising Landlord's rights under any
provision of this Lease) taken by Landlord on account of such Event of Default;
and/or
9.3.4. pursue any combination of such remedies and/or any other
remedy available to the Landlord on account of such Event of Default under
applicable law, provided that Landlord shall in any event (whether Section
9.3.2, Section 9.3.3 or this Section 9.3.4 applies) use reasonable efforts to
relet the Premises for Tenant's account.
SECTION 9.4. Upon the occurrence of an Event of Default, Landlord
shall be entitled (but shall not be obligated), in addition to any other rights
which it may have hereunder or under applicable law as a result thereof, and
after giving Tenant written notice of Landlord's intention to do except in the
case of emergency, to cure such Event of Default, and Tenant shall reimburse
Landlord for all expenses incurred by Landlord in doing so, plus interest
thereon at a rate which is the lesser of the prime rate charged by Citibank, New
York City, plus two percent (2%) per annum, or the highest rate then permitted
on account thereof by applicable law, which expenses and interest shall be
Additional Rent and shall be payable by Tenant immediately upon demand therefor
by Landlord.
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SECTION 9.5. In the event of any default in the payment of any Base
Rent or Additional Rent payable by Tenant to Landlord hereunder which continues
uncured for a period of ten (10) days after written notice thereof to Tenant,
Landlord shall be entitled to collect from Tenant, as additional rent, a late
payment penalty in an amount equal to that percentage of the amount so in
default that is equal to the lesser of (a) three and one half percent (3.5%) or
(b) seventy percent (70%) of the amount of the late payment penalty percentage
rate payable by Landlord pursuant to the provisions of the first deed of trust
on the Building at the time of such default in the event of any delinquency in
the payment of amounts owed under such first deed of trust.
SECTION 9.6. Each party hereto hereby waives its right of trial by
jury in any legal proceeding brought in respect of this Lease.
ARTICLE 10. HOLDING OVER
SECTION 10.1. Tenant shall not continue to occupy the Premises after
the expiration or earlier termination of the Term or any renewal thereof, unless
Landlord consents in writing to such continuation of occupancy, in which event
such occupancy shall (unless the parties hereto otherwise agree in writing) be
deemed to be under a month-to-month tenancy, which shall continue until either
party hereto notifies the other in writing, by at least thirty (30) days before
the end of any calendar month, that the party giving such notice elects to
terminate such tenancy at the end of such calendar month, in which event such
tenancy shall so terminate. The rental payable with respect to each monthly
period of such month-to-month tenancy shall equal one-twelfth (1/12th) of the
Base Rent and the Additional Rent payable under the provisions of Article 4
(calculated in accordance with such provisions of Article 4 as if this Lease had
been renewed for a period of twelve (12) full calendar months after such
expiration or earlier termination of the Term or such renewal). Except as
expressly provided otherwise, such month-to-month tenancy shall be upon the same
terms and subject to the same conditions as those set forth in the provisions of
this Lease.
SECTION 10.2. In the event Tenant holds over without Landlord's
written consent obtained prior to the expiration or earlier termination of the
Term, Tenant, during the period of its possession, shall pay to Landlord on a
monthly basis Rent equal to one-twelfth of twice the amount of Base Rent and
Additional Rent paid to Landlord under the provisions of Article 4 during the
Lease Year immediately preceding the expiration or earlier termination of the
Term, and Landlord shall have the right to enter (forcibly if necessary) the
Premises and to remove Tenant and its property from the Premises, including
storage of Tenant's property, all at Tenants's cost and expense, and Landlord
shall have no liability therefor except in the event of Landlord's gross
negligence or wilful misconduct.
ARTICLE 11. LANDLORD'S RIGHT OF ENTRY
SECTION 11.1. Upon twenty-four (24) hours prior notice and during
normal business hours (except in cases of emergency) Landlord and its agents
shall be entitled to enter the Premises (a) to inspect the Premises, (b) to
exhibit the Premises to any existing or prospective tenant, purchaser or
mortgagee thereof or any prospective tenant thereof; (c) to
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make any alteration, improvement or repair to the Building or the Premises, or
(d) for any other purposes relating to the operation or maintenance of the
Property in connection with such entry. Landlord shall use reasonable efforts
to avoid interfering with the Tenant's use and enjoyment of the Premises and
(except in cases of emergency) Landlord and its agents shall be accompanied by a
representative of Tenant at all times. Notwithstanding the foregoing except in
the case of emergency threatening property or life, Landlord shall not be
entitled to enter any special security area located on the Premises and
designated as such by Tenant.
ARTICLE 12. INSURANCE AND INDEMNIFICATION
SECTION 12.1. Tenant shall not do or permit to be done any act or
thing as a result of which either (a) Landlord has advised Tenant that any
policy of insurance of any kind covering any or all of the Property may become
void, cancelled or suspended, or (b) Landlord has advised Tenant that the
insurance risk under any such policy would (in the opinion of the insurer
thereunder) be made greater, unless such activity by Tenant can be insured
against upon payment of an additional premium by Tenant and Tenant agrees to pay
such additional insurance premium within ten (10) days after receipt thereof by
Tenant, which amount shall be deemed additional rent. Landlord shall promptly
notify Tenant of receipt by Landlord of any statement by any insurer of Landlord
claiming that Tenant has violated the covenant contained in the preceding
sentence. In the event that Tenant fails to remedy the condition causing the
violation of such covenant within ten (10) days after receipt of notice thereof,
Tenant shall pay as Additional Rent the amount of any increase in any premium
for such insurance resulting from the breach of such covenant within ten (10)
days after being billed therefor by Landlord. In determining whether any
increase in any premium is a result of a breach by Tenant of the covenant set
forth in this Section 12.1, a schedule issued by the organization computing the
insurance rate on the Building or the Leasehold Improvements, showing the
various components of such rate, shall be prima facie evidence of the several
items and charges which make up such rate.
SECTION 12.2. Tenant shall maintain at its expense, throughout the
Term, insurance against loss or liability in connection with bodily injury,
death, property damage and destruction, occurring within the Premises or arising
out of the use thereof by Tenant or its agents, employees, officers or invitees,
visitors and guests under one or more policies of comprehensive general public
liability insurance in limits of not less than Five Million Dollars ($5,000,000)
inclusive. Such policies shall name Landlord and Tenant (and, at Landlord's
request, any mortgagee) as the insured parties, all as their respective
interests may appear, and shall provide that they shall not be cancellable
without at least thirty (30) days' prior written notice to Landlord (and, at
Landlord's request, any such mortgagee). Tenant will deliver certificates of
insurance to Landlord as soon as reasonably practicable after the placing of the
required insurance but not later than ten (10) days prior to the Commencement
Date. The insurance policies required hereunder shall be issued by insurers of
recognized responsibility licensed to do business in Maryland. Such insurance
may be placed as part of any blanket policy carried by Tenant and/or carried
under primary and excess coverage policies.
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SECTION 12.3.
12.3.1. During the Term Landlord shall insure the personal property
and the Leasehold Improvements (excluding the personal property of Tenant and
any Alterations) against damage with All-Risk insurance in an amount not less
than one hundred percent (100%) of the then replacement cost to the extent
obtainable, and comprehensive general liability insurance in limits not less
than Five Million Dollars ($5,000,000) inclusive. Landlord's policies of
comprehensive general liability insurance shall name Tenant as an additional
insured. The insurance policies required hereunder shall be issued by insurers
of recognized responsibility licensed to do business in Maryland and shall
provide that they shall not be cancellable without at least thirty (30) days'
prior written notice to Tenant.
12.3.2. Landlord will deliver certificates of insurance to Tenant as
soon as reasonably practicable after the placing of the required insurance but
not later than ten (10) days prior to the Commencement Date. On or before the
Commencement Date and every anniversary of the Commencement Date thereafter,
Landlord shall provide Tenant with evidence that Landlord has insured the
Building and the Leasehold Improvements against damage in an amount not less
than one hundred percent (100%) of the then replacement cost of the Building and
Leasehold Improvements, which evidence shall be a determination of the
replacement cost of the Building and Leasehold Improvements made by or for its
insurance carrier or other evidence thereof.
SECTION 12.4. All policies covering real or personal property which
either party obtains affecting the Premises or the Building shall include a
clause or endorsement denying the insurer any rights of subrogation against the
other party to the extent rights have been waived by the insured before the
occurrence of injury or loss. Landlord and Tenant waive any rights of
subrogation or recovery against the other for damage or loss to their respective
property due to hazards covered or which should be covered by policies of
insurance obtained or which should be or have been obtained pursuant to this
Lease, to the extent of the injury or loss covered or which should have been
covered thereby, assuming that any deductible shall be deemed to be insurance
coverage.
ARTICLE 13. EMINENT DOMAIN
SECTION 13.1. In the event that all or a substantial part of the
Building and/or the Premises are taken or condemned for any public purpose, this
Lease shall terminate as of the date of such taking. For purposes of this
Section 13.1, a substantial part of the Premises or the Building shall be deemed
to have been taken if (a) more than fifteen percent (15%) of the Rentable Area
of the Premises is rendered unusable by Tenant, provided Tenant does not send
Landlord written notice, within thirty (30) days after Tenant is notified of
such taking, of Tenant's election not to have this Lease terminate as provided
for hereunder, in which event the provisions of Section 13.2 shall govern; or
(b) all or substantially all of the Rentable Area of the Building is taken; or
(c) less than substantially all of the Rentable Area of the Building is rendered
unusable and such unusable portion of the Building results in the Premises being
not reasonably usable for the conduct of Tenant's business on the Premises.
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SECTION 13.2. In the event that a portion, but less than a
substantial part, of the Premises shall be taken or condemned for any public
purpose, then this Lease shall terminate as of the date of such taking as to the
portion of the Premises so taken, and this Lease shall remain in full force and
effect as to the remainder of the Premises. In such event, the Base Rent, and
Additional Rent attributable to the Premises, shall be diminished by an amount
representing the part of such amounts properly applicable to the portion of the
Premises so taken.
SECTION 13.3. In the event of the termination of this Lease pursuant
to the provisions of subsections 13.1 or 13.2, this Lease and the Term and the
estate hereby granted shall expire as of the date of such termination in the
same manner and with the same effect as if that were the date set for the normal
expiration of the Term, and Rent shall be apportioned as of the date of
termination. The provisions of this Section 13.3 shall apply in the same manner
to any partial termination of this Lease pursuant to the provisions of this
Article 13.
SECTION 13.4. Landlord shall be entitled to receive the entire award
in any condemnation proceeding or action for taking, without deduction therefrom
for any estate vested in Tenant by this Lease; provided that nothing herein
contained shall prohibit Tenant from seeking any separate award or benefits that
Tenant may be entitled to as long as such award or benefits do not in any manner
reduce the award payable to Landlord.
ARTICLE 14. MECHANICS' AND MATERIALMENS' LIENS
Tenant shall bond, remove or have removed any mechanics',
materialmens' or other lien filed or claimed against any or all of the Premises,
or against the Building where such lien or claim arises out of any purported act
or agreement of Tenant, by reason of labor or materials provided for or at the
request of Tenant or any of its contractors or subcontractors (other than labor
or materials provided by Landlord pursuant to the provisions of Article 6)
within twenty (20) days after Tenant receives notice of any such lien.
ARTICLE 15. QUIET ENJOYMENT - SURRENDER
SECTION 15.1. Landlord hereby covenants that Tenant, on paying the
Rent and performing the covenants set forth herein, shall peaceably and quietly
hold and enjoy, throughout the Term (a) the Premises, and (b) such rights as
Tenant may hold hereunder with respect to the remainder of the Property
(including, by way of example rather than of limitation, any such right to use
the Building parking garage).
SECTION 15.2.
15.2.1. Upon the expiration or earlier termination of the Term,
Tenant shall surrender the Premises to Landlord in good order and repair (damage
from fire or other casualty and ordinary wear and tear excepted), and broom
clean.
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15.2.2. Any and all improvements, repairs, alterations and all other
property attached to, used in connection with or otherwise installed upon the
Premises shall be surrendered to Landlord upon the expiration or earlier
termination of the Term, except that any machinery, equipment or fixtures
installed by Tenant and used in the conduct of Tenant's trade or business
(rather than to service the Premises or any of the remainder of the Building or
the Property generally) shall remain Tenant's property and shall be removed by
Tenant within five (5) days after the expiration or earlier termination of the
Term, and if such removal causes any damage to the Premises or the Building,
Tenant shall promptly thereafter fully repair such damage. If Tenant installs
within the Premises any interior stairs connecting floors within the Premises
and Landlord elects, within one year after the Expiration Date, to remove such
interior stairs because of the requirements of a new tenant, Tenant shall
reimburse Landlord for the reasonable costs incurred by Landlord in filling in
the concrete floor slab penetrated by such stairs.
ARTICLE 16. RULES AND REGULATIONS
Landlord hereby reserves the right to prescribe, at its sole
discretion, reasonable rules and regulations (the "Rules and Regulations")
having uniform applicability to all tenants of the Building and governing the
use and enjoyment of the Building and the remainder of the Property; provided,
that the Rules and Regulations shall not interfere or adversely affect Tenant's
use and enjoyment of the Premises in accordance with the provisions of this
Lease. Tenant, its agents and employees, shall adhere to the Rules and
Regulations and use its best efforts to cause its invitees, visitors and guests
to do so. A copy of the Rules and Regulations in effect on the date hereof is
attached hereto as Exhibit G.
ARTICLE 17. SUBORDINATION - ATTORNMENT
SECTION 17.1. Landlord warrants and represents that on and after the
date that Landlord acquires title to the Land, there shall be no holders of any
deeds of trust, mortgages or other security interests (collectively, the
"Superior Instruments") covering the Building and/or Land or any interest of
Landlord therein (collectively, the "Holders of Superior Instruments") unless
Landlord obtains and delivers to Tenant a non-disturbance agreement
substantially in the form of Exhibit H hereto executed by the Holder of such
Superior Instrument. Tenant agrees that it shall not unreasonably withhold its
consent to any modifications to the form of the non-disturbance agreement
attached hereto as Exhibit H that may be requested by the Holder of such
Superior Instrument.
SECTION 17.2. This Lease shall be subject and subordinate to any
future Superior Instruments which may from time to time during the Term cover
the Building and/or the Land, or any interest of Landlord therein, and to any
advances made on the security thereof, and to any refinancings, increases,
renewals, modifications, consolidations, replacements, and extensions of any of
such future Superior Instruments, provided that, as a condition of such
subordination being effective, the Holder of such Superior Instrument shall have
executed, acknowledged and delivered to Tenant a non-disturbance agreement
described in Section 17.1. Upon execution and delivery of such non-disturbance
agreement, this Section 17.2 shall be self-operative and no further instrument
shall be required to effect such
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subordination of this Lease. Upon demand, however, Tenant shall execute,
acknowledge, and deliver to Landlord any further instruments and certificates
evidencing such subordination as Landlord, or such Holder of the Superior
Instrument may reasonably request.
SECTION 17.3. Subject to the provisions of Section 17.1, any Holder
of a Superior Instrument shall have the right, unilaterally, at any time to
subordinate fully or partially any such Superior Instrument to this Lease. Upon
request Tenant shall execute an instrument confirming any such subordination by
any Holder of a Superior Instrument. At any time, before or after the
institution of any proceedings for the foreclosure of any such Superior
Instrument, or sale of the Building under any such Superior Instrument, Tenant
shall attorn to such purchaser upon any such sale or the grantee under any deed
in lieu of such foreclosure and shall recognize such purchaser or grantee as
Landlord under this Lease. Tenant hereby waives the right, if any, to elect to
terminate this Lease or to surrender possession of the Premises in the event of
the judicial or non-judicial foreclosure of any deed of trust, mortgage, or
security agreement (or any transfer in lieu thereof). The foregoing agreement
of Tenant to attorn shall survive any such foreclosure sale, trustees' sale, or
conveyance in lieu thereof. Tenant shall upon demand at any time, before or
after any such foreclosure sale, trustee's sale, or conveyance in lieu thereof,
execute, acknowledge, and deliver to Landlord's mortgagee or any successor
thereof or any then owner of the Building (as the case may be), any written
instruments and certificates evidencing such attornment as such Holder of a
Superior Instrument may reasonably require.
ARTICLE 18. ESTOPPEL CERTIFICATE
SECTION 18.1. Tenant shall from time to time, within fifteen (15)
days after being requested to do so by Landlord or any Holder of a Superior
Instrument, execute, acknowledge and deliver to Landlord an instrument in
recordable form certifying that this Lease is unmodified and in full force and
effect (or, if there has been any modification thereof, that it is in full force
and effect as so modified, stating therein the nature of such modification); as
to the dates to which the Base Rent and any Additional Rent and other charges
arising hereunder have been paid in advance of the dates on which payment
thereof is due hereunder, if any; as to the amount of any unpaid Rent or any
credit due to Tenant hereunder; that Tenant has accepted possession of the
Premises, and the date on which the Term commenced (if such is true); as to
whether, to the best knowledge, information and belief of the signer of such
certificate, Landlord is then in default in the performance of any of its
obligations hereunder (and, if so, specifying the nature of each such default)
and as to any other fact or condition reasonably requested by Landlord, or any
Holder of such Superior Instrument (if such is true); and acknowledging and
agreeing that any statement contained in any such certificate may be relied upon
by Landlord and any such other person.
SECTION 18.2. Landlord agrees to furnish, within fifteen (15) days
after being requested to do so by Tenant, an instrument in recordable form
executed by Landlord containing substantially the same information as described
in Section 18.1 above.
ARTICLE 19. NOTICES
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SECTION 19.1. Any notice or demand, consent, approval or disapproval,
or statement (collectively, "Notices") required or permitted to be given by the
terms and provisions of this Lease, or by any law or governmental regulation,
shall be in writing (unless otherwise specified herein) and unless otherwise
required by such law or regulation, shall be personally delivered or sent by
United States mail postage prepaid as registered or certified mail, return
receipt requested. Any Notice shall be addressed to Landlord or Tenant, as
applicable, at its address specified below as said address may be changed from
time to time as hereinafter provided. By giving the other party at least ten
(10) days prior written notice, either party may, by Notice given as above
provided, designate a different address or addresses for Notice.
LANDLORD: TENANT:
Suite 1135 Until Tenant occupies
Chevy Chase Building the Premises:
5530 Wisconsin Avenue 4601 N. Park Avenue
Chevy Chase, MD 20815 Chevy Chase, MD 20815
After Tenant
occupies the
Premises:
4800 Hampden Lane
Bethesda, MD 20814
SECTION 19.2. Any Notice shall be deemed given as of the date of
delivery as indicated by affidavit in case of personal delivery or by the return
receipt in the case of mailing; and in the event of failure to deliver by reason
of changed address of which no Notice was given or refusal to accept delivery,
as of the date of such failure as indicated by affidavit or on the return
receipt or by notice of the postal service, as the case may be.
SECTION 19.3. In addition to the foregoing, either Landlord or Tenant
may, from time to time, request in writing that the other party serve a copy of
any Notice on one other person or entity designated in such request, such
service to be effected as provided in Section 19.1 hereof.
ARTICLE 20. GENERAL
SECTION 20.1. This Lease shall become effective upon and only upon
the execution and delivery hereof by each party hereto.
SECTION 20.2. This Lease represents the complete understanding
between the parties hereto as to the subject matter hereof, and supercedes all
prior negotiations, representations, warranties, statements or agreements,
either written or oral, between the parties hereto as to the same.
SECTION 20.3. This Lease may be amended by and only by an instrument
executed and delivered by each party hereto.
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SECTION 20.4. This Lease shall be given effect and construed by
application of the laws of Maryland.
SECTION 20.5. Neither Tenant nor Landlord shall be deemed to have
waived the exercise of any right which it holds hereunder unless such waiver is
made expressly and in writing (and no delay or omission by Landlord or Tenant in
exercising any such right shall be deemed to be a waiver of the future exercise
thereof). No such waiver made with respect to any instance involving the
exercise of any such right shall be deemed to be a waiver with respect to any
other such instance, or any other such right.
SECTION 20.6. Time shall be of the essence of this Lease.
SECTION 20.7. The headings of the Sections, subsections, paragraphs
and subparagraphs hereof are provided herein for and only for convenience of
reference, and shall not be considered in construing the contents thereof.
SECTION 20.8. As used herein:
20.8.1. the term "person" shall mean a natural person, a trustee, a
corporation, a partnership and any other form of legal entity; and
20.8.2. all references made (a) in the neuter, masculine or feminine
gender shall be deemed to have been made in all such genders, (b) in the
singular or plural number shall be deemed to have been made, respectively, in
the plural or singular number as well, and (c) to any Article, Section,
subsection, paragraph or subparagraph shall, unless therein expressly indicated
to the contrary, be deemed to have been made to such Article, Section,
subsection, paragraph or subparagraph of this Lease.
SECTION 20.9. Each writing, plan or document referred to herein as
being attached hereto as an exhibit or otherwise designated herein as an exhibit
hereto is hereby made a part hereof.
SECTION 20.10. No determination by any court, governmental body or
otherwise that any provisions of this Lease or any amendment hereof is invalid
or unenforceable in any instance shall affect the validity or enforceability of
(a) any other provision thereof, or (b) such provision in any circumstance not
controlled by such determination. Each such provision shall be valid and
enforceable to the fullest extent allowed by, and shall be construed wherever
possible as being consistent with, applicable law.
SECTION 20.11.
20.11.1. As used herein, the term "Landlord" shall mean the entity
hereinabove named as such, and its heirs, personal representatives, successors
and assigns, each of whom shall have the same rights, remedies, powers,
authorities and privileges as it would have had, had it originally signed this
Lease as Landlord.
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20.11.2. No person holding Landlord's interest hereunder (whether or
not such person is named "Landlord" herein) shall have any liability hereunder
after such person ceases to hold such interest, except for any such liability
accruing while such person holds such interest, and except that the original
Landlord named herein shall be obligated for all obligations accruing hereunder
until the expiration of twelve (12) months after the Commencement Date,
notwithstanding any transfer prior to such date.
20.11.3 In the event of any sale or other transfer of the Building
(or the Property), it shall be automatically deemed and construed that the
purchaser or transferee (as the case may be) has assumed and agreed to carry out
any and all covenants and obligations of Landlord hereunder.
20.11.4 Notwithstanding any other provision in this Lease, in the
event that at any time Landlord is a partnership, any judgment obtained by
Tenant against Landlord by reason of any default by Landlord shall be enforced
only against the partnership assets owned by Landlord and not against the
separate assets owned by any general partner of Landlord, provided, however,
that the foregoing limitation of liability shall not apply (a) to the
obligations of Landlord under Article 6, Article 23, Section 2.2, Section 8.3.3
or Exhibit B of this Lease or (b) to any cases of fraud or malfeasance on the
part of any general partner of Landlord, it being intended and agreed that
Landlord's general partners shall have personal liability for the obligations
referred to in the preceding clauses (a) and (b).
SECTION 20.12. As used herein, the term "Tenant" shall mean each
person hereinabove named as such and such person's heirs, personal
representatives, successors and assigns, each of whom shall have the same
obligations, liabilities, rights and privileges as it would have possessed had
it originally executed this Lease as Tenant; provided, that no such right or
privilege shall inure to the benefit of any assignee of Tenant if such
assignment is prohibited under Article 5. Whenever two or more persons
constitute Tenant, all such persons shall be jointly and severally liable for
the performance of the Tenant's obligations hereunder.
SECTION 20.13. Landlord recognizes Polinger Company as the sole
broker procuring this Lease and shall pay said broker a commission therefor
pursuant to a separate agreement between said broker and Landlord. Landlord
agrees to indemnify and hold harmless Tenant from any claims that may be
asserted by Polinger Company. Except as set forth, Landlord and Tenant each
represent and warrant that it has not entered into any agreement with, nor
otherwise had any dealings with, any other broker or agent in connection with
the negotiation or execution of this Lease which could form the basis of any
claim by any such broker or agent for a brokerage fee or commission, finder's
fee, or any other compensation of any kind or nature in connection herewith.
Except as otherwise provided in this Section 20.13, Landlord and Tenant each
agree to indemnify and hold the other harmless from any reasonable costs
(including, but not limited to, court costs, investigation costs, and attorneys'
fees), expenses, or liability for commissions or other compensation claimed by
any broker or agent with respect to this Lease which arise out of any agreement
or dealings, or alleged agreement or dealings, between such party and any such
agent or broker.
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SECTION 20.14. Throughout the Term, Landlord shall not name or change
the name of the Building to a name of, or resembling the name of, any person,
firm, corporation, governmental agency or other entity without the prior written
approval of Tenant.
SECTION 20.15. Each of the persons executing this Lease on behalf of
Landlord or Tenant represents and warrants that such party has complied with all
applicable laws, rules and governmental regulations relative to its right to do
business in the State of Maryland, that such party has the full right and
authority to enter into this Lease, and that all persons signing on behalf of
such party were authorized to do so by any and all necessary or appropriate
corporate or partnership actions.
ARTICLE 21. ARBITRATION
SECTION 21.1. In the event of any dispute (other than payment of Base
Rent) under this Lease or any Exhibit hereto either party may refer such dispute
to arbitration. Any such arbitration shall be conducted by a single arbitrator,
except as specifically provided for in this Lease.
SECTION 21.2. The arbitration shall be conducted in the metropolitan
Washington D.C. area in accordance with the then-prevailing commercial
arbitration rules of the American Arbitration Association (or any organization
successor thereto). The decision and award shall be rendered by the arbitrator
within thirty (30) days after the appointment of the arbitrator, shall be in
writing and shall be final and conclusive on the parties. Counterpart copies
thereof shall be delivered to each of the parties. In rendering such decision
and award, the arbitrator shall not add to, subtract from or otherwise modify
the provisions of this Lease. Judgment may be had on the decision and award of
the arbitrator so rendered in any court of competent jurisdiction.
SECTION 21.3. All expenses of the arbitration (other than the fees
and disbursements of attorneys or witnesses for each party) shall be borne by
the parties equally. Notwithstanding the foregoing, in the case of a dispute
involving a claim for a monetary amount, if the arbitration award grants to the
claimant one hundred percent (100%) of the amount of such claim or no portion of
such claim, the prevailing party shall be entitled to reimbursement from the
other party of the expenses of arbitration (including reasonable attorneys'
fees) incurred by the prevailing party, and such expenses shall be included in
the arbitration award.
SECTION 21.4.
21.4.1. If Landlord shall prevail in any arbitration hereunder
involving a claimed Event of Default by Tenant under this Lease, then for the
purpose of determining the time within which Tenant must cure such claimed Event
of Default in order to avoid giving rise to Landlord's rights under Section 9.3
as the result of such Event of Default, Landlord shall be deemed to have given
Tenant notice of such Event of Default on the date the decision of the
arbitrator has been delivered to Tenant.
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21.4.2. If Tenant shall prevail in any arbitration hereunder,
Landlord shall comply with the arbitrator's decision and award within ten (10)
business days after the decision of the arbitrator has been delivered to
Landlord. If the arbitrator determines that Tenant has overpaid any amount due
hereunder, Landlord shall promptly return such amount to Tenant, or at
Landlord's election, credit such amount to the next payments of Rent due
hereunder.
ARTICLE 22. MEMORANDUM OF LEASE
SECTION 22.1. Landlord and Tenant shall, at the request of either
party, execute, acknowledge and deliver to the other party a memorandum of this
Lease (the "Lease Memorandum") in recordable form, setting forth the date of
this Lease, the names of the parties hereto, the Commencement Date and
describing the Premises, Expansion Space (hereinafter defined) and Tenant's
options therefor, Tenant's rights to renew this Lease and the Land. Said Lease
Memorandum shall not in any circumstances be deemed to modify or to change any
of the provisions of this Lease. Either party may elect, at its sole expense,
to record this Lease or said Lease Memorandum.
SECTION 22.2. In the event that Landlord and Tenant execute said
Lease Memorandum, each party shall after the expiration or termination of the
Term, at the request of other party, execute, acknowledge and deliver a
memorandum in recordable form evidencing the expiration or termination of this
Lease, and if such party fails to execute such memorandum within fifteen (15)
days after the date of such request, such party hereby irrevocably appoints the
requesting party its attorney-in-fact to execute and deliver such memorandum on
behalf of such party. The requesting party may elect, at its sole expense, to
record said memorandum.
ARTICLE 23. LETTERS OF CREDIT
SECTION 23.1. On or before the expiration of fifteen (15) days after
the date on which Landlord acquire satisfactory title to Land in accordance with
the provisions of Article 25 hereof and evidence thereof is delivered to Tenant,
Tenant shall deliver to Landlord an unconditional, irrevocable letter of credit
from such banking institution as is reasonably acceptable to Landlord, in the
amount of One Hundred Thousand Dollars ($100,000), subject to increase as
hereinafter provided, and in the form attached hereto as Exhibit I (which Letter
of Credit and any substitute therefor is hereinafter referred to as "Tenant's
Letter of Credit"). Tenant's Letter of Credit shall be maintained in effect (or
replaced by an identical Tenant's Letter of Credit) by Tenant for the entire
period ending on the date (the "Tenant's Letter of Credit Expiration Date")
which is thirty (30) days after the Outside Completion Date and may be issued
for such period of time that expires earlier than Tenant's Letter of Credit
Expiration Date so long as each such Tenant's Letter of Credit is renewed or
replaced by an identical Tenant's Letter of Credit at least fifteen (15) days
prior to the expiration date thereof. In the event that any such Tenant's
Letter of Credit is not so renewed or replaced by an identical Tenant's Letter
of Credit at least fifteen (15) days prior to the expiration date thereof,
Landlord may draw on Tenant's Letter of Credit. The amount of Tenant's Letter
of Credit shall be increased or supplemented by an additional Tenant's Letter of
Credit in
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accordance with the following schedule provided that at the time of any such
increase or supplement Landlord shall not have defaulted in the performance of
any of Landlord's obligations hereunder:
Amount of
Date Increase or Supplement
---- -----------------------
(a) Fifteen (15) days after $100,000
Landlord gives Tenant notice
of the Groundbreaking of the
Building
(b) Fifteen (15) days after $100,000
Landlord gives Tenant notice
of the topping out of the
Building
(c) Fifteen (15) days after $100,000
Landlord gives Tenant notice
of the date on which all of the
exterior window glazing has been
completed [other than areas, not
to exceed ten percent (10%) of
the windows, for access for
interior construction work]
(d) Fifteen (15) days after $100,000
Landlord delivers to Tenant a
certificate from Landlord's
Contractor certifying that
construction of the Leasehold
Improvements in the Premises
has commenced
SECTION 23.2. Provided Landlord is not in default hereunder, Landlord
shall be entitled to draw upon Tenant's Letter of Credit upon delivery of a
statement under oath, acknowledged before a notary public, signed by Landlord,
with signature guaranteed by a bank, stating that Tenant has defaulted under
this Lease and such default has continued beyond any applicable grace period,
and that the amount drawn under Tenant's Letter of Credit represents the amount
necessary to reimburse Landlord for damages attributable to such default.
Tenant's Letter of Credit shall be returned to Tenant on the Commencement Date
or, in the event this Lease is terminated prior to the Commencement Date, on the
date of such termination.
SECTION 23.3. On or before the date on which topping out of the
Building occurs, Landlord shall deliver to Tenant an unconditional, irrevocable
letter of credit from
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such banking institution as is reasonably acceptable to Tenant, in the amount of
Three Hundred Thousand Dollars ($300,000), subject to reduction as hereinafter
provided, and in the form attached hereto as Exhibit J (which letter of credit
and any substitute therefor is hereinafter referred to as "Landlord's Letter of
Credit"). Landlord's Letter of Credit shall be maintained in effect (or
replaced by an identical Landlord's Letter of Credit) by Landlord for the entire
period ending on the date (the "Landlord's Letter of Credit Expiration Date")
which is one hundred twenty (120) days after the Outside Completion Date and may
be issued for such period of time that expires earlier than Landlord's Letter of
Credit Expiration Date so long as each such Landlord's Letter of Credit is
renewed or replaced by an identical Landlord's Letter of Credit at least fifteen
(15) days prior to the expiration date thereof. In the event that any such
Landlord's Letter of Credit is not so renewed or replaced by an identical
Landlord's Letter of Credit at least fifteen (15) days prior to the expiration
date thereof, Tenant may draw on Landlord's Letter of Credit. The amount of
Landlord's Letter of Credit may be reduced to Two Hundred Thousand Dollars
($200,000) on the date on which Landlord sends Tenant the sixty (60) day notice
of the Completion Date pursuant to the provisions of Section 2.2.1(k) hereof
provided such Completion Date is no later than the Outside Completion Date, but
in no event shall Landlord's Letter of Credit be so reduced below Three Hundred
Thousand Dollars ($300,000) prior to the date which is sixty (60) days before
the estimated Completion Date.
SECTION 23.4. In the event that the Commencement Date does not occur
on or before the date (the "Guaranteed Completion Date") which is the earlier of
(i) the Outside Completion Date or (ii) fifteen (15) days after the estimated
Completion Date specified in the sixty (60) day notice delivered by Landlord to
Tenant pursuant to Section 2.2.1(k), then Tenant shall be entitled to draw upon
Landlord's Letter of Credit, at the rate of Two Thousand Dollars ($2,000) per
day for each day after the Guaranteed Completion Date that is prior to the
Commencement Date, upon delivery of a statement under oath, acknowledged before
a Notary Public, signed by the President or any Vice President of Tenant with
signature guaranteed by a bank, stating that Landlord has failed to complete the
Building and Leasehold Improvements in accordance with Section 2.2 of this Lease
by the Guaranteed Completion Date. Tenant shall be entitled to continue to draw
upon Landlord's Letter of Credit until the Commencement Date, provided, however,
that in the event that the Commencement Date has not occurred by the date
Landlord's Letter of Credit is exhausted (the "Landlord's Letter of Credit
Exhaustion Date"), Tenant shall have the right to terminate this Lease by
sending notice in writing to Landlord. In the event this Lease is terminated as
herein set forth, (i) neither party shall be liable to the other for the
performance of any obligations hereunder, not shall either party, be liable to
the other for any losses or damage incurred or sustained by the other as a
result of such failure, (ii) Landlord shall reimburse Tenant for the expenses
incurred by Tenant for space planning work for the Premises and for Leasehold
Improvement Work performed by Landlord's Contractor or in connection with
termination expenses in respect of cancellation of orders for any of such items
or services for Leasehold Improvement Work performed by Landlord's Contractor
and (iii) Landlord shall pay to Tenant as fixed, agreed and liquidated damages,
the sum of Three Hundred Thousand Dolars ($300,000) on the date of termination
of this Lease. In the event that Tenant does not elect to terminate this Lease
as herein provided, Landlord shall provide Tenant, as fixed, agreed and
liquidated damages two (2) days' free rent for each day during the period
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commencing on Landlord's Letter of Credit Exhaustion Date and ending on the
Commencement Date. Landlord's Letter of Credit (to the extent not fully drawn
upon) shall be returned to Landlord on the Commencement Date.
ARTICLE 24. WARRANTIES AND REPRESENTATIONS
SECTION 24.1. Landlord represents and warrants that prior to
Groundbreaking hereunder, Landlord shall acquire satisfactory title to the Land
in accordance with the provisions of Article 25 and the Property shall not be
subject to any Superior Instruments except as such as with respect to which the
Holder of any such Superior Instrument shall have executed, acknowledged and
delivered to Tenant the non-disturbance agreement required by Section 17.1
hereof.
SECTION 24.2. Tenant hereby acknowledges and agrees that there have
been no warranties or representations, verbal or written, made by Landlord or
any agent or representative of Landlord, including, but not by way of
limitation, any broker employed by Landlord, other than as expressly set forth
in this Lease, and Tenant hereby waives any claim which it may have against
Landlord by virtue of any representation or warranty not expressly set forth
herein made by any person whomsoever on behalf of Landlord.
ARTICLE 25. ACQUISITION OF LAND.
SECTION 25.1. In the event that Landlord does not acquire
satisfactory title to the Land in fee simple in accordance with the provisions
hereinafter set forth in Section 25.2 on or before January 15, 1985, Tenant may
elect to terminate this Lease by giving Landlord written notice of termination
at any time after January 15, 1985 that is prior to the date on which Landlord
does acquire such satisfactory title to the Land, and this Lease shall
automatically terminate (if it has not previously been terminated) on the date
that Landlord's right to acquire the Land expires. In the event this Lease is
terminated as herein set forth, neither party shall be liable to the other for
the performance of any obligations hereunder, nor shall either party be liable
to the other for any losses or damage incurred or sustained by the other as a
result of such failure; provided, that Landlord shall reimburse Tenant for the
expenses incurred by Tenant for space planning work for the Premises in an
amount not to exceed Ten Thousand Dollars ($10,000).
SECTION 25.2. For purposes of this Lease, Landlord shall have
acquired "satisfactory title" to the Land only if Landlord shall have delivered
to Tenant a copy of a standard ALTA (Form B) owner's title insurance policy
issued to Landlord by a recognized title insurance company insuring Landlord's
fee simple ownership of the Land subject to no Superior Instruments (defined in
Section 17.1) except such as with respect to which the Holder of such Superior
Instrument shall have executed, acknowledged and delivered to Tenant the
non-disturbance agreement required by Section 17.1 hereof, and disclosing no
easements, covenants or other exceptions to Landlord's title to the Land
(collectively, "Title Exceptions") except such Title Exceptions as will not (i)
adversely affect Tenant's interest in the Lease, (ii) impose any cost, expense,
limitation or restriction on Tenant in connection
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with Tenant's use of the Premises in accordance with the terms of this Lease,
(iii) in any way interfere with, limit, restrict or adversely affect Tenant's
conduct of Tenant's business operations in the Premises, or (iv) adversely
affect Landlord's ability to construct the Building in accordance with the Plans
and Specifications.
ARTICLE 26. PARKING
SECTION 26.1. Landlord shall provide or require that any garage
operator shall offer to Tenant, and Tenant agrees to accept, three (3) monthly
parking contracts for a right to park a full-sized American automobile ("Parking
Right") in the Building parking garage for each one thousand (1,000) square feet
of Rentable Area of the Premises leased by Tenant on the Commencement Date.
Landlord shall also provide or require that any garage operator shall offer to
Tenant no fewer than two (2) additional monthly parking contracts, and as many
as three (3) additional monthly parking contracts to the extent they are
available (the "Additional Parking"), for a Parking Right in the Building
parking garage for each one thousand (1,000) square feet of Expansion Space
leased by Tenant pursuant to any right granted in Article 29 hereof, which
Parking Rights for Additional Parking Tenant shall have the option, but not the
obligation, to accept in whole or in part by written notice to Landlord prior to
the expiration of ninety (90) days after the commencement of the term of the
lease of the applicable Expansion Space. Each Parking Right shall permit
in-and-out parking, twenty-four (24) hours per day, seven (7) days a week
(either on a self-park or attendant basis, as determined by Landlord), provided,
however that Landlord shall provide at least twelve (12) Parking Rights on a
self-park basis (in locations designated by Landlord) where the automobile
driver may remove his car without obstruction and without access to any other
car. Tenant shall pay, as Additional Rent, a monthly rental for each Parking
Right of Eighty-five Dollars ($85) per month, which monthly rental shall be
increased at the end of each Lease Year by the percentage increase in the CPI-U
that has occurred during such Lease Year. Notwithstanding the foregoing, the
monthly rental for the Additional Parking shall be the monthly rental then being
charged by the operator of the garage for new monthly contracts at the time the
Expansion Space is added to the Premises, subject to the same annual CPI-U
increase as herein provided during each Lease Year thereafter. Except as
otherwise provided herein, the parking contracts shall be with the garage
operator and shall contain the same terms as are usually contained in contracts
with other customers of the garage operator, but subject to the provisions of
this Article 26.
SECTION 26.2. Landlord warrants to Tenant that any person or entity
with whom Landlord may contract for the operation of the garage in the Building
(including any lessee of all or a substantial portion of the garage) shall
acknowledge in such contract or lease Tenant's rights under this Article 26 and
shall assume Landlord's obligations hereunder.
ARTICLE 27. RENEWAL OPTIONS
SECTION 27.1. Tenant shall have and is hereby granted two successive
options to renew or extend the Term for additional periods of five (5) years
each (the "Renewal Periods"). Subject to the provisions of Section 27.4, each
renewal option shall be
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exercisable by Tenant by giving written notice of the exercise of such renewal
option to Landlord at least nine (9) months prior to the expiration of (i) the
initial Term, in the case of the first such renewal option, and (ii) the first
Renewal Period, in the case of the second such renewal option. In the event
that Tenant exercises the option or options to renew this Lease in accordance
with the provisions hereof, then the Term shall be extended accordingly. Except
as otherwise expressly provided herein, each Renewal Period shall be upon the
same terms, covenants and conditions as set forth herein with respect to the
immediately preceding portion of the Term. All references in this Lease to the
Term shall be construed to mean the initial Term and the Renewal Period or
Periods, unless the context clearly indicates that another meaning is intended.
For purposes of this Lease, no distinction is made between the terms "extend"
and "renew," or any variations thereof.
SECTION 27.2. The Base Rent for the Premises payable pursuant to
Article 4 during each Renewal Period shall be equal to ninety-five percent (95%)
of the Fair Market Value Rate (as defined below) of the Premises as of the
commencement of such Renewal Period multiplied by the Rentable Area of the
Premises. The Operating Costs Factor during each Renewal Period shall be the
quotient derived by dividing the Annual Operating Costs for the calendar year in
which the applicable Renewal Period commences by the Rentable Area of the
Building. Notwithstanding the foregoing, in no event shall the Base Rent
payable during a Renewal Period be less than the Base Rent payable by Tenant
pursuant to the provisions of Article 4 during the Lease Year immediately
preceding the commencement of the applicable Renewal Period.
SECTION 27.3. At least six (6) months prior to the commencement of
the Renewal Period, Landlord shall send to Tenant a written notice specifying
the Fair Market Value Rate as determined by Landlord in accordance with Section
27.5. Within thirty (30) days after receipt of such notice from Landlord,
Tenant shall send Landlord a written notice of Tenant's acceptance or challenge
of Landlord's determination of such rate, provided, however, that in the event
that Tenant fails to respond within such thirty (30) day period, Tenant shall be
deemed to have accepted Landlord's determination of the Fair Market Value Rate.
In the event that Tenant challenges Landlord's determination of the Fair Market
Value Rate and Landlord and Tenant are not able to agree on such rate within
fifteen (15) days (the "Negotiation Period") after Tenant notifies Landlord of
Tenant's initial rejection of Landlord's determination of such Fair Market Value
Rate, then Landlord and Tenant shall each, within fifteen (15) days after the
expiration of the Negotiation Period, select an appraiser, each of whom shall be
a licensed real estate broker or a MAI-certified real estate appraiser with five
(5) years' experience in the metropolitan Washington, D.C. office market who
shall determine the Fair Market Value Rate in accordance with Section 27.5. The
appraisers shall be instructed to complete the appraisal procedure and to submit
their written determinations to Landlord and Tenant within thirty (30) days
after their meeting. In the event that the determination of the Fair Market
Value Rate submitted by Landlord's appraiser is equal to or less than one
hundred ten percent (110%) of the determination of the Fair Market Value Rate
submitted by Tenant's appraiser, the Fair Market Value Rate shall be the average
of such determinations. If the determination of the Fair Market Value Rate
submitted by Landlord's appraiser is greater than one hundred ten percent (110%)
of the
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determination of the Fair Market Value Rate submitted by Tenant's appraiser, the
appraisers shall, within ten (10) days, appoint a third appraiser with similar
qualifications to make such determination of the Fair Market Value Rate. In the
event that the two appraisers cannot agree as to the selection of the third
appraiser within fifteen (15) days after Landlord and Tenant are notified of the
determination of the appraisers, either party may request that the President of
the Washington Board of Realtors (or any successor organization) appoint the
third appraiser. The third appraiser shall be instructed to complete the
appraisal procedure and to submit a written determination of the Fair Market
Value Rate to Landlord and Tenant within thirty (30) days after such appraiser's
appointment. The determination which is neither the highest nor the lowest of
the three determinations shall be binding upon Landlord and Tenant as the Fair
Market Value Rate. Landlord and Tenant shall each bear the costs of their
respective appraisers. The expenses of the third appraiser shall be borne
one-half (1/2) by Landlord and one-half (1/2) by Tenant.
SECTION 27.4. None of the options referred to in Section 27.1, none
of the Expansion Options referred to in Article 29 and none of the purchase
options referred to in Article 30 may be exercised by Tenant if, at the time
specified in Section 27.1, Article 29 or 30, as the case may be, for exercising
such option, this Lease shall not be in full force and effect or in the event
that Tenant at the time Tenant exercises such option shall be in default in the
performance of any obligations hereunder, such default has continued uncured
beyond the grace period for curing such default set forth in Section 9.2 and
Landlord has served written notice to Tenant that it has exercised any of its
remedies under Section 9.3. If Tenant shall fail to exercise either renewal
option during the time or in the manner provided in Section 27.1 above for the
exercise thereof, or if at the time specified for the exercise of such renewal
option Tenant shall not be entitled to exercise such option because of the
provisions of this Section 27.4, then, and in either such event, such renewal
option, and any additional renewal option, shall be absolutely void and of no
force and effect.
SECTION 27.5. For purposes of this lease, the term "Fair Market Value
Rate" means the fair market rental rate per square foot of Rentable Area of the
Premises or the Expansion Space (hereinafter defined), as the case may be, that
would be agreed upon between a landlord and a tenant executing a lease in a
comparable building of comparable age located in the Bethesda Central Business
District, assuming the following; (A) the landlord and tenant are typically
motivated; (B) the landlord and tenant are well informed and well advised and
each is acting in what it considers its own best interest; (C) the rental is
unaffected by concessions, special financing amounts and/or terms, or unusual
services, fees, costs or credits in connection with the leasing transaction; (D)
the leased premises are fit for immediate occupancy and use "as is" and no work
is required to be done by the landlord (and that the tenant would not require
any additional tenant work or reconfiguration of the existing tenant work); (E)
the leased premises are to be let with vacant possession and subject to the
provisions of this Lease for a five-year term (taking into account the
provisions of this Lease); (F) the tenant is paying all costs of electricity
provided to the leased premises; (G) there is no brokerage or finders fee or
commission payable by either party, and (H) market rents then being charged for
comparable space in other similar office buildings in comparable locations. In
no event, however, shall the Fair Market Value Rate be less than the Base Rent
per square foot of Rentable Area of the Premises for the Lease Year immediately
preceding
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the commencement of the Renewal Period or the commencement of the term of the
leasing of the Expansion Space, as the case may be.
ARTICLE 28. ADDITIONAL SPACE
Subject to the terms and conditions hereinafter set forth, Tenant
shall have the option to lease the entire ninth (9th) floor of the Building,
consisting of approximately 11,363 square feet of Rentable Area (the "Additional
Space"), on the same terms and conditions as the Premises, by sending written
notice to Landlord at any time on or before October 1, 1985. On the date of
delivery to Tenant of possession of the Additional Space in accordance with the
provisions of this Lease, such space shall be added to and constitute a part of
the Premises subject to all the terms and conditions of this Lease.
ARTICLE 29. RIGHT OF FIRST OFFERING
SECTION 29.1. In the event that Rentable Area (the "Expansion Space")
from time to time becomes available anywhere in the Building during the period
commencing on the date hereof until the end of the Term, and provided this Lease
is in full force and effect, Tenant shall have the option (the "Expansion
Option") to lease such Expansion Space on the terms and conditions hereinafter
set forth. Landlord shall send notice in writing (the "Expansion Notice") to
Tenant specifying the location and configuration of such Expansion Space and the
date on which the Expansion Space is scheduled to become available for
occupancy, provided, that in no event shall Landlord send an Expansion Notice to
Tenant more than twelve (12) months prior to the time at which the space which
is the subject of such Expansion Notice is scheduled to become available for
occupancy. Each Expansion Option shall be exercisable by Tenant giving written
notice of the exercise of the particular Expansion Option within thirty (30)
days after Landlord sends the applicable Expansion Notice. Tenant shall lease
the Expansion Span on the same terms and conditions as the Premises except that
(a) the Base Rent payable pursuant to Article 4 of this Lease shall be the Fair
Market Value Rate, determined as of the date of the exercise of such option by
Tenant, of such Expansion Space multiplied by the Rentable Area of the Expansion
Space, and (b) the Operating Costs Factor applicable to the Expansion Space
shall be the quotient derived by dividing the Annual Operating Costs for the
calendar year in which the term of the lease of such Expansion Space commences
by the Rentable Area of the Building, provided however, that with respect to
Expansion Space offered to Tenant hereunder which has not been previously leased
to any tenant ("Initial Lease-Up Expansion Space"), the determination of the
Fair Market Value Rate shall take into consideration the then-existing state of
such Initial Lease-Up Expansion Space, including the existence or non-existence
of any leasehold improvements therein, and the absence of any cash allowance for
any such work payable to Tenant by Landlord. In the event that Tenant does not
exercise any such Expansion Option within the time period required by this
Section 29.1, Landlord shall be free to lease the Expansion Space that was the
subject of such Expansion Option to any other party on such terms and conditions
that Landlord determines in Landlord's sole discretion, but Tenant's option
rights under this Section 29.1 shall continue in full force and effect with
respect to any Expansion Space thereafter becoming available for lease in
accordance with this Article 29.
38
<PAGE>
SECTION 29.2. On the date of delivery of possession of the Expansion
Space (but not earlier than the date on which Landlord previously advised Tenant
such Expansion Space would be available), such space shall be added to and
constitute a part of the Premises. Tenant shall accept the Expansion Space in
its "as is" condition and Tenant's obligation to pay rent with respect to the
Expansion Space shall commence on the date of delivery of such space by Landlord
to Tenant (but not earlier than the date on which Landlord previously advised
Tenant such Expansion Space would be available). Landlord shall have no
obligation to make any alterations, decorations, additions or improvements in or
to the Expansion Space. Tenant shall not make any alterations, installations,
additions or improvements to the Expansion Space unless Tenant complies with
Section 8.2.2 of this Lease.
SECTION 29.3. Notwithstanding anything herein contained to the
contrary, Tenant shall be entitled to lease only that amount of Initial Lease-Up
Expansion Space which will not, when aggregated with the Rentable Area of the
Premises, exceed seventy-five percent (75%) of the Rentable Area of the
Building.
SECTION 29.4. Tenant's option rights under this Article 29 shall be
subject to any option granted by Landlord to another tenant of the Building
contained in the original lease executed by Landlord and such other tenant that
permits such other tenant the right to expand its leased premises to add
additional space whose location is specifically described in such original lease
at a particular time (such as, for example, an option in the original ten (10)
year lease of a tenant leasing seventy-five percent (75%) of the fourth (4th)
floor to lease the remainder of the fourth (4th) floor effective in the fifth
(5th) lease year), but Tenant's rights under this Article 29 shall be superior
to any other rights of first offering or first refusal granted to any other
tenant of the Building.
ARTICLE 30. TENANT'S OPTION TO PURCHASE
SECTION 30.1.
30.1.1. In the event that Landlord shall, at any time during the
Term, desire to sell the Property, Landlord shall send to Tenant a written
notice (the "Sale Notice") setting forth the purchase price and the terms of any
such proposed sale of the Property by Landlord. Tenant shall, for a period of
sixty (60) days (the "Option Period") after Tenant's receipt of the Sale Notice,
have the right to elect to (i) purchase the Property on the terms and conditions
set forth in the Sale Notice; or (ii) make a counteroffer for the purchase of
the Property by sending Landlord a written statement setting forth Tenant's
proposed terms and conditions for the purchase of the Property (the
"Counter-offer"); or (iii) notify Landlord in writing of Tenant's election not
to purchase the Property.
30.1.2. If Tenant elects to accept the terms set forth in the Sale
Notice, Tenant shall send a written notice to such effect to Landlord prior to
the end of the Option Period and Landlord and Tenant shall make settlement of
Tenant's purchase of the Property in accordance with the terms of the Sale
Notice, subject to the provisions of Section 30.4.
39
<PAGE>
30.1.3. If Tenant elects to make the Counteroffer, Landlord shall
notify Tenant in writing of its acceptance or rejection of the Counteroffer
within ten (10) days after Landlord receives the Counteroffer. In the event
that Landlord elects to accept the Counteroffer, Landlord and Tenant shall make
settlement of Tenant's purchase of the Property in accordance with the terms of
the Counteroffer, subject to the provisions of Section 30.4.
30.1.4. In the event Tenant shall elect not to purchase the Property
or Landlord shall not accept the Counteroffer, Landlord shall have the right
during the one (1) year period (the "Third Party Solicitation Period")
commencing on the expiration of the Option Period, to offer to sell the Property
to a third party, subject to the provisions of this Section 30.1.4. Landlord
shall send Tenant a copy of any offer (the "Outside Offer)" to purchase Property
from any such third party that is acceptable to Landlord, which shall set forth
the name and address of such third party and the terms and conditions of the
proposed purchase. In no event shall Landlord accept an offer to purchase the
Property for an amount (based upon present value discounted at a rate equal to
the discount rate of such financing at then prevailing market conditions
assuming that the seller of such financing obligation is not in a forced sale
position) that is less than the lesser of (i) the amount set forth in any
Counteroffer made by Tenant during the Option Period or (ii) the purchase price
for the Property initially set forth in the Sale Notice, unless Landlord shall
first give to Tenant the right, exercisable for sixty (60) days prior to
Landlord's acceptance of the Outside Offer, to purchase the Property on the same
terms and conditions as those contained in the Outside Offer.
SECTION 30.2.
30.2.1. In the event that Landlord shall, at any time during the
Term, receive a Bona Fide Offer (hereinafter defined) to purchase the Property
that Landlord is willing to accept, except an Outside Offer received during the
Third Party Solicitation Period in connection with the procedure described in
subsection 30.1.4 above, Landlord shall send Tenant notice in writing (the
"Notice of Bona Fide Offer") containing a true and complete copy of the Bona
Fide Offer, setting forth the price and all terms and conditions, with the name
and address of the third party offeror. For purposes hereof, a "Bona Fide
Offer" shall be an offer in writing, signed by an unrelated offeror or offerors
(who must be a person or persons financially capable of carrying out the terms
of such Bona Fide Offer), in a form legally enforceable against such outside
offeror or offerors.
30.2.2. Whenever a Bona Fide Offer to purchase the Property has been
received and the Notice of Bona Fide Offer has been sent by Landlord to Tenant,
the following procedure shall be complied with: For a period of thirty (30)
days from Tenant's receipt of the Notice of Bona Fide Offer, Tenant shall have
the right to purchase the Property on the same terms and conditions as the Bona
Fide Offer. If Tenant shall not elect to purchase the Property in accordance
with the terms and conditions of the Bona Fide Offer, Landlord shall have the
right to accept the Bona Fide Offer and to sell and convey the Property but only
in strict accordance with all of the provisions of the Bona Fide Offer and only
if the sale is fully consummated within one (1) year after Tenant's receipt of
the Notice
40
<PAGE>
of Bona Fide Offer, and in the event of any such sale and conveyance, Tenant's
option rights pursuant to this Article 30 shall terminate and be of no further
force or effect.
SECTION 30.3. As a condition of exercising the option to purchase the
Property pursuant to Section 30.1. or 30.2, simultaneously with or prior to the
exercise of such option, Tenant shall deposit with a recognized title insurance
company (the "Title Company") situated in the metropolitan Washington, D.C. area
either:
(a) A cash deposit (the "Purchase Option Deposit") in an amount
equal to either (i) one percent (1%) of the purchase price set forth in the
Sales Notice or the Counteroffer, as applicable, or (ii) the deposit required
under the Outside Offer or the Bona Fide Offer, as applicable, which shall be
applied to the purchase price at settlement of such purchase; or
(b) An unconditional, irrevocable letter of credit from such
banking institution as is reasonably acceptable to Landlord, in an amount equal
to either (i) one percent (1%) of the purchase price set forth in the Sale
Notice or the Counteroffer, as applicable, or (ii) the deposit required under
the Outside Offer or the Bona Fide Offer, as applicable, which shall be
substantially in the form attached hereto as Exhibit K (which letter of credit
and any substitute therefore is hereinafter referred to as the "Purchase Option
Letter of Credit"). The Purchase Option Letter of Credit shall be maintained in
effect (or replaced by an identical Purchase Option Letter of Credit) by Tenant
for the entire period ending on the date (the "Purchase Option Letter of Credit
Expiration Date") which is thirty (30) days after the Purchase Option Settlement
Date (hereinafter defined) and may be issued for such period of time that
expires earlier than the Purchase Option Letter of Credit Expiration Date so
long as each such Purchase Option Letter of Credit is renewed or replaced by an
identical Purchase Option Letter of Credit at least fifteen (15) days prior to
the expiration date thereof. In the event that any such Purchase Option Letter
of Credit is not so renewed or replaced by an identical Purchase Option Letter
of Credit at least fifteen (15) days prior to the expiration date thereof, the
Title Company may draw on the Purchase Option Letter of Credit and the proceeds
thereof shall the constitute the Purchase Option Deposit and shall be held and
disbursed by the Title Company as provided in Section 30.3 (a).
SECTION 30.4. In the event that Tenant exercises its option to
purchase the Property pursuant to Section 30.1 or 30.2, settlement shall be held
on the date (the "Purchase Option Settlement Date") required by the Sale Notice,
the Counteroffer, the Outside Offer or the Bona Fide Offer, as may be
applicable, but not earlier than ninety (90) days after the date of exercise by
Tenant of such purchase option. It shall be a condition of Tenant's obligation
to make settlement of such purchase that Tenant shall receive at settlement of
such purchase (at Tenant's expense) a full coverage owner's title insurance
policy (ALTA Form B) from a recognized title insurance company designated by
Tenant insuring Tenant's ownership of the Property free and clear of all liens,
encumbrances and title exceptions except any matters permitted as title
exceptions under the provisions of the Sale Notice, the Counteroffer, the
Outside Offer or the Bona Fide Offer, as applicable.
41
<PAGE>
SECTION 30.5. Tenant's option rights under this Article 30 shall be
assignable by Tenant and in such event title to the Property shall be acquired
in such name as may be designated by Tenant or Tenant's assignee; provided,
however, that in the event that the Outside Offer or the Bona Fide Offer
requires the delivery of a deferred purchase money promissory note at settlement
of such purchase that is executed by a purchaser having a net worth in excess of
the principal amount of such deferred purchase money promissory note and which
provides for personal liability of such purchaser, then such deferred purchase
money promissory note that shall be delivered by Tenant or its assignee shall be
executed or guaranteed either by a party having a net worth in excess of the
principal amount of such deferred purchase money promissory note or by Tenant.
SECTION 30.6. If Tenant defaults in its obligation to purchase the
Property when Tenant is obligated to make settlement of such purchase, the
Purchase Option Deposit shall be forfeited and paid to Landlord as fixed, agreed
and liquidated damages and Tenant shall thereupon be relieved of all further
obligations to Landlord by reason of such default, and this Lease shall continue
in full force and effect but Tenant's option rights under this Article 30 shall
cease and terminate and the provisions of this Article 30 shall have no further
force or effect.
ARTICLE 31. TENANT'S REFURBISHING ALLOWANCE;
REFURBISHING BY LANDLORD
SECTION 31.1. Landlord shall, on or before the thirtieth (30th) day
of the (6th) Lease Year, pay to Tenant a cash allowance equal to the product of
One and 50/100ths Dollars ($1.50) multiplied by the Rentable Area of the
Premises (including any Expansion Space), to be applied by Tenant to (and
payable to Tenant only to the extent applied by Tenant to pay or to reimburse
Tenant for the payment of) the cost of Tenant's refurbishing of the Premises.
SECTION 31.2. Landlord covenants and agrees to renovate, refurbish
and improve the common and public areas of the Building as frequently as
necessary, but at least as often as once every five (5) years during the Term,
if and to the extent required to maintain the quality of the Building as a
first-class office building in the Washington, D.C. metropolitan area. Any
alterations or redecoration of the common and public areas shall be subject to
Tenant's approval of the quality and nature thereof, which approval shall not be
unreasonably withheld or delayed.
42
<PAGE>
IN WITNESS WHEREOF, each party hereto has executed and sealed this Lease,
or has caused it to be executed and sealed on its behalf by its duly authorized
representatives, the day and year first above written.
WITNESS: LANDLORD:
COMMUNITY MOTORS PROPERTY
ASSOCIATES LIMITED
PARTNERSHIP
By: /s/ Paul B. Abrams
- --------------------------- ------------------------------
Paul B. Abrams,
General Partner
ATTEST: TENANT:
FEDERAL DATA CORPORATION
By: /s/ Robert Hanley
- --------------------------- ------------------------------
Marvin S. Haber, Secretary Robert Hanley, President
43
<PAGE>
_______________ss:
I, ________________, a Notary Public in and for the
_______________________, do hereby certify that Paul B. Abrams, who is
personally well known to me as a person named as the General Partner of
Community Motors Property Associates Limited that executed the foregoing and
annexed Agreement of Lease, personally appeared before me in said jurisdiction
and acknowledged that he, as such General Partner being duly authorized so to
do, executed the foregoing and annexed Agreement of Lease on behalf of said
corporation.
Given under my hand and seal this ______ day of ________________ A.D.,
1984.
-----------------------------------
Notary Public
[Notarial Seal]
_______________ss:
I, ________________, a Notary Public in and for the
_______________________, do hereby certify that ___________________, who is
personally well known to me as a person named as the _____________________ of
Federal Data Corporation that executed the foregoing and annexed Agreement of
Lease, personally appeared before me in said jurisdiction and acknowledged that
he, as such _____________________ being duly authorized so to do, executed the
foregoing and annexed Agreement of Lease on behalf of said corporation.
Given under my hand and seal this ______ day of ________________ A.D.,
1984.
-----------------------------------
Notary Public
[Notarial Seal]
44
<PAGE>
INDEX
Page
----
ARTICLE 1. PREMISES......................................................... 2
ARTICLE 2. TERM............................................................. 3
ARTICLE 3. USE.............................................................. 6
ARTICLE 4. RENT............................................................. 6
ARTICLE 5. ASSIGNMENT AND SUBLETTING........................................ 13
ARTICLE 6. CONSTRUCTION OF BUILDING AND PREMISES............................ 14
ARTICLE 7. FIRE AND OTHER CASUALTY.......................................... 15
ARTICLE 8. MAINTENANCE AND SERVICES.......................................... 16
ARTICLE 9. DEFAULTS BY TENANT............................................... 19
ARTICLE 10. HOLDING OVER.................................................... 21
ARTICLE 11. LANDLORD'S RIGHT OF ENTRY....................................... 21
ARTICLE 12. INSURANCE AND INDEMNIFICATION................................... 22
ARTICLE 13. EMINENT DOMAIN.................................................. 23
ARTICLE 14. MECHANICS' AND MATERIALMENS' LIENS.............................. 24
ARTICLE 15. QUIET ENJOYMENT - SURRENDER..................................... 24
ARTICLE 16. RULES AND REGULATIONS........................................... 25
ARTICLE 17. SUBORDINATION - ATTORNMENT...................................... 25
ARTICLE 18. ESTOPPEL CERTIFICATE............................................ 26
ARTICLE 19. NOTICES......................................................... 26
ARTICLE 20. GENERAL......................................................... 27
ARTICLE 21. ARBITRATION..................................................... 30
45
<PAGE>
ARTICLE 22. MEMORANDUM OF LEASE............................................. 31
ARTICLE 23. LETTERS OF CREDIT............................................... 31
ARTICLE 24. WARRANTIES AND REPRESENTATIONS.................................. 34
ARTICLE 25. ACQUISITION OF LAND............................................. 34
ARTICLE 26. PARKING......................................................... 35
ARTICLE 27. RENEWAL OPTIONS................................................. 35
ARTICLE 28. ADDITIONAL SPACE................................................ 38
ARTICLE 29. RIGHT OF FIRST OFFERING......................................... 38
ARTICLE 30. TENANT'S OPTION TO PURCHASE..................................... 39
ARTICLE 31. TENANT'S REFURBISHING ALLOWANCE;
REFURBISHING BY LANDLORD............................... 42
Attachments: Exhibit A - Floor Plans of Premises
Exhibit B - Leasehold Improvements
Exhibit C - Declaration of Commencement Date
Exhibit D - Plans and Specifications
Exhibit E - Holidays
Exhibit F - Cleaning Specifications
Exhibit G - Rules and Regulations
Exhibit H - Non-Disturbance Agreement
Exhibit I - Tenant's Letter of Credit
Exhibit J - Landlord's Letter of Credit
Exhibit K - Purchase Option Letter of Credit
Schedule I - Legal descripton of the Land
46
<PAGE>
DEFINITIONS
The following terms are defined in the Sections indicated:
Term Section
- ---- -------
Additional Parking 26.1
Additional Real Property 4.4.2
Additional Rent 4.1.2
Additional Space 28
Alterations 8.2.2
Annual Operating Costs 4.3.1
Base Rent 4.1.1
Bona Fide Offer 30.2.1
Building 1.1
Building Architect 1.2.1
Commencement Date 2.1
Completion Date 2.2.1(k)
Counteroffer 30.1.1
CPI-U 4.2(a)(i)
Electrical Consumption Costs Statement 4.3.3
Electrical Consumption Factor 4.3.4
Energy Saving Capital Improvement 4.3.10
Event of Default 9.1
Expansion Notice 29.1
Expansion Option 29.1
Expansion Space 29.1
Expiration Date 2.1
Fair Market Value Rate 27.5
Groundbreaking 6.4
Guaranteed Completion Date 23.4
Holders of Superior Instruments 17.1
Holidays 8.1.1
Initial Lease-Up Expansion Space 29.1
Land 1.1
Landlord 20.11.1
Landlord's Letter of Credit 23.3
Landlord's Letter of Credit Exhaustion Date 23.4
Landlord's Letter of Credit Expiration Date 23.3
Lease Memorandum 22.1
Legal Requirements 6.1
Liquidation Bankruptcy Proceeding 9.1.3
Negotiation Period 27.3
Notice of Bona Fide Offer 30.2.1
Notice of Dispute 4.3.9
Notices 19.1
47
<PAGE>
Term Section
- ---- -------
Operating Costs Factor 4.3.4
Operating Costs Statement Option Period 4.3.5
Option Period 30.1.1
Outside Completion Date 6.4
Outside Offer 30.1.4
Parking Right 26.1
Person 20.8.1
Plans and Specifications 6.1
Premises 1.1
Property 1.1
Purchase Option 30.3(a)
Purchase Option Letter of Credit 30.3(b)
Purchase Option Letter of Credit Expiration Date 30.3(b)
Purchase Option Settlement Date 30.4
Rate 4.3.3
Real Estate Taxes 4.4.1
Renewal Periods 27.1
Rent 4.1
Rentable Area 1.2.1
Rentable Area of the Building 1.2.1
Rentable Area of the Premises 1.2.1
Rules and Regulations 16
Sale Notice 30.1.1
Substantially Completed 2.2.3
Superior Instruments 17.1
Tenant 20.12
Tenant's Architect 1.2.1
Tenant's Electrical Consumption Costs 4.3.3
Tenant's Estimated Operating Costs Amount 4.3.8
Tenant's Finish Work 6.2
Tenant's Letter of Credit 23.1
Tenant's Letter of Credit Expiration Date 23.1
Tenant's Operating Costs Amount 4.3.6
Term 2.1
Third Party Solicitation Period 30.1.4
Title Company 30.3
Title Exceptions 25.2
Warranty Period 8.3.3
48
<PAGE>
EXHIBIT B
LEASEHOLD IMPROVEMENTS
ARTICLE 1
DEFINITIONS
The terms defined in Article 1 of this Exhibit B, for all purposes of
this Exhibit B, shall have the meanings herein specified and, in addition to the
terms defined herein, the definitions in the Lease shall also apply to this
Exhibit B.
SECTION 1.1. "Building Standard" means the quantity and quality of
materials and finishes set forth in Exhibit B-1. Such improvements shall be
supplied, installed, finished and paid for by Landlord.
SECTION 1.2. "Building Shell Work" means the following improvements
in and about the Premises which shall be supplied, installed, finished and paid
for by Landlord: (a) outside walls and core walls in such manner, including
finish materials, as befits a first-class office building in the Washington,
D.C. metropolitan area;(b) unfinished concrete floors installed throughout the
Premises, broom clean;(c) Building Standard ceiling grid system installed
throughout exclusive of ceiling tile;(d) Building Standard 277/480 volt and
120/208 volt power supplied to the Building core and the power grid in
ceiling;(e) mens' and ladies' restroom facilities with Building Standard
finishes located on each floor on which the Premises are located;(f) main
heating, ventilating, and air conditioning ducts completed to the perimeter VAV
box of each perimeter bay, and standard thermostats, connected in the ceiling at
the ratio of one (1) for each such perimeter bay, and for interior one space,
one VAV box and standard thermostat for each one thousand (1,000) square feet of
interior space;(g) risers and main loop on each floor with sprinkler piping,
drops and heads installed as required by applicable governmental and insurance
requirements;(h) Building Standard communication speakers and smoke detectors if
and to the extent required by applicable governmental and insurance
requirements;(i) all exterior walls shall have thermal insulation and all
windows shall have double glazing;(j) all floor openings and stairs, stair
openings, fire rated drywall enclosures and standard fire rated doors for
stairwells and structural engineering required for these items shall have been
provided by Landlord; and (k) thin slat venetian blinds hung on all exterior
windows.
SECTION 1.3. "Tenant Work" means the items which are supplied,
installed, and finished by Landlord's Contractor or Tenant's Contractor in or
for the Premises on behalf of Tenant, as hereinafter provided for, which are not
included in the Building Standard specifications in or for the Premises in terms
of quantity or quality (or both) and which are not
B-1
<PAGE>
included in Building Shell Work. The design of the Tenant Work shall be
consistent with sound architectural and construction practice in first-class
office buildings.
SECTION 1.4. "Leasehold Improvements" shall mean the aggregate of
the Building Standard improvements and the Tenant Work.
SECTION 1.5. "Landlord's Contractor" means the contractor selected
by Landlord to construct the Building.
SECTION 1.6. "Tenant's Contractor" means the contractor selected by
Tenant to construct and install the Leasehold Improvements in the Premises in
the event Tenant elects to have Tenant's Contractor perform such work pursuant
to the provisions of Article 5 hereof.
SECTION 1.7. "Landlord's Architect" shall mean the architectural
firm of Burroughs + Roos or such other architectural firm rendering services
relating to the Premises that Landlord and Tenant shall mutually approve.
ARTICLE 2
COMPLETION OF PREMISES
SECTION 2.1. The "Architectural Plans" shall mean complete
architectural working drawings and specifications for the Leasehold Improvements
to the Premises prepared by Landlord's Architect based upon information
furnished by Tenant. The Architectural Plans shall show all Leasehold
Improvements including, but not limited to, partitions, doors, wall finishes,
floor coverings, reflected ceilings, all special requirements and all items
required by Landlord's mechanical, electrical and structural engineers to
prepare mechanical, electrical, structural, and plumbing plans and
specifications for the Premises.
SECTION 2.2. In accordance with the procedure and time schedule set
forth in this Article 2, Landlord and Tenant shall do the following:
(a) Landlord confirms that prior to execution of this Lease,
Tenant submitted to Landlord's Architect all information necessary to enable
Landlord's Architect to prepare the Architectural Plans.
(b) Landlord shall cause Landlord's Architect to prepare and
submit the Architectural Plans to Tenant with reasonable diligence. The fees
and expenses of Landlord's Architect for preparing the Architectural Plans and
revisions thereto and for consultations with Tenant shall be paid by Landlord to
the extent of an allowance equal to Forty-Three Cents ($0.43) multiplied by the
Rentable Area of the Premises and shall be paid by Tenant to the extent that
such fees and expenses exceed such allowance payable by Landlord.
B-2
<PAGE>
(c) Within twenty (20) days after Landlord's delivery of the
Architectural Plans to Tenant, Tenant shall deliver to Landlord its approval or
disapproval of such Plans in accordance with Section 2.5 hereof.
(d) Within thirty (30) days after the approval of the
Architectural Plans, Landlord, at Landlord's sole cost and expense, shall cause
Landlord's engineers to prepare and deliver to Tenant mechanical, electrical,
structural and plumbing plans and specifications ("MEPS Plans") which are
consistent with and implement and carry out the Architectural Plans, including
all work necessary to connect any of Tenant's special facilities to the Building
systems.
(e) Within twenty (20) days after the delivery of the MEPS
Plans, Tenant shall approve or disapprove the MEPS Plans in accordance with
Section 2.5 hereof.
(f) Landlord and Tenant shall use their best efforts to endeavor
to have the Architectural Plans and MEPS Plans completed in accordance with the
following time schedule:
(1) February 1, 1985 - completion of Architectural Plans to
the extent of partitioning layout, doors, electrical and telephone outlets,
plumbing, location of special items that will affect the heating, ventilating
and air conditioning system, designation of areas to be carpeted or tiled and
changes to concrete slabs, and submission thereof to Landlord's engineers for
preparation of MEPS Plans.
(2) March 1, 1985 - completion of entire Architectural
Plans and MEPS Plans, other than decorative or millwork elements.
(g) On or before the later of April 1, 1985 and the date which
is sixty (60) days after the approval of the Architectural Plans and the MEPS
Plans, Landlord shall deliver to Tenant a guaranteed price for the performance
of the Leasehold Improvements (the "Guaranteed Price"), which Guaranteed Price
shall (1) separately specify the cost of each trade for labor and materials, the
unit cost of each trade for labor and materials and the unit cost of all
fixtures, equipment and materials in the form requested by Tenant, (2) have
annexed thereto a schedule of prices for alternate work, materials, equipment,
fixtures or installations requested by Tenant, (3) have annexed thereto a
schedule of unit prices requested by Tenant, (4) have annexed thereto a schedule
of unit prices for all items of Building Standard, and (5) separately state the
cost of the Tenant Work portion and the Building Standard portion of the
Guaranteed Price, which Building Standard portion shall not be less than an
amount (the "Building Standard Minimum Amount") equal to the product of Eleven
Dollars ($11.00) multiplied by the Rentable Area of the Premises. The unit
prices in the Guaranteed Price need not have an allocation between labor and
materials. For purposes hereof, the amount that is equal to the greater of the
Building Standard portion of the Guaranteed Price determined as aforesaid and
the Building Standard Minimum Amount is hereinafter referred to as the Building
Standard Cash Allowance.
B-3
<PAGE>
(h) Within thirty (30) days after Tenant receives the Guaranteed
Price, Tenant shall deliver to Landlord either written acceptance of such
Guaranteed Price or written notice of Tenant's election to have Tenant's
Contractor perform the Leasehold Improvement work pursuant to the provisions of
Article 5 hereof.
SECTION 2.3. The Term "Guaranteed Price" means
(a) the direct and actual costs necessarily to be incurred by
Landlord for the Leasehold Improvements and payable by Landlord, and shall
include only the following costs:
(i) wages payable for labor in the direct employ of
Landlord's Contractor in the performance of "general conditions"
work applicable to the Leasehold Improvements provided that (A)
such wages are pursuant to applicable collective bargaining
agreements or under a salary or wage schedule agreed upon by
Tenant and Landlord's Contractor, and (B) the number of employees
constituting such labor shall not exceed the number which is
normal and usual for the scope of the work constituting the
Leasehold Improvements;
(ii) an allowance for the costs of contributions,
assessments or taxes for such items as unemployment compensation
and social security on amounts payable to employees of Landlord's
Contractor which are included under clause (A) of paragraph (i)
above equal to twenty-six percent (26%) of such amounts;
(iii) costs of all materials, supplies and equipment to
be incorporated in the Leasehold Improvements, including costs of
transportation thereof;
(iv) payments to be made by Landlord's Contractor to
subcontractors for Leasehold Improvement work performed pursuant
to subcontracts executed by Landlord's Contractor in accordance
with the provisions of Section 2.8;
(v) sales, use or similar taxes related to the
Leasehold Improvements (including such taxes on materials
supplied by subcontractors) to be imposed by any governmental
authority, which Landlord shall insure are paid as they become
due; and
(vi) rental of equipment, except that rental of
contractor-owned
B-4
<PAGE>
equipment shall be at 75% of the current American Equipment
Distributors rates;
(vii) allocable portion of bond and insurance premiums;
(viii)costs of necessary printing of all shop drawings and
other reproduction approved by Tenant, PLUS
(b) An amount equal to five percent (5%) of the amount of the
Tenant Work portion of the Guaranteed Price for Landlord's Contractor's overhead
and profit allocable to the Tenant Work, with no mark-up for any overhead or
profit to Landlord.
SECTION 2.4. The Guaranteed Price shall not include any of the
following items:
(a) salaries or other compensation of the Landlord's or
Landlord's Contractor's officers or executives or other employees or personnel
except as specifically provided in Section 2.3;
(b) any expenses of or for Landlord's or Landlord's Contractor's
principal and branch office [other than the field office expenses referred to in
Section 2.3(a) (i) and (ii)];
(c) any capital expenses of the Landlord or Landlord's
Contractor in connection with the Leasehold Improvements, including without
limitation, interest on any capital employed for the Leasehold Improvements;
(d) overhead, profit and general expenses of any kind except
those that are expressly set forth in Section 2.3; or
(e) any fees of any kind to Landlord.
SECTION 2.5. With respect to the Architectural Plans and the MEPS
Plans (or any revision thereof), Tenant shall notify Landlord in writing within
twenty (20) days after Tenant's receipt of such Plans as to whether Tenant
approves or disapproves the same. If Tenant disapproves any part of such Plans,
Tenant shall specify with particularity (A) the reason therefore and (B) the
modifications required by Tenant thereto. Landlord shall cause Landlord's
Architect or engineer to modify the Plans accordingly and resubmit the same for
Tenant's approval within fifteen (15) days after Landlord's receipt of Tenant's
disapproval. If Tenant fails to approve or disapprove such Plans in the manner
and within the period specified in this Section 2.5. Tenant shall be deemed to
have approved such Plans.
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SECTION 2.6. Tenant may request revisions ("Revisions") to the
Architectural Plans or MEPS Plans, in which event Landlord shall notify Tenant
in writing within ten (10) days after receipt of such Revisions as to whether
Landlord approves or disapproves such Revisions. Landlord shall have the right
to disapprove any Revisions only if the same would either (i) adversely affect
the structural, plumbing, heating, air conditioning or ventilating systems of
the Building or the functioning thereof, (ii) fail to comply with applicable
Legal Requirements, (iii) adversely affect the safety of the Building, or (iv)
affect the exterior appearance of the Building. If Landlord disapproves any
Revisions, Landlord shall specify with particularity (A) the reason therefor and
(B) the modifications required by Landlord thereto. After the Architectural
Plans and MEPS Plans have been approved pursuant to Section 2.2, the fees of
Landlord's Architect and engineers for any Revisions thereto requested by Tenant
shall be paid by Tenant.
SECTION 2.7. For purposes of determining compliance with the
schedule set forth in Section 2.2, 2.5 and 2.6 hereof, a Plan or approval shall
be deemed submitted when it has been delivered in accordance with this Exhibit
B. In the event Landlord and Tenant disagree as to whether any submission or
disapproval is or is not in accordance with Section 2.2, 2.5 or 2.6 as the case
may be, either party may request that the dispute be resolved by arbitration in
accordance with Article 21 of the Lease. In the event the arbitrator determines
that a Plan should have been approved by Landlord or Tenant, as the case may be,
such Plan shall be deemed to have been submitted as of the day of its actual
submission. In the event the arbitrator determines that a Plan should not have
been approved, such Plan shall not be deemed submitted until a revised Plan is
submitted that is consistent with the provisions of this Exhibit B.
SECTION 2.8. (a)Within fifteen (15) business days after the approval
of the Architectural Plans, Landlord's Contractor shall submit to Tenant for its
approval a list of at least three (3) bona fide independent bidders for each
trade to be employed in connection with the performance of the Leasehold
Improvements. Any such bidders may be deleted by Tenant by notice to Landlord's
Contractor given within ten (10) days after such submission, and additional
bidders may be added to the list by Tenant by notice to Landlord's Contractor
given within said ten (10) day period, which additional bidders shall be subject
to Landlord's Contractor's approval, which approval shall not be unreasonably
withheld or delayed. If Landlord's Contractor does not disapprove any such
additional bidder within ten (10) days after Tenant's submission of such bidder,
such bidder shall be deemed approved.
(b) Landlord's Contractor shall solicit bids from such bidders
for the applicable trade within five (5) business days after (i) Landlord and
Tenant approve the bid list for such trade, and (ii) those portions of the
Architectural Plans and the MEPS Plans, and any specifications thereto,
applicable to such trade have been approved by Landlord and Tenant. Landlord's
Contractor shall prepare the invitations to bid, which invitations shall specify
that (i) the bids shall indicate a guaranteed date of delivery and installation;
(ii) all bids must be received by Landlord's Contractor within fifteen (15)
business days after the receipt thereof by each bidder of an invitation to bid;
(iii) the bids shall contain such reasonable and customary
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guarantees and warranties requested by Tenant, (iv) each such bid shall
separately specify the cost for labor and materials and the unit cost of all
fixtures, equipment and materials in the form requested by Tenant, (v) each bid
shall have annexed thereto a schedule of prices for alternate work, materials,
equipment, fixtures or installations requested by Tenant, (vi) each bid shall
have annexed thereto a schedule of unit prices requested by Tenant, and (vii)
each bid shall have annexed thereto a schedule of unit prices for all items of
Building Standard to be included therein. Notwithstanding the foregoing, the
information (the "Detailed Information") referred to in clauses (iv), (v), (vi),
and (vii) of this Section 2.8(b) need not be submitted with the original bid
provided that the Detailed Information is obtained from the three lowest bidders
within ten (10) business days after the bids are received by Landlord and the
Detailed Information is delivered to Tenant no later than the date on which the
Guaranteed Price is submitted by Landlord to Tenant.
(c) Landlord's Contractor shall, promptly after receipt thereof,
deliver to Tenant copies of all bids submitted by subcontractors pursuant to
Section 2.8(b).
(d) The Guaranteed Price shall be based upon the bid of each of
the qualified bidders who submits the lowest bid for such trade's portion of the
Tenant Work pursuant to this Section 2.8. Notwithstanding the foregoing, if
another qualified bidder (the "Overall Low Bidder") has a lower overall bid for
work relating to both the Building and for any Building Standard portion of the
Tenant Work, Landlord may use such subcontractor to perform such work but in
such event the Guaranteed Price shall be based upon (i) the average of the three
lowest bidders for such portion of the Tenant Work if the bid of the highest of
such three bidders is not more than one hundred ten percent (110%) of the bid of
the lowest bidder or (ii) the average of the bid obtained from the lowest bidder
for such portion of the Tenant Work and the second lowest bidder for such
portion of the Tenant Work if the bid of the third lowest bidder is more than
one hundred ten percent (110%) of the bid of the lowest bidder.
(e) Landlord's Contractor shall assist Tenant in reviewing bids.
Upon request by Tenant, Landlord's Contractor shall arrange for meetings with
any party submitting a bid for the purpose of negotiating the price thereof or
other matters contained therein. Tenant and Tenant's consultants shall have the
right to participate in such negotiations with Landlord's Contractor.
Landlord's Contractor shall reasonably cooperate with Tenant in negotiating
prices and other matters contained in such bids.
(f) The cost of any trade to be included in the Guaranteed Price
shall be the amount of the bid designated by Tenant or Landlord pursuant to
Section 2.8(d).
(g) If less than two (2) of the bidders designated as provided
in Section 2.8(a) submit bids within the fifteen (15) business day period
specified in Section 2.8(b), Tenant may require that Landlord's Contractor
solicit additional bids in accordance with Section 2.8(a) and (b).
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ARTICLE 3
BUILDING STANDARD WORK; BUILDING SHELL WORK
SECTION 3.1. As part of Landlord's contribution to the Leasehold
Improvements, Landlord shall pay for the Building Standard portion of the
Guaranteed Price.
SECTION 3.2. Tenant shall be entitled to credit against the
Guaranteed Price for the components of Building Standard which are not
installed. Such credit shall be computed based upon the unit prices for
Building Standard submitted to Tenant with the Guaranteed Price.
SECTION 3.3. In addition to the Building Standard items referred to
in Section 3.1, Landlord shall at its sole cost and expense furnish, install and
complete the Building Shell Work.
ARTICLE 4
TENANT WORK; LANDLORD'S CASH ALLOWANCE
SECTION 4.1. In addition to Landlord's contributions described in
Article 3, Landlord shall pay to or on behalf of Tenant an amount ("Landlord's
Cash Allowance") equal to the sum of (i) Two Hundred Thousand Dollars ($200,000)
plus (ii) the product of Three Dollars ($3.00) multiplied by the Rentable Area
of the Premises in excess of ten thousand (10,000) square feet. In
consideration of the Lease and without regard to whether expenditures for Tenant
Work actually exceed Landlord's Cash Allowance (subject to the limitation set
forth in Section 4.4), Landlord's Cash Allowance shall be paid to or on behalf
of Tenant as set forth below.
SECTION 4.2. On or before the tenth (10th) day of each month,
Landlord shall submit to Tenant a certified statement setting forth the portion
of the Guaranteed Price due and payable to Landlord's Contractor on account of
Tenant Work performed during the preceding month, which statement shall include,
among other things, (A) a detailed description of the portion of the Tenant Work
performed during the preceding calendar month, (B) a copy of Landlord's
Contractor's requisition for such preceding calendar month, and (C) a
calculation of any amounts then due to Landlord with respect to such Tenant
Work, in accordance with Section 4.3.
SECTION 4.3. If the cost of Tenant Work exceeds Landlord's Cash
Allowance, such excess cost shall be paid by Tenant after Landlord's Cash
Allowance has been paid in full to Landlord's Contractor and within ten (10)
days after presentation of the information set forth in Section 4.2.
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SECTION 4.4. If the cost of Tenant Work is less than Landlord's Cash
Allowance, then, on the Commencement Date, Landlord shall pay to Tenant the
excess of (i) Landlord's Cash Allowance over (ii) the cost of Tenant Work;
provided, however, that such payment by Landlord to Tenant shall not exceed the
sum of the cost of Tenant's Finish Work incurred by Tenant plus Two Dollars
($2.00) multiplied by the Rentable Area of the Premises. If Landlord fails to
make any such payment to Tenant, Tenant shall have the right to deduct the same
from the installments of Rent next becoming due.
SECTION 4.5. Within sixty (60) days after the Commencement Date,
Tenant shall submit a list to Landlord itemizing the components of Leasehold
Improvements which were paid by Tenant from Landlord's Cash Allowance and all
such components of Leasehold Improvements shall remain the property of Landlord
("Landlord's Property"). All components of Leasehold Improvements other than
Landlord's Property shall be and remain Tenant's property during the Term and
shall become Landlord's Property at the end of the Term, except that Tenant's
furniture, furnishings, personal property and movable trade fixtures shall be
removed or otherwise disposed of at the termination of the Lease in accordance
with Article 15 of the Lease.
SECTION 4.6. For purposes of this Exhibit B, the Rentable Area of
the Premises is estimated to be 65,722 square feet. The amount of any payments
payable to Tenant pursuant to this Article 4 shall be adjusted upon the
determination of the Rentable Area of the Premises pursuant to Section 1.2 of
the Lease. If the payments made to or on behalf of Tenant on the basis of the
estimated Rentable Area of the Premises exceed the amount which Tenant is
entitled to based on the actual Rentable Area of the Premises, Tenant shall pay
Landlord such excess promptly after such determination. If the payments made to
or on behalf of Tenant on the basis of the estimated Rentable Area of the
Premises are less than the amount which Tenant is entitled to based upon the
actual square feet of Rentable Area in the Premises, Landlord shall pay Tenant
such shortfall promptly after such determination.
ARTICLE 5
CONSTRUCTION OF LEASEHOLD IMPROVEMENTS BY TENANT
SECTION 5.1. Notwithstanding any other provisions of this Exhibit B
or the Lease to the contrary, Tenant shall have the right, exercisable by Tenant
giving notice in writing to Landlord within the period which is thirty (30) days
after the date on which Tenant receives the Guaranteed Price pursuant to the
provisions of Section 2.3(f) hereof [including the Detailed Information referred
to in Section 2.8(b)], to elect to have Tenant's Contractor install the
Leasehold Improvements subject to the terms and conditions hereinafter set
forth.
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SECTION 5.2. In the event that Tenant elects to have Tenant's
Contractor install the Leasehold Improvements hereunder, the Lease and this
Exhibit B shall be amended as follows:
5.2.1. Landlord shall be responsible for the completion of the
Building Shell Work but not the Leasehold Improvements. The Building Shell Work
shall be deemed to have been completed on the date (the "Building Shell Work
Completion Date") when all of the following shall have occurred:
(a) All of the work required pursuant to Section 1.2 of this
Exhibit B [other than Deferral Items (hereafter defined in this Section 5.2.1)]
shall have been substantially completed (as such term is defined in subsection
2.2.3 of the Lease); provided that the Premises are accessible and that the
non-completion of any work to be done does not materially interfere with the
work to be done by Tenant's Contractor hereunder;
(b) Landlord shall have delivered to Tenant the certificate of
Landlord's Architect certifying the matters set forth in subparagraph (a) of
this Section 5.2.1.;
(c) Landlord shall have given Tenant at least thirty (30) days
notice of the date on which Landlord anticipates that the Building Shell Work
Completion Date will occur.
For purposes hereof, Deferral Items shall mean the work set forth in clause (e)
of Section 1.2 of this Exhibit B and the work set forth in clause (i) of Section
1.2 of this Exhibit B to the extent that the work set forth in clause (i)
relates to floors not leased to Tenant.
5.2.2. (a) Landlord shall pay to or for the benefit of
Tenant, as hereinafter provided, a cash allowance (the "Leasehold Improvements
Allowance") equal to the sum of the Building Standard Cash Allowance plus
Landlord's Cash Allowance. Landlord shall pay the Leasehold Improvements
Allowance to Tenant's Contractor periodically as written requests for payment
(the "Payment Request") are submitted to Landlord by Tenant based upon copies of
Tenant's Contractor's requisition for the period to which any such Payment
Request relates, which Payment Request shall include a detailed description of
the portion of the Tenant Work performed during the period to which such Payment
Request relates. Landlord shall pay the amount so requested by Tenant to
Tenant's Contractor within fifteen (15) days after a Payment Request is
submitted to Landlord. In the event that Landlord fails to comply with the time
period set forth herein for payment of a Payment Request, Landlord shall be
obligated to pay to Tenant interest on such late payment at the rate of two
percent (2%) above the prime rate charged by Citibank, New York City computed
from the expiration of ten (10) days after the date on which the applicable
Payment Request was submitted to Landlord to the date on which such delinquent
payment is paid by Landlord to Tenant.
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(b) In the event that Tenant shall not have utilized the entire
Leasehold Improvements Allowance for the cost of the Leasehold Improvements or
Tenant's Finish Work in accordance with the provisions of subparagraph (a) of
this Section 5.2.2, Landlord shall pay the balance of the Leasehold Improvements
Allowance, but not exceeding an amount equal to Two Dollars ($2.00) multiplied
by the Rentable Area of the Premises, in cash to Tenant on the Commencement
Date.
5.2.3. For purposes of establishing the Commencement Date and
the Completion Date pursuant to Article 2 of the Lease, Landlord's obligations
pursuant to subsection 2.2.1 of the Lease shall not include any of the Leasehold
Improvements.
5.2.4. The Commencement Date for purposes of the Lease shall be
the earlier of (a) the later of (i) the date which is four (4) months after the
Building Shell Work Completion Date, (ii) the expiration of five (5) days after
the Completion Date, and (iii) the date on which the Deferral Items (defined in
Section 5.2.1 of this Exhibit B) have been completed, or (b) the date of
Tenant's occupancy of the Premises for the regular conduct of its business
operations. Landlord shall provide continuous access to the Premises to Tenant,
Tenant's Contractor and its subcontractors at all times after the Building Shell
Work Completion Date in accordance with the provisions of Section 6.2 of the
Lease and all references in Section 6.2 of the Lease to Tenant's Finish Work
shall include the Leasehold Improvements.
5.2.5. The first sentence of Section 2.2.1(k) of the Lease
shall be modified in its entirety to read as follows: "Landlord shall have
given Tenant at least thirty (30) days prior written notice of the date on which
Landlord anticipates that the Building Shell Work Completion Date (defined in
Exhibit B) will occur; provided that if the Building Shell Work Completion Date
does not occur as anticipated, the Building Shell Work Completion Date shall not
occur before the date which is ten (10) days after Landlord's notice to Tenant
notifying Tenant of the revised Building Shell Completion Date."
5.2.6. Tenant's Contractor shall carry worker's compensation
insurance in statutory amounts (unless such contractor is a self insurer and has
adequate assets to provide such self insurance) and comprehensive general
liability insurance in amounts required by Section 12.2. Certificates of such
insurance shall be delivered to Landlord prior to commencement of work in the
Premises by Tenant's Contractor.
ARTICLE 6
TENANT DELAYS
SECTION 6.1. In the event that Tenant does not comply with any of the
time requirements imposed upon Tenant pursuant to Article 2 of this Exhibit B
and by reason thereof the bidding and Guaranteed Price for the Tenant Work is
obtained later than the bidding and
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Guaranteed Price for the Building, (a) the fee payable to Landlord's Contractor
pursuant to Section 2.3(b) shall be increased from five percent (5%) to such
higher amount [not greater than ten percent (10%)] that may be charged by
Landlord's Contractor, and (b) Landlord shall have the right to obtain unit
prices for Tenant Work at the time Landlord obtains the bidding and Guaranteed
Price for the Building, in which event such unit prices shall be included in the
Guaranteed Price for the Tenant Work unless Tenant subsequently obtains a lower
price in bidding its Tenant Work.
SECTION 6.2. In the event that Tenant requests any change in the
Tenant Work after the Guaranteed Price has been approved by Tenant, the fee
payable to Landlord's Contractor with respect to such change order work pursuant
to Section 2.3(b) shall be increased from five percent (5%) to such higher
amount [not greater than fifteen and one-half percent (15 1/2%)] that may be
charged by Landlord's Contractor on the net increase in cost arising from such
change order (treating related items of work or substitutions and additions as a
single change order); provided that in the event of any increase in such fee the
cost of general conditions work shall be paid by Landlord's Contractor out of
such fee and shall not be included in the cost of the work pursuant to Section
2.3.
SECTION 6.3. In the event that the Completion Date is delayed by
reason of any delay by Tenant in complying with any of the time requirements
imposed upon Tenant pursuant to Article 2 of this Exhibit B, or in the event
that Tenant requests any change in the Tenant Work after the Guaranteed Price
has been approved by Tenant which results in the Completion Date being delayed,
then Tenant shall pay to Landlord rent in the amount of one three hundred
sixty-fifth (1/365) of the Base Rent for each day that the Completion Date is
delayed by reason of such delay or change order by Tenant.
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EXHIBIT C
DECLARATION BY LANDLORD AND TENANT AS TO COMMENCEMENT DATE
THIS DECLARATION is made and entered into this day of
, 198 , by and between COMMUNITY MOTORS PROPERTY ASSOCIATES LIMITED PARTNERSHIP
(the "Landlord") and FEDERAL DATA CORPORATION (the "Tenant").
WITNESSETH
WHEREAS, by that certain Agreement of Lease made and entered into the
day of December, 1984 (the "Lease"), Landlord leased to Tenant that certain
Rentable Area described therein in the Building known as 4800 Hampden Lane,
Bethesda, Maryland 20814 upon certain terms and conditions more fully set forth
in the Lease.
AND WHEREAS, Section 2.3 of the Lease provides that upon determination of
the Commencement Date in accordance with the provisions of Article 2 of the
Lease, Landlord and Tenant shall execute a written instrument confirming the
Commencement Date and the Expiration Date of the Term of the Lease.
NOW, THEREFORE, in consideration of the premises, Landlord and Tenant
hereby confirm and agree as follows:
1. The Commencement Date is .
2. The Expiration Date is .
IN WITNESS WHEREOF, Landlord and Tenant have executed this Declaration by
Landlord and Tenant on the day and year first above written.
WITNESS: LANDLORD
COMMUNITY MOTORS PROPERTY
ASSOCIATES LIMITED PARTNERSHIP
By:
- -------------------------- ----------------------------
ATTEST: TENANT
FEDERAL DATA CORPORATION
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By:
- -------------------------- ----------------------------
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EXHIBIT D
PLANS AND SPECIFICATIONS
The following is a list of the plans and specifications comprising Exhibit D as
prepared by the firm of Weihe, Black, Jeffries, Strassman and Dove. These
documents are subject to the changes and clarifications enumerated in Exhibit
D1.
PLANS
Plan Name Revision Date Drawing Number
- --------- ------------- --------------
First Floor Plan 11/12/84 1
Second Floor Plan 10/16/84 2
Third Floor Plan 10/16/84 3
Fourth Floor Plan 10/19/84 4
Fifth Floor Plan 10/19/84 5
Sixth Floor Plan 10/19/84 6
Seventh Floor Plan 10/19/84 7
Eighth Floor Plan 10/19/84 8
Ninth Floor Plan 10/19/84 9
Tenth Floor Plan 10/16/84 10
Eleventh Floor Plan 10/16/84 11
Twelfth Floor Plan 10/16/84 12
Garage Floor Plan P-1 11/7/84 13
Garage Floor Plan P-2 11/7/84 14
Garage Floor Plan P-3 11/7/84 15
Garage Floor Plan P-4 11/7/84 16
East & West Elevations 11/12/84 17
South Elevation 11/12/84 18
North Elevation 11/12/84 19
Building Section 11/18/84 20
SPECIFICATIONS
Outline Specifications for One Bethesda Center, 4800 Hampden Lane, as of
November 12, 1984.
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EXHIBIT D1
MODIFICATIONS TO PLANS AND SPECIFICATIONS
The following is a list of the changes and clarifications to the plans
and specifications in Exhibit D. Unless otherwise indicated, all items refer
specifically to Tenant's premises and the common areas included on Tenant's
floors.
1. The northwestern most passenger elevator shall have access both to
the elevator lobby and to the service corridor behind the elevator shaft
provided it is deemed feasible in the sole opinion of Weihe, Block, Jeffries,
Strassman & Dove.
2. Elevators shall service all building levels, including all floors
in the parking garage.
3. Samples of the following materials and finishes shall be submitted
for Tenant's information and approval. If Tenant does not disapprove any item
within seventy-two (72) hours after receipt of such item by Tenant, Tenant shall
be deemed to have approved such item. Tenant shall not have the right to
require any item that is not available or that would delay the completion of the
Building or the Premises. Where appropriate, manufacturer's descriptive
material may be substituted for samples.
a. Metal finishes of door frames, hardware and accessories;
b. Enamel color on elevator doors;
c. Building standard carpet in both 28 oz. and 40 oz. weights;
d. Vinyl base coving;
e. Ceiling tiles;
f. Exit signage and building standard signage;
g. Fire extinguisher cabinets and installation specifications;
h. Accessories, such as ash urns and trash receptacles;
i. Water coolers and installation specifications (which item
shall be subject only to Tenant's review and shall not be subject to Tenant's
approval);
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j. Parahex lenses for standard light fixtures;
k. Vinyl wall covering in elevator lobbies and toilet rooms;
l. Resilient floorings and vinyl asbestos tile.
4. Landlord shall notify Tenant as to the color and degree of tint of
glazing when such information is available.
5. Alcoves and corridors shall have solid core wood stained grade
doors.
6. Ceramic tile in toilet rooms shall be 2" x 2" on both floors and
walls.
7. Electrical, telephone and mechanical closets and toilet rooms
shall have metal or solid core wood stained grade doors.
8. Colors of all common area elements including toilet rooms and fire
stairs on Tenant's floors shall be coordinated with Tenant's design treatments.
9. Suite entry doors shall be rift cut oak.
10. Horizontal blinds shall be manufactured by Levelor.
11. Telephone closets shall have vinyl asbestos tile floors as
required by Tenant's telephone service.
12. Adequate riser capacity shall be available to accommodate cable
and communications system requirements between Tenant's floors.
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EXHIBIT E
HOLIDAYS
New Year's Day
President's Day
Memorial Day
Labor Day
Columbus Day
Thanksgiving Day
Christmas Day
The above-listed holidays shall be observed in accordance with their observation
by the federal government.
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EXHIBIT F
SPECIFICATIONS
BUILDING JANITORIAL MAINTENANCE
SCOPE - The contractor shall furnish all labor, supplies, materials, equipment,
supervision and perform satisfactorily, the services at the frequencies and
during the times specified herein. The services shall include all functions
normally considered a part of workmanlike, satisfactory janitorial work.
I. ROOM CLEANING
a. DAILY SERVICES:
1. The contents of ashtrays and smoking stands shall be emptied into
metal containers and the ashtrays wiped clean with a damp cloth.
Wastebaskets shall be emptied. Ashtrays, smoking stands and
wastepaper baskets shall be returned to original placement.
Wastepaper and trash shall be removed to main disposal area. The
horizontal surfaces of all furniture within approximately 70
inches of the floor shall be dusted with a treated dust cloth and
the rug area vacuumed and floor area swept with a treated sweep
mop daily. Glass tops shall be cleaned with an untreated cloth.
2. The floor area shall be spot swept, damp mopped, or vacuumed to
remove obvious surface dirt from traffic areas and from under
furniture. Exposed floor areas in partially carpeted offices are
to be swept in accordance with the above requirements. Obvious
surface dirt referred to is any visible foreign matter found on
the floor, rug, or carpet surface and includes but is not limited
to paper clips, staples, metal fasteners, pencil sharpenings,
erasures, paper pieces, fragments, clippings, and punchings,
ashes, mud, sand, rubber bands, cigarette butts and so on.
b. MONTHLY SERVICES:
1. Vertical surfaces and under surfaces (knee wells, chair rungs,
table legs, etc.) shall be thoroughly dusted and all glass in
doors, partitions, pictures and bookcases shall be damp-wiped.
2. Wall spotting - All wall surfaces within approximately 70 inches
of the floor shall be spot cleaned.
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II. Computer Rooms
a. DAILY:
1. Empty trash receptacles
2. Sweep or vacuum floors
3. Empty and clean ashtrays
4. Dust the horizontal surfaces of all furniture
b. WEEKLY:
1. Spot clean wall surfaces within 70 inches of the floor
2. Dust vertical surfaces and under surfaces
3. Clean glass in doors, partitions, etc.
4. Damp mop and buff floor, except Tape Vault, which is damp mopped
only. Reapply floor finish as necessary to maintain uniform
"high gloss" shine.
III. FLOOR MAINTENANCE:
a. DAILY:
RECEPTION ROOM AND KITCHENS:
Resilient floors shall be swept and, if necessary to remove dirt, spot
mopped.
b. MONTHLY:
1. Hard floor shall be swept, wet mopped or scrubbed.
c. QUARTERLY:
Resilient floors shall be swept initially, spray buffed and swept
after spray buffing. Floors that are heavily scuffed should be
stripped and refinished.
IV. HIGH CLEANING:
Once a year services: All surfaces and objects in the building
approximately 70 inches or more from the floor shall be cleaned by dusting
and/or vacuuming. This includes the wall and ceiling area adjacent to
ventilating and air conditioning outlets.
V. CARPET MAINTENANCE:
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DAILY:
TENANT SPACE - carpet - vacuum all areas; spot clean carpets as requested
or required.
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EXHIBIT G
RULES AND REGULATIONS
4800 HAMPDEN LANE
BETHESDA, MARYLAND 20814
The following rules and regulations have been formulated for the safety and
well-being of all the tenants of the building. Adherence to these rules and
regulations ensures that each and every tenant will enjoy a safe and unannoyed
occupancy in the Building. Any violation of these rules and regulations by any
tenant which continues after notice from Landlord shall be sufficient cause for
termination, at the option of Landlord, of the tenant's lease.
Subject to the provisions of Article 16 of the Lease, Landlord shall have
the continuing right to amend or eliminate any of these rules and regulations,
and also to adopt additional reasonable rules and regulations of like force and
effect. Any change of whatsoever nature shall be effective five (5) days after
delivery of written notice thereof to the Premises.
Landlord may, upon request by any tenant, waive the compliance by such
tenant of any of the following rules and regulations, provided that (a) no
waiver shall be effective unless in writing and signed by Landlord or Landlord's
authorized agent, (b) any such waiver shall not relieve the tenant from the
obligation to comply with such rule or regulation in the future unless expressly
consented to by Landlord, and (c) no waiver of a rule or regulation granted to
any tenant shall relieve any other tenant from the obligation of complying with
the rule or regulation unless such other tenant has received a similar waiver in
writing from Landlord.
1. The sidewalks, entrances, passages, courts, elevators, vestibules,
stairways, corridors or halls or other parts of the Building not occupied by any
tenant (the "Common Areas") shall not be obstructed or encumbered by any tenant
or used for any purpose other than ingress and egress to and from the tenant's
premises. Landlord shall have the right to control and operate the Common
Areas, and the facilities furnished for the common use of the tenants, in such
manner as Landlord deems best for the benefit of the tenants generally. No
tenant shall permit the visit of its premises of persons in such numbers or
under such conditions as to interfere with the use and enjoyment by other
tenants of the Common Areas.
2. No awnings or other projections shall be attached to the outside walls
of the Building without the prior written consent of the Landlord. No drapes,
blinds, shades or screens shall be attached or hung in, or used in connection
with, any window or door of a tenant's premises, without the prior written
consent of Landlord. Such awnings, projections, curtains, blinds,
B-23
<PAGE>
screens or other fixtures must be of a quality, type, design and color, and
attached in the manner approved by Landlord.
3. No sign, advertisement, notice or other lettering shall be exhibited,
inscribed, painted or affixed by any tenant on any part of the outside or inside
of the tenant's premises of the Building without the prior written consent of
the Landlord. In the event of the violation of the foregoing by any tenant,
Landlord may remove same without any liability, and may charge the expense
incurred by such removal to the tenant or tenants violating this rule. All
interior signs on the doors and directory tablet shall be inscribed, painted or
affixed for each tenant by Landlord at the expense of such tenant, and shall be
of a size, color and style acceptable to Landlord, provided, however, that
notwithstanding the foregoing, Landlord shall provide Tenant, at Landlord's sole
cost and expense, with one listing in the Building directory tablet for each
floor of the Building occupied in whole or in part by Tenant.
4. No show cases or other articles shall be put in front of or affixed to
any part of the exterior of the Building, nor placed in the Common Areas without
the prior consent of Landlord.
5. The water and washclosets and other plumbing fixtures shall not be used
for any purposes other than those for which they were constructed, and no
sweepings, rubbish, rags or other substances shall be thrown herein. All
damages resulting from any misuse of the fixtures shall be borne by the tenant
who, or whose employees, agents, visitors or licensees, shall have caused the
same.
6. There shall be no marking, painting, drilling into or other form of
defacing or damage of any part of a tenant's premises or the Building. No
boring, cutting or stringing of wires shall be permitted. No tenant shall
construct, maintain, use or operate within its premises or elsewhere within or
on the outside of the Building, any electrical device, wiring or apparatus in
connection with a loud speaker system or other sound system. Landlord will,
however, permit a tenant to install Muzak or another internal music system
within the tenant's premises if the music system cannot be heard outside of the
premises.
7. No tenant shall make, or permit to be made, any disturbing noises or
disturb or interfere with occupants of the Building or neighboring buildings or
premises or those having business with them, whether by the use of any musical
instrument, radio, tape recorder, whistling, singing or any other way. No
tenant shall throw anything out of the doors or windows or down the corridors or
stairs.
8. No bicycles, vehicles or animals, birds or pets of any kind shall be
brought into or kept in or about a tenant's premises. No cooking shall be done
or permitted by any tenant on its premises, without Landlord's prior approval
which shall not be unreasonably withheld. Notwithstanding the foregoing, Tenant
may install and operate for the convenience of its
B-24
<PAGE>
employees, a lounge or coffee room with stove, sink and refrigerator. No tenant
shall cause or permit any unusual or objectionable odors to originate from its
premises.
9. No space in or about the Building shall be used for the manufacture,
storage or sale at auction of merchandise, goods or property of any kind.
10. No inflammable, combustible or explosive fluid, chemical or substance
shall be brought or kept upon a tenant's premises.
11. No additional locks or bolts of any kind shall be placed upon any of
the doors or windows by any tenant, nor shall any changes be made in existing
locks or the mechanism thereof. The doors leading to the corridors or main
halls shall be kept closed during business hours except as they may be used for
ingress and egress. Each tenant shall, upon the termination of its tenancy,
return to Landlord all keys used in connection with its premises, including any
keys to the premises, to rooms and offices within the premises, to storage rooms
and closets, to cabinets and other built-in furniture, and to toilet rooms
whether or not such keys were furnished by Landlord or procured by tenant, and
in the event of the loss of any such keys, such tenant shall pay to Landlord the
cost of replacing the locks. On termination of a tenant's lease, the tenant
shall disclose to landlord the combination of all locks for safes, safe cabinets
and vault doors, if any, remaining in the premises.
12. All removals, or the carrying in or out of any safes, freight,
furniture or bulky matter of any description, must take place in such manner and
during such hours as Landlord may reasonably require. Landlord reserves the
right to inspect all freight to be brought into the Building and to exclude from
the Building all freight which violates any of these Rules and Regulations or
the Lease.
13. Any person employed by any tenant to do janitorial work within the
tenant's premises must obtain Landlord's consent prior to commencing such work,
and such person shall, while in the Building and outside of said premises,
comply with all instructions issued by the superintendent of the Building. No
tenant shall engage or pay any employees on the tenant's premises, except those
actually working for such tenant on said premises.
14. No tenant shall purchase spring water, ice, coffee, soft drinks,
towels, or other like merchandise or service from any company or person whose
repeated violations of the Building regulations have caused, in Landlord's
opinion, a hazard or nuisance to the Building and/or its occupants.
15. Landlord shall have the right to prohibit any advertising by any
tenant which relates to the premises or the Building in which the premises are
situated.
B-25
<PAGE>
16. Landlord reserves the right to exclude from the Building at all times
any person who is not known or does not properly identify himself to the
Building management or its agents. Landlord may at its option require all
persons admitted to or leaving the Building to register. Each tenant shall be
responsible for all persons for whom it authorizes entry into the Building, and
shall be liable to Landlord for all acts of such persons. Landlord shall also
have the right to install an electronic security system for the Building
requiring the use of identification cards, passwords, confidential codes and the
like as a prerequisite to admission of any person into the Building, and tenant
agrees to faithfully abide by the rule of any such security system. If
identification cards are used in any such system, Tenant shall be issued, at no
expense to Tenant, one (1) card for each two hundred fifty (250) square feet of
Rentable Area of the Premises. Each additional or replacement card requested
shall be issued only upon payment of a service fee of Ten Dollars ($10.00) per
card.
17. Each tenant, before closing and leaving its premises at any time,
shall see that all lights, electrical appliances and mechanical equipment are
turned off.
18. The requirements of tenants will be attended to only upon application
at the office of the Building. Building employees shall not perform any work or
do anything outside of their regular duties, unless under special instruction
from the management of the Building.
19. Canvassing, soliciting and peddling in the Building is prohibited and
each tenant shall cooperate to prevent the same, including notifying Landlord
when and if such activity occurs.
20. No water cooler, plumbing or electrical fixture shall be installed by
any tenant without Landlord's prior written consent.
21. There shall not be used in any space, or in the public halls of the
Building, either by any tenant or by jobbers or others, in the delivery or
receipt of merchandise, any hand trucks, except those equipped with rubber tires
and side guards.
22. Mats, trash or other objects shall not be placed in the public
corridors.
23. Drapes installed by Landlord for the use of any tenant or drapes
installed by tenant which are visible from the exterior of the Building must be
cleaned by such tenant at least once a year, without notice, at such tenant's
own expense.
24. Landlord does not maintain suite finishes which are non-standard such
as kitchens, bathrooms, wallpaper, special lights, etc. However, should the
need for repairs arise, Landlord will arrange for the work to be done at the
tenant's expense.
B-26
<PAGE>
25. All office equipment of any electrical or mechanical nature shall be
placed by Tenant in the Premises in approved settings to absorb or prevent any
vibration, noise or annoyance.
26. Tenant shall not permit or cause to be used in the Premises any device
or instrument such as a sound reproduction system, or excessively bright,
changing, flashing, flickering, moving lights or lighting devices or any similar
devices, the effect of which shall be audible or visible beyond the confines of
the Premises, nor shall Tenant permit any act or thing upon the Premises
disturbing to normal sensibilities of other tenants.
27. All moving of safes, freight, furniture or bulky matter of any
description, to or from the Premises, shall only take place on specified
elevators and during the hours designated by Landlord. Hand trucks may be used
only if they are equipped with rubber tires and side guards.
28. Tenant shall not use the Premises as headquarters for large scale
employment of workers for other locations.
29. The Premises shall never at any time be used for any immoral or
illegal purposes.
30. Landlord shall have the right, from time to time, to designate
specific parking spaces in the parking areas for the Building as being reserved
for specific tenants or for members of the general public, and each tenant
agrees to honor such reservations and to permit parking for officers and
employees only in those parking spaces available for such purposes, provided any
such designated parking spaces for Tenant shall be self-park spaces where the
automobile driver may remove his car without obstruction and without access to
any other car. Notwithstanding the foregoing, in no event shall more than
fifteen percent (15%) of the parking spaces designated for Tenant's use on the
Commencement Date pursuant to the foregoing be located on the lowest level of
the Building parking garage, it being agreed that such restriction shall not be
applicable to additional parking provided for Expansion Space. Tenant agrees to
park all vehicles within the striped lines provided for each space and to
otherwise comply with all reasonable rules and regulations established by
Landlord for the parking facility.
31. Tenant must provide the Landlord with a key or security code in order
to enter Tenant's premises in the case of emergencies and during non-Building
standard hours.
32. Tenant may not place any items on the balconies other than tables and
chairs (in accordance with building standard colors) without Landlord's prior
approval.
B-27
<PAGE>
EXHIBIT H
NONDISTURBANCE AND ATTORNMENT AGREEMENT
MADE this day of , 198 , by and among COMMUNITY MOTORS PROPERTY
----- ------- --
ASSOCIATES LIMITED PARTNERSHIP ("Landlord"); FEDERAL DATA CORPORATION
("Tenant"); ("Mortgagee"); and
------------------------------------ ------------
("Trustee").
- ---------------
RECITALS
A. Landlord is the owner in fee simple of the real property in the
District of Columbia described in Exhibit A attached hereto ("Land") and of the
improvements ("Building") now under construction on the Land.
B. Mortgagee is the owner of the beneficial interest under that certain
deed of trust dated , encumbering the Land and Building made by
-------------
Landlord to the Trustee, and recorded in the records of the Clerk of the Circuit
Court of Montgomery County, Maryland in Liber at folio
------- -----
(the "Mortgage").
C. Pursuant to an Agreement of Lease dated , 1984 (the
--------------------
"Lease") Tenant has leased from Landlord certain space in the Building ("Demised
Premises"). The Demised Premises are more particularly described in the Lease,
a true copy of which as executed by Landlord and Tenant has been delivered to
Mortgagee.
D. Tenant and Mortgagee desire to confirm certain understandings with
respect to the Lease and the Mortgage and Landlord desires to join herein to
evidence its agreement to the provisions hereof.
NOW, THEREFORE, in consideration of the covenants herein contained, the
parties hereby agree as follows:
1. APPROVAL OF LEASE. Mortgagee hereby approves the execution of the
Lease by Landlord and Tenant.
2. NONDISTURBANCE; NO JOINDER. So long as Tenant is not in default
(beyond any period granted to Tenant to cure such default) in the payment of
rent or additional rent or in the performance of any of the other terms,
covenants or conditions of the Lease on Tenant's part to be performed:
B-28
<PAGE>
(a) Tenant's possession of the Demised Premises and Tenant's rights,
options and privileges under the Lease, or under any extensions thereof effected
in accordance with any option therefor in the Lease, shall not be diminished or
interfered with by Mortgagee, and Tenant's occupancy of the Demised Premises
shall not be disturbed by Mortgagee for any reason whatsoever during the term of
the Lease or any such extensions or renewals thereof; and
(b) Mortgagee will not join Tenant as a party defendant in any action
or proceeding for the purpose of terminating Tenant's interest and estate under
the Lease because of any default under the Mortgage.
3. ATTORNMENT. If Mortgagee succeeds to the interest of Landlord in the
Lease by reason of foreclosure, dispossession or other proceedings brought by
Mortgagee, or by any other manner, Tenant shall be bound to Mortgagee under all
of the terms, covenants, and conditions of the Lease for the balance of the term
thereof and any extensions thereof effected in accordance with any option
therefor in the Lease, with the same force and effect as if Mortgagee were the
landlord under the Lease, and Tenant does hereby attorn to Mortgage as its
landlord. Such attornment shall be effective and self-operative, without the
execution of any further instruments on the part of any of the parties hereto,
immediately upon Mortgagee's succeeding to the interest of Landlord under the
Lease. In confirmation of such attornment, Tenant shall execute and deliver
promptly any certificate or other instrument which Mortgagee may request;
PROVIDED, that Tenant shall be under no obligation to pay Base Rent, additional
rent or other sums payable under the Lease until Tenant receives written notice
from Mortgagee that Mortgagee has succeeded to the interest of Landlord under
the Lease or that Mortgagee has exercised any right under the Mortgage to
collect such payments directly from Tenant. The respective rights and
obligations of Tenant and Mortgagee upon such attornment shall be the same as
set forth in the Lease.
4. MORTGAGEE'S SUCCESSION. If Mortgagee shall succeed to the interest of
Landlord in the Lease, Mortgagee shall be bound to Tenant under all the terms,
covenants and conditions of the Lease, and Tenant shall, from and after
Mortgagee's succeeding the interest of Landlord in the Lease, have the same
remedies against Mortgagee for the breach of any agreement contained in the
Lease that Tenant might have had under the Lease against Landlord if Mortgagee
had not succeeded to the interest of Landlord; PROVIDED, that Mortgagee shall
not be --
(i) bound by any termination, amendment, modification or surrender of
the Lease without Mortgagee's written consent;
(ii) bound by any payment in advance of Base Rent or additional rent
for more than one month to any prior landlord (including Landlord), unless such
advance payment is specifically required under the Lease.
B-29
<PAGE>
5. SUBORDINATION. Subject to the provisions hereof, the Lease now is and
shall continue to be subject and subordinate to the Mortgage, to any and all
renewals and modifications thereof and to all advances made and to be made
thereunder, so long as no such renewal or modification shall increase any
obligation of Tenant or shall diminish any obligation of Mortgagee or Landlord
hereunder or under the Lease. Any such renewal or modification shall
nevertheless be subject to and entitled to the benefits of the terms of this
Agreement and no further instrument of subordination shall be required. Such
subordination shall be effective and self-operative, without the execution of
any further instruments on the part of any of the parties hereto.
6. NO ORAL MODIFICATIONS. This Agreement may not be modified orally or in
any manner other than by an agreement in writing signed by the parties hereto or
their respective successors in interest.
7. BENEFIT AND BURDEN. All provisions and covenants in this Agreement
shall be deemed to touch and concern and run with the Land. This Agreement
shall inure to the benefit of, be enforceable by and be binding upon the parties
hereto and their respective successors and assigns, including as a successor in
the case of Mortgagee any purchaser at a foreclosure sale. The word "Mortgagee"
shall include the original Mortgagee named herein and any of its successors and
assigns, including any person or entity succeeding to Landlord's interest in the
Land or the Building or the Lease upon foreclosure of the Mortgage. The word
"foreclosure" and "foreclosure sale" as used herein shall be deemed to include
the acquisition of Landlord's estate in the Land or the Building by voluntary
deed, assignment or other disposition or transfer in lieu of foreclosure.
8. LEASE DEFINED. The word "Lease" as used herein shall be deemed to be
the Lease as originally executed by Landlord and Tenant, as amended or modified
by written agreements hereafter made, from time to time, between the Landlord
and Tenant and consented to by Mortgagee.
9. APPLICABLE LAW; GENDER. This Agreement shall be construed according to
the laws of the State of Maryland. The use of the neuter gender in this
Agreement shall be deemed to include any other gender, and words in the singular
number shall be held to include the plural, when the sense so requires.
10. TRUSTEE. Mortgagee hereby authorizes the Trustee to execute this
Agreement.
B-30
<PAGE>
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the
day and year first above written.
ATTEST: FEDERAL DATA CORPORATION
By: [SEAL]
- ------------------------- ------------------------
WITNESS: COMMUNITY MOTORS ASSOCIATES
LIMITED PARTNERSHIP
By:
- ------------------------- ------------------------
Paul B. Abrams
General Partner
ATTEST: [NAME OF MORTGAGEE]
By:
- ------------------------- ------------------------
[Corporate Seal]
WITNESS: [NAME OF TRUSTEE]
By:
- ------------------------- ------------------------
B-31
<PAGE>
)
) ss:
)
Before me, a Notary Public in and for the jurisdiction aforesaid, on
this date personally appeared before me of
------------------------------------
Federal Data Corporation personally well known to me and acknowledged that he
executed the Agreement as the corporate act and deed of Federal Data
Corporation.
WITNESS my hand and official seal on , 198 .
------------------------ --
[SEAL]
----------------------
Notary Public
My commission expires:
)
) ss:
)
Before me, a Notary Public in and for the jurisdiction aforesaid, on
this date personally appeared before me
--------------------------------------
personally well known to me and acknowledged that he executed the Agreement as
the corporate act and deed of .
-----------------
WITNESS my hand and official seal on , 198 .
------------------------ --
[SEAL]
----------------------
Notary Public
My commission expires:
B-32
<PAGE>
)
) ss:
)
Before me, a Notary Public in and for the jurisdiction aforesaid, on
this date personally appeared before me Paul B. Abrams who is the person who
executed the foregoing Agreement dated , 198_ as general
--------------------
partner of the Landlord named therein and who being by me first duly sworn
acknowledged that he, being duly authorized, executed the Agreement as his free
act and deed for the purposes therein set forth.
WITNESS my hand and official seal on , 198__.
------------------
[SEAL]
----------------------
Notary Public
My commission expires:
)
) ss:
)
Before me, a Notary Public in and for the jurisdiction aforesaid, on
this date personally appeared who is well known to me as
------------------
the person who executed the foregoing Agreement dated as of ,
------------------
1984 as the Trustee named therein and who being by me first duly sworn
acknowledged that he, being duly authorized, executed the Agreement as his free
act and deed for the purposes therein set forth.
WITNESS my hand and official seal on , 1984.
-------------------
[SEAL]
----------------------
Notary Public
My commission expires:
B-33
<PAGE>
EXHIBIT I
FORM OF TENANT'S LETTER OF CREDIT
IRREVOCABLE LETTER OF CREDIT NO.__
Community Motors Property Associates Limited Partnership
Suite 1135
Chevy Chase Building
5530 Wisconsin Avenue
Chevy Chase, Maryland 20815
[DATE]
Gentlemen:
We hereby irrevocably authorize you to draw on _________, _______ ,
_________, for the account of Federal Data Corporation, the amount of One
Hundred Thousand Dollars ($100,000).
Available upon presentation to us, at our office at _________, _________,
_________, of your draft on us at sight stating that it is "drawn under
Credit No. ", accompanied by a sworn statement acknowledged before a notary
public signed by you, with signature guaranteed by a bank stating either (1)
that this credit has not been renewed or replaced at least fifteen (15) days
prior to the expiration date hereof, or (2) that "Federal Data Corporation
has defaulted under the Agreement of Lease dated _________, 1984 between
Community Motors Property Associates Limited Partnership and Federal Data
Corporation and such default has continued beyond any applicable grace
period, and that the amount drawn under this credit represents the amount
necessary to reimburse Community Motors Property Associates Limited
Partnership for damages attributable to such default." We agree to duly
honor upon presentation a draft under and in compliance with the terms of
this Credit when accompanied by the statement specified above.
This credit shall expire at _____ p.m., local time, on _________, unless
sooner extended or renewed in writing.
This Credit is subject to the Uniform Customs and Practice for
Documentary credits (1983 revision), International Chamber of Commerce
Publication No. 400.
[Insert Name of Bank]
By
-------------------------
B-34
<PAGE>
B-35
<PAGE>
EXHIBIT J
FORM OF LANDLORD'S LETTER OF CREDIT
IRREVOCABLE LETTER OF CREDIT NO.
Federal Data Corporation
4601 N. Park Avenue
Chevy Chase, Maryland 20815
[DATE]
Gentlemen:
We hereby irrevocably authorize you to draw on _________, _________,
_________, for the account of Community Motors Property Associates Limited
Partnership the amount of Three Hundred Thousand Dollars ($300,000).
Available upon presentation to us, at our office at _________, _________,
_________, of your draft on us at sight stating that it is "drawn under
Credit No. ", accompanied by a sworn statement acknowledged before a notary
public signed by your President or any Vice President, with signature
guaranteed by a bank stating either (1) that this credit has not been renewed
or replaced at least fifteen (15) days prior to the expiration date hereof,
or (2) that "Community Motors Property Associates Limited Partnership has
failed to complete the office building known as 4800 Hampden Lane, Bethesda,
Maryland 20814 and the leasehold improvements therein in accordance with
Section 2.2 of the Agreement of Lease dated _________, 1984 between Community
Motors Property Associates Limited Partnership by the Guaranteed Completion
Date set forth in said Agreement of Lease and that Federal Data Corporation
is entitled to draw on this Credit in the amount drawn upon." We agree to
duly honor upon presentation a draft under and in compliance with the terms
of this Credit when accompanied by the statement specified above.
This credit shall expire at __p.m., local time, on _________,
unless sooner extended or renewed in writing.
This Credit is subject to the Uniform Customs and Practice for Documentary
credits (1983 revision), International Chamber of Commerce Publication No. 400.
[Insert Name of Bank]
B-36
<PAGE>
By
-------------------------
B-37
<PAGE>
EXHIBIT K
FORM OF PURCHASE OPTION LETTER OF CREDIT
IRREVOCABLE LETTER OF CREDIT NO.
[Insert name and address of Title Company]
[DATE]
Gentlemen:
We hereby irrevocably authorize you to draw on _________, _________,
_________, for the account of Federal Data Corporation, the amount of _________*
Dollars ($_________). All payments hereunder shall be made directly to you as
the Title Company under the Agreement of Lease dated _________, 1984
between Community Motors Property Associates Limited Partnership and Federal
Data Corporation.
Available upon presentation to us, at our office at _________, _________,
_________, of your draft on us at sight stating that it is "drawn under
Credit No. _________", accompanied by either (1) an affidavit acknowledged
before a notary public signed by a general partner of Community Motors
Property Associates Limited Partnership stating that "Community Motors
Property Associates Limited Partnership is entitled to draw upon Credit
No._________ pursuant to the Agreement of Lease dated _________, 1984 between
Community Motors Property Associates Limited Partnership and Federal Data
Corporation," or (2) a sworn affidavit, acknowledged before a notary public,
signed by one of your officers stating that this credit has not been renewed
or replaced at least fifteen (15) days prior to the expiration date hereof.
We agree to duly honor upon presentation a draft under and in compliance with
the terms of this Credit when accompanied by the statement specified above.
This credit shall expire at ___p.m., local time, on _________**_________,
unless sooner extended or renewed in writing.
This Credit is subject to the Uniform Customs and Practice for Documentary
credits (1983 revision), International Chamber of Commerce Publication No. 400.
[Insert Name of Bank]
By
-------------------------
B-38
<PAGE>
* Insert amount provided for in section 30.3.1(b) of the Lease.
** Insert date which is thirty (30) days after the Purchase Option Settlement
Date as defined in Section 30.3.1 of the Lease.
B-39
<PAGE>
AMENDMENT TO AGREEMENT TO LEASE
THIS AMENDMENT is made and entered into this 7th day of January, 1985 by
and between (i) Community Motors Property Associates Limited Partnership
("Landlord") and (ii) Federal Data Corporation ("Tenant").
WHEREAS, Landlord and Tenant executed an Agreement of Lease ("Lease") dated
December 5, 1984 and Landlord and Tenant desire to amend the Lease in certain
respects;
NOW, THEREFORE, in consideration of the mutual promises herein contained
and for other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, it is agreed as follows:
1. Section 17 of the Lease is hereby amended to add the following Section
17.4 thereto:
SECTION 17.4.
17.4.1 Tenant agrees that, if requested by Landlord, any
non-disturbance agreement required to be delivered pursuant to this Article
17 may contain a modification (the "Special Modification") pursuant to
which the following clause (iii) shall be inserted in Section 4 on page 3
of the Non-Disturbance Agreement attached hereto as Exhibit H:
"(iii) liable for any damages or be subject to any offset or
defense by Tenant to the payment of Rent by reason of any act or omission
of Landlord prior to the date that Mortgagee succeeds to the interest of
Landlord, but the foregoing shall not be construed to relieve the Mortgagee
of its obligation to perform all obligations under the Lease during the
period after the Mortgagee succeeds to the interest of Landlord, subject to
the provisions of Section 20.11.2 of the Lease."
17.4.1 In the event that the Special Modification is included in any
non-disturbance agreement executed pursuant to this Article 17, Landlord
(and Paul B. Abrams so long as he is a general partner of Landlord) agrees
to indemnify and hold harmless Tenant from any monetary loss that is
sustained by Tenant by reason of the inclusion of the Special Modification
in such non-disturbance agreement to the extent attributable to acts or
omissions of Landlord, or amounts received by Landlord, prior to the
effective date of the foreclosure sale by the Holder of the Superior
Instrument that executed such nondisturbance agreement (or its successors
or assigns).'
2. Section 20.11.4 of the Lease is hereby amended to add the phrase
"Section 17.4" after the phrase "Section 8.3.3" in clause (a) of Section 20.11.4
of the Lease.
B-40
<PAGE>
3. Section 25.1 of the Lease is hereby amended to delete the date "January
15, 1985" in two places and to insert in lieu thereof the date "January 21,
1985."
4. In all other respects, the Lease is hereby ratified and confirmed.
COMMUNITY MOTORS PROPERTY
ASSOCIATES LIMITED PARTNERSHIP
By /s/ Paul B. Abrams
-------------------------------
Paul B. Abrams
General Partner
FEDERAL DATA CORPORATION
By /s/ Robert Hanley
------------------------------
B-41
<PAGE>
AMENDMENT NO. 2 TO LEASE AGREEMENT
This Amendment No. 2 to Lease Agreement is made the 14th day of November,
1986, by and between Community Motors Property Associates Limited Partnership, a
Maryland limited partnership, having its principal offices in Montgomery County,
State of Maryland (hereinafter referred to as "Landlord,") and Federal Data
Corporation, a District of Columbia corporation having its principal offices at
4800 Hampden Lane, Bethesda, Maryland (hereinafter referred to as "Tenant"),
WITNESSETH:
WHEREAS, Landlord & Tenant executed a Lease Agreement (the "Lease") dated
December 5, 1984 for Tenant's lease of certain space in Landlord's Building
located at 4800 Hampden Lane, Bethesda, Maryland; and
WHEREAS, an Amendment to Agreement to Lease was executed on January 7,
1985; and
WHEREAS, Tenant exercised its option to lease the ninth floor of Landlord's
Building on October 1, 1985; and
WHEREAS, Landlord and Tenant now wish to further amend the Lease to clarify
certain provisions contained therein;
NOW, THEREFORE, in consideration of the foregoing and of the mutual
covenants and agreements hereinafter set forth, the parties hereto agree as
follows:
1. PREMISES
The rentable area of the Premises according to the Washington Board of
Realtors standard method of measurement, including the second, third,
tenth, eleventh, twelfth, and now the ninth floors, is 77,338 square feet.
The annual base rent stated in section 4.1.1 of the Lease is therefore
adjusted to One Million, Nine Hundred and Thirty-Three Thousand, Four
Hundred and Fifty Dollars ($1,933,450), payable in equal monthly
installments of $161,120.83.
2. ELECTRICAL USAGE
Section 4.3.1.(b) of the Lease is hereby amended in its entirety to read as
follows: "charges or fees for, and taxes on, the furnishing of water,
sewer service, gas, fuel, electricity, or other utility services to the
Building."
Section 4.3.2.(o) of the Lease is hereby deleted.
Section 4.3.3. is hereby deleted.
B-42
<PAGE>
Section 4.3.4.(i). The number $4.10 is hereby amended to read $5.75.
Section 4.3.4.(ii) and the balance of Section 4.3.4. are hereby deleted.
Section 8.1.1. The final seven (7) lines of the paragraph, beginning with
the phrase "Landlord's actual cost of providing such services . . ." are
hereby deleted and replaced by the following:
Floor Hourly Charge*
----- -------------
2** $19.00
3 21.00
9 16.00
10 17.00
11 15.00
12 15.00
Computer Room 18.00
* Subject to full annual CPI adjustment.
** Except computer room.
If Tenant uses more than one floor after hours, the hourly rate for each
additional floor shall be reduced by eight dollars ($8.00). However, the
Computer Room shall not be subject to such reduction, nor shall its usage
cause the hourly rate for any other space to be reduced.
All other terms and conditions of the Lease shall remain in full force and
effect.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment No. 2 to Lease
Agreement to be executed as of the date and year first written above.
WITNESS: LANDLORD
COMMUNITY MOTORS PROPERTY
ASSOCIATES LIMITED PARTNERSHIP
BY: By: /s/ Paul B. Abrams
---------------------------- --------------------------------
Paul B. Abrams
General Partner
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<PAGE>
ATTEST: TENANT
FEDERAL DATA CORPORATION
BY: /s/ Robert Hanley
---------------------------- ----------------------------------
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<PAGE>
AMENDMENT NO. 3 TO LEASE AGREEMENT
This Amendment No. 3 to Lease Agreement is made the 6th day of February,
1987, by and between Community Motors Property Associates Limited Partnership, a
Maryland limited partnership, having its principal offices in Montgomery County,
State of Maryland, (hereinafter referred to as "Landlord") and Federal Data
Corporation, a District of Columbia corporation having its principal offices at
4800 Hampden Lane, Bethesda, Maryland (hereinafter referred to as the "Tenant"),
WITNESSETH:
WHEREAS, Landlord and Tenant executed a Lease Agreement (the "Lease") dated
December 5, 1984 for Tenant's lease of certain space in Landlord's Building
located at 4800 Hampden Lane, Bethesda, Maryland; and
WHEREAS, an Amendment to Agreement to Lease was executed on January 7,
1985; and
WHEREAS, Tenant exercised its option to lease the ninth floor of Landlord's
Building on October 1, 1985; and
WHEREAS, a second Amendment to Agreement to lease was executed on November
14, 1986; and
WHEREAS, Landlord and Tenant now wish to further amend the Lease to clarify
certain provisions contained therein;
NOW, THEREFORE, in consideration of the foregoing and of the mutual
covenants and agreements hereinafter set forth, the parties hereto agree as
follows:
1. STORAGE SPACE
Landlord hereby leases to Tenant and Tenant hereby leases from Landlord, subject
to the conditions of the Lease Agreement referred to herein, storage space
totalling approximately 726 square feet located on the B-3 level of the garage
as set forth in Exhibit A of this Amendment No. 3. This space is leased on an
"as is" basis at an annual base rent calculated at a rate of eight dollars
($8.00) per square foot and paid on a monthly basis of four hundred eighty four
dollars and no cents ($484.00) escalated annually by three percent (3%).
It is mutually agreed that the Rent Commencement and Lease Commencement date for
the storage space is December 1, 1986 for a term to expire co-terminus with the
lease for the office space currently occupied by Tenant.
The five (5) parking spaces which comprise this storage space will be deducted
from the parking allocation provided pursuant to Article 26 of this lease.
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All other terms and conditions of the Lease shall remain in full force and
effect.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment No. 3 to Lease
Agreement to be executed as of the date and year first written above.
WITNESS: LANDLORD
COMMUNITY MOTORS PROPERTY
ASSOCIATES LIMITED PARTNERSHIP
BY: BY: /s/ Paul B. Abrams
---------------------------- --------------------------------
Paul B. Abrams
General Partner
WITNESS: TENANT
FEDERAL DATA CORPORATION
BY: BY: /s/ Robert Hanley
---------------------------- --------------------------------
B-46
<PAGE>
DECLARATION BY LANDLORD AND TENANT
AS TO DATE OF DELIVERY
EXHIBIT C
THIS AGREEMENT OF CONFIRMATION of the Lease Term made and entered into this
4th day of December, 1986, by and between COMMUNITY MOTORS PROPERTY ASSOCIATES
LIMITED PARTNERSHIP, hereinafter referred to as "Landlord" and FEDERAL DATA
CORPORATION, hereinafter referred to as "Tenant."
WITNESSETH
WHEREAS, by that certain Agreement of Lease made and entered into the 5th
day of December, 1984, Landlord leased to Tenant that certain space described
therein in the Building located at 4800 Hampden Lane, Bethesda, Maryland for an
initial term to ten (10) years.
AND WHEREAS, Section 2.3 of the Lease states that a written instrument
shall be executed confirming the commencement date of the Lease and rental
payments and the expiration date of the Lease.
NOW, THEREFORE, in consideration of the Premises, Landlord and Tenant
hereby confirm and agree as follows:
FLOOR COMMENCEMENT OF FREE FIRST
AND RENTAL AND PRORATED RENTAL FULL MONTH
SQ. FT. LEASE TERM RENTAL DUE PERIOD RENTAL
- ------- --------------- ---------- ------- ----------
77,338 sq ft August 9, 1986 Aug. 9, 1986 Sept. 1, 1986 January 1, 1987
Aug. 31, 1986 December 31, 1986 $161,120.84
$119,541.35
The expiration date of the initial term shall be August 31, 1996.
IN WITNESS WHEREOF, Landlord and Tenant have executed this Declaration by
Landlord and Tenant as to Date of Delivery as of the day and year first above
written.
WITNESS: COMMUNITY MOTORS PROPERTY
ASSOCIATES LIMITED PARTNERSHIP
BY: BY: [SEAL]
---------------------------- --------------------------------
Paul B. Abrams
General Partner
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<PAGE>
LANDLORD
ATTEST: FEDERAL DATA CORPORATION
BY: BY:
---------------------------- --------------------------------
President
TENANT
B-48
<PAGE>
AMENDMENT NO. 4 TO LEASE AGREEMENT
THIS AMENDMENT NO. 4 TO LEASE AGREEMENT is made the 31st day of March,
1993, by and between Community Motors Property Limited Partnership, a Maryland
limited partnership, having its principal offices in Montgomery County, State of
Maryland (hereinafter referred to as "Landlord") and Federal Data Corporation, a
District of Columbia corporation having its principal offices at 4800 Hampden
Lane, Bethesda, Maryland (hereinafter referred to as the "Tenant").
WITNESSETH:
WHEREAS, Landlord and Tenant executed a Lease Agreement (the "Lease") dated
December 5, 1984 for Tenant's lease of certain space in Landlord's Building
located at 4800 Hampden Lane, Bethesda, Maryland; and
WHEREAS, an Amendment to Agreement to Lease was executed on January 7,
1985; and
WHEREAS, Tenant exercised its option to lease the ninth floor of Landlord's
Building on October 1, 1985; and
WHEREAS, a second Amendment to Agreement to Lease was executed on November
14, 1986; and
WHEREAS, a third Amendment to Agreement to Lease was executed on February
6, 1987; and
WHEREAS, Landlord and Tenant now wish to further amend the Lease to clarify
certain provisions contained therein;
NOW, THEREFORE, in consideration of the foregoing and of the mutual
covenants and agreements hereinafter set forth, the parties hereto agree as
follows:
1. As of April 1, 1993, Landlord will deliver to Tenant One Thousand Six
Hundred fifty (1,650) square feet of gross rentable floor area of
office space on the first (1st) floor of the Building (the "Additional
Space") and said Additional Space shall be added to the Premises as
defined under the Agreement of Lease. The Additional Space is
outlined in red on Exhibit "A" attached hereto and incorporated herein
by reference.
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<PAGE>
2. As of April 1, 1993, the Base Rent as set forth in Section 3.1.1 of
the Agreement of Lease shall be increased by Thirty-Seven Thousand One
Hundred Twenty-Five Dollars ($37,125.00) per annum and the monthly
rent increased by Three Thousand Ninety-Three and 75/100 Dollars
($3,093.75). Tenant shall also be responsible for increases in
operating expenses, as set forth in Section 3.2.4 of the Lease
Agreement, in excess of actual operating expenses for calendar year
1993. Tenant's pro rata share of operating expenses shall be adjusted
accordingly.
3. The term of the Lease shall be coterminous with the Lease Agreement
dated December 5, 1984, except that Tenant shall have the right to
terminate the lease for this Additional Space at any time after March
31, 1994 by providing ninety (90) days advance written notice to
Landlord. In the event Tenant exercises its option to terminate, then
Tenant shall reimburse Landlord an amount equal to Seven Hundred
Eighty Dollars ($780.00) times the number of months remaining from the
termination date to September 1, 1996, as the unamortized construction
and lease commission attributable to this Additional Space. This
payment shall be due at the time Tenant exercises this termination
option.
All other terms and conditions of the Lease as amended, except as
specifically modified herein, shall remain in full force and effect.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment No. 4 to
Lease Agreement to be executed as of the date and year first written above.
WITNESS: COMMUNITY MOTORS PROPERTY
ASSOCIATES LIMITED PARTNERSHIP
BY: /s/ Paul B. Abrams
- ------------------------------- --------------------------------
Paul B. Abrams
General Partner
WITNESS: FEDERAL DATA CORPORATION
BY: /s/ Robert Hanley
- -------------------------------- --------------------------------
B-50
<PAGE>
Robert Hanley,
CEO
B-51
<PAGE>
AMENDMENT NO. 5 TO LEASE AGREEMENT
AMENDMENT NO. 5 TO LEASE (the "Amendment") is made as of the 8th day
of March, 1995, by and between COMMUNITY MOTORS PROPERTY ASSOCIATES LIMITED
PARTNERSHIP, a Maryland limited partnership, having its principal offices in
Montgomery County, State of Maryland ("Landlord"), and FEDERAL DATA CORPORATION,
a Delaware corporation having its principal offices at 4800 Hampden Lane,
Bethesda, Maryland ("Tenant").
WHEREAS, Landlord and Tenant entered into that certain Agreement of
Lease (the "Lease") dated December 5, 1984, with respect to certain space as
further described in the Lease (the "Premises") in the building with an address
of 4800 Hampden Lane, Bethesda, Maryland (the "Building");
WHEREAS, Landlord and Tenant amended the Lease pursuant to that
certain Amendment to Agreement of Lease dated January 7, 1985 (the "First
Amendment");
WHEREAS, Landlord and Tenant amended the Lease pursuant to that
certain Amendment No. 2 to Lease Agreement dated November 14, 1986 (the "Second
Amendment");
WHEREAS, Landlord and Tenant amended the Lease pursuant to that
certain Amendment No. 3 to Lease Agreement dated February 6, 1987 (the "Third
Amendment");
WHEREAS, Landlord and Tenant amended the Lease pursuant to that
certain Amendment No. 4 to Lease Agreement dated March 31, 1993 (the "Fourth
Amendment") (hereinafter all references herein to the "Lease" shall refer to the
Lease as amended by the First Amendment, Second Amendment, Third Amendment and
Fourth Amendment, as amended hereby);
WHEREAS, Landlord and Tenant desire to revise the definition of the
Premises, the rental rate for the Premises, extend the Lease term and amend the
Lease in other ways, all on such terms and conditions hereinafter set forth;
WHEREAS, Landlord is a debtor in bankruptcy proceedings Case No.
94-1-5830-DK (Chapter 11) (the "Bankruptcy Proceeding") pending before the U.S.
Bankruptcy Court for the District of Maryland (the "Court");
WHEREAS, Landlord's authority to accept and execute this Agreement is
subject to approval by the Court of that certain Settlement Agreement by and
among Landlord, The Travelers Insurance Company ("Travelers") and Paul B. Abrams
that is the subject of the Notice of Joint Motion for Approval of Settlement
Agreement dated February 3, 1995 filed with the
B-52
<PAGE>
Court, as amended by the Praecipe filed by Landlord and Travelers dated March
10, 1995 and filed with the Court (the "Settlement Agreement"), and of this
Amendment in connection with the Settlement Agreement; and
WHEREAS, Landlord's assumption of the Lease as modified by this
Amendment is subject to the approval of the Court.
NOW, THEREFORE, in consideration of the foregoing premises, the mutual
covenants set forth herein, and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, Landlord and Tenant,
intending to be legally bound, hereby agree as follows:
1. INCORPORATION OF RECITALS. The foregoing recitals are hereby incorporated
herein and made a part hereof by this reference.
2. DEFINITIONS. All capitalized terms in this Amendment shall have the
meanings assigned thereto in the Lease unless otherwise specified.
3. RETROACTIVE AND COURT APPROVAL DATES.
(a) RETROACTIVE DATE. The terms of this Amendment shall commence to apply
to Sections 6, 7 and 8 of this Amendment retroactively as of 12:01 a.m. on
January 1, 1995 ("Retroactive Date"), and shall apply from and after the Court
Approval Date as to the other provisions of this Amendment, subject to the
conditions precedent set forth in Section 3(b) hereof.
(b) BANKRUPTCY ORDERS CONTINGENCY.
(i) Notwithstanding the execution of this Amendment by the Landlord
and consent thereto by Travelers, this Amendment and Travelers' consent thereto
shall not be effective unless and until such time that the Lease Approval Orders
(hereafter defined) have been issued by the Court and have become final orders
of the Court which are not subject to any appeal by reason of expiration of the
appeal period with no appeal having been taken or by reason of any dismissal
with prejudice of any appeal.
(ii) For purposes hereof, the Lease Approval Orders shall be one or
more orders of the Court that (A) approve the Settlement Agreement, (B) approve
the execution of this Amendment by the Landlord, (C) approve the assumption of
the Lease and this Amendment by the Landlord, (D) contains a finding that the
notice or notices provided to parties in interest was waived and/or adequate and
appropriate under the circumstances, and (E) contains no qualifications,
conditions or provisions not acceptable to Tenant and Travelers.
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<PAGE>
(iii) Tenant hereby unconditionally and irrevocably consents to
the Settlement Agreement and the Travelers' and Debtor's Joint Plan of
Reorganization for the Debtor that is included as an exhibit to the Settlement
Agreement (the "Joint Plan") and the assignment and assumption of the Landlord's
interest in and obligations under the Lease in accordance with the terms of the
Joint Plan, including, without limitation, the assignment of the Lease to
Travelers, or its designee, pursuant thereto on the Effective Date (as defined
in the Joint Plan). Tenant further hereby unconditionally and irrevocably
consents to any other transfer of the Building and assignment and assumption of
the Landlord's interest in and obligations under the Lease to Travelers, or its
designee, pursuant to the Travelers' Plan (as defined in the Settlement
Agreement as amended from time to time) or otherwise. Tenant further hereby
unconditionally and irrevocably consents to any amendments hereafter adopted to
the Settlement Agreement, the Joint Plan or the Travelers' Plan provided that
Tenant shall not be deemed to have consented to any such amendment if and to the
extent that such amendment would result in a change in any of the provisions of
the Lease as modified by this Amendment or if and to the extent that such
amendment would affect any claim that Tenant may have, as a partner of the
Landlord, with respect to the manner in which any funds (if any) previously or
hereafter received by the Landlord or the general partner of the Landlord,
including funds (if any) to be received pursuant to the Joint Plan or the
Travelers' Plan, shall be allocated among the partners of the Landlord.
(iv) In the event that the conditions set forth in Section
3(b)(i) occur on or before May 1, 1995 or such later date as Landlord, Tenant
and Travelers may agree to in writing (the "Court Approval Deadline Date"), (A)
Landlord, Tenant and Travelers shall execute an appropriate document confirming
that the conditions set forth in Section 3(b)(i) of this Amendment have been
fulfilled, (B) Tenant shall be deemed to have withdrawn, dismissed and released
all objections filed or otherwise interposed by Tenant with respect to the
Settlement Agreement (including, without limitation, the Limited Objection to
Joint Motion for Approval of Settlement Agreement and Bankruptcy Code Section
364(c)(1) Financing), the Joint Plan, the Travelers' Plan, any transfer of the
Building to Travelers or its designee, and/or the assignment and assumption of
the Landlord's interest in and obligations under the Lease in accordance with
the terms of the Joint Plan or Travelers' Plan or other transfer of the Building
to Travelers or its designee, and (C) Tenant agrees not to raise any new
conditions, requirements or objections with respect to the Settlement Agreement,
the Joint Plan, the Travelers' Plan, any transfer of the Building to Travelers
or its designee, and/or the assignment and assumption of the Landlord's interest
in and obligations under the Lease in accordance with the terms of the Joint
Plan or the Travelers' Plan or other transfer of the Building to Travelers or
its designee, including the assignment of the Lease to Travelers, or its
designee, pursuant to the Joint Plan, the Travelers' Plan or otherwise, except
that the provisions of the last sentence of Section 3(b)(iii) of this Amendment
shall apply to the foregoing.
(v) In the event that the conditions set forth in Section
3(b)(i) do not occur on or before the Court Approval Deadline Date, this
Amendment shall be null and void and of no force or effect as fully and as
effectively as if this Amendment had not been executed.
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<PAGE>
(vi) The Landlord unconditionally and irrevocably agrees that the
Lease as modified by this Amendment will be assumed in the Bankruptcy Proceeding
regardless of whether the Joint Plan or the Travelers' Plan is confirmed and
will not later be rejected, and Travelers (by executing the consent hereto)
consents to the foregoing.
(vii) The date on which the conditions set forth in Section
3(b)(i) of this Amendment occur is herein referred to as the "Court Approval
Date."
(viii) On or before the Delivery Date (as defined in the Joint
Plan, or the Travelers' Plan, if applicable), Tenant shall execute and deliver,
in the manner required by the Joint Plan or the Travelers' Plan, as the case may
be, the Travelers Parties Release attached as an exhibit to the Joint Plan or
the Travelers' Plan, as the case may be, provided that such Release, to the
extent applicable to Tenant, shall be deemed to exclude matters arising under
the Lease as amended by this Amendment from and after the date of this
Amendment. The Debtor Parties Release delivered by Travelers pursuant to the
Joint Plan or the Travelers' Plan, to the extent applicable to the Tenant, shall
also be deemed to exclude matters arising under the Lease as amended by this
Amendment from and after the date of this Amendment.
4. TERM. The original Term (as defined in Section 2.1 of the Lease) is hereby
extended to expire at 11:59 p.m. on December 31, 2004 ("Expiration Date"),
unless further extended or earlier terminated in accordance with the terms of
the Lease. Notwithstanding Section 2.1 of the Lease, any reference to "Lease
Year" shall mean a twelve (12) month period commencing on January 1st of the
applicable year and ending on December 31st of the applicable year, with the
first Lease Year being the period from January 1, 1995 to December 31, 1995, all
dates inclusive.
5. PREMISES; STORAGE SPACE. The Premises are hereby deemed to be (i) 1,650
square feet of Rentable Area located on the first (1st) floor of the Building
("1st Floor Space"), (ii) 18,168 square feet of Rentable Area located on the
second (2nd) floor of the Building ("2nd Floor Space"), (iii) 17,422 square feet
of Rentable Area located on the third (3rd) floor of the Building ("3rd Floor
Space"), (iv) 3,240 square feet of Rentable Area located on the ninth (9th)
floor of the Building ("3,240 9th Floor Space"), (v) 11,623 square feet of
Rentable Area located on the tenth (10th) floor of the Building ("10th Floor
Space"), (vi) 9,208 square feet of Rentable Area located on the eleventh (11th)
floor of the Building ("11th Floor Space"), and (vii) 9,531 square feet of
Rentable Area located on the twelfth (12th) floor of the Building ("12th Floor
Space"), all as more fully described on EXHIBIT A attached hereto and hereby
incorporated by reference herein, and consist in the aggregate of 70,842 square
feet of Rentable Area. The Storage Space (as defined in the Third Amendment),
which consists of 726 square feet and is located on the B-3 level of the
Building's garage, shall continue to be subject to the terms of the Lease as set
forth in the Third Amendment, including without limitation the rental set forth
therein. Notwithstanding the terms of the Lease, as of the Retroactive Date,
except as set forth in this paragraph, no other space shall be deemed part of
the Premises or the Storage Space. The
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parties agree that the figures for the Rentable Area of the Premises set forth
in this Section 5 are conclusive and shall not be subject to further measurement
or adjustment and that the Rentable Area of the Building (retail and office
space) is 167,500 square feet and shall not be subject to further measurement or
adjustment except that if the Landlord constructs any additional or reduces the
Rentable Area of the Building then the Rentable Area of the Building shall be
increased or decreased by the amount of such additional or reduced Rentable
Area, as applicable.
6. BASE RENT.
(a) PAYMENTS. Section 4.1.1 of the Lease is hereby deleted and the
following substituted therefor:
"An annual base rent with respect to the 3,240 9th Floor Space, 10th Floor
Space, 11th Floor Space and 12th Floor Space, which consist of 33,602
square feet of Rentable Area ("Upper Floors Space"), of Seven Hundred
Fifty-Six Thousand Forty-Five Dollars ($756,045.00) for each Lease Year
during the Term, payable in equal monthly installments of Sixty-three
Thousand Three and 75/100 Dollars ($63,003.75) which amount shall be equal
to Twenty-two and 50/100 Dollars ($22.50) multiplied by the Rentable Area
of the Upper Floors Space ("Upper Floors Space Base Rent"). An annual base
rent with respect to the 1st Floor Space, 2nd Floor Space and 3rd Floor
Space, which consists of 37,240 square feet of Rentable Area ("Lower Floors
Space"), of Eight Hundred Thousand Six Hundred and Sixty Dollars
($800,660.00) for each Lease Year during the Term, payable in equal monthly
installments of Sixty-six Thousand Seven Hundred Twenty-one and 67/100
Dollars ($66,721.67), which amount shall be equal to Twenty-one and 50/100
Dollars ($21.50) multiplied by the Rentable Area of the Lower Floors Space
("Lower Floors Space Base Rent"). In the aggregate, the Upper Floors Space
Rent and the Lower Floors Space Rent ("Base Rent") is One Million Five
Hundred Fifty-Six Thousand Seven Hundred Five Dollars ($1,556,705.00) for
each Lease Year during the Term, payable in equal monthly installments of
One Hundred Twenty-nine Thousand Seven Hundred Twenty-five and 42/100
Dollars ($129,725.42), subject to the terms of Section 10 of this
Amendment."
(b) ABATEMENT. Section 4.3.11 of the Lease shall have no further force or
effect since the provisions thereof have been fully performed.
7. ESCALATION OF BASE RENT. Section 4.2 of the Lease is hereby deleted and
the following substituted therefor:
"Commencing on the first day of the second (2nd) Lease Year and on the
first day of each Lease Year thereafter until and including the eighth
(8th) Lease Year, the applicable Base Rent (as adjusted by this Section
4.2) shall be increased by an amount
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equal to two percent (2%) multiplied by the applicable Base Rent (as
adjusted by this Section 4.2) payable by Tenant for the immediately
preceding Lease Year. On the first day of the ninth (9th) Lease Year and
on the first day of each Lease Year thereafter through the expiration of
the Term, the Base Rent (as adjusted by this Section 4.2) shall be
increased by an amount equal to two and one half percent (2.5%) multiplied
by the applicable Base Rent (as adjusted by this Section 4.2) payable by
Tenant for the immediately preceding Lease Year."
8. ANNUAL OPERATING COSTS.
(a) OPERATING COSTS FACTOR. Section 4.3.4 of the Lease is hereby deleted
and the following substituted therefor: "For purposes of this Lease, the
`Operating Costs Factor' shall mean the Annual Operating Costs per square foot
of Rentable Area in the Building for calendar year 1995 (as derived under the
provisions of Section 4.3.5)." Since the Operating Costs Factor is based on
calendar year 1995, Tenant shall not have any obligation to pay any Tenant's
Operating Costs Amount (or estimated payments with respect thereto) for calendar
year 1995.
(b) CAP ON ACTUAL EXPENSES. Notwithstanding anything to the contrary in
the Lease, the Tenant shall not be required, in any calendar year (excluding
calendar year 1996 and each calendar year in which an applicable Extension
Period commences), to pay that portion of Tenant's Operating Costs Amount (other
than for the costs of the items described in Sections 4.3.1(a) and (b) of the
Lease, being the "Exclusions") which exceed one hundred seven percent (107%) of
Tenant's Operating Costs Amount (less the Exclusions) per square foot of
Rentable Area of the Premises payable with respect to the immediately prior
calendar year.
(c) CAP ON ESTIMATED EXPENSES. At the end of the first sentence of
Section 4.3.8 of the Lease, add the following: "for any year prior to 1995;
provided, further, that in no event shall the estimate furnished by Landlord
exceed one hundred and seven percent (107%) of Tenant's Operating Costs Amount
(other than for the costs of the Exclusions) for the immediately preceding
calendar year for any year after 1996."
(d) STATEMENTS AND ESTIMATES OF OPERATING COSTS. Notwithstanding anything
to the contrary in the Lease:
(i) Each Operating Costs Statement required to be submitted by
Landlord shall contain reasonably detailed line items of the various components
of Operating Costs at a level of detail comparable to that set forth in the
Carey Winston statement for the Building attached hereto as EXHIBIT B.
(ii) All Landlord estimates of Operating Costs pursuant to Section
4.3.8 shall be on a form that fulfills the requirements for an Annual Operating
Costs Statement under Section 8(d)(i) of this Amendment and must be based upon
either known cost increases or decreases
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(such as a revised tax assessment or tax rate or a renegotiated or new service
contract) or must specify the basis on which the Landlord has assumed such cost
increase or decrease (I.E. CPI increase or otherwise) and shall be accompanied
by an explanation of any increases or decreases from any previous statement.
Tenant shall have no right to contest the basis for Landlord's estimates or
assumptions absent manifest error, and Tenant shall pay Landlord on the basis of
Landlord's estimates, notwithstanding any dispute, until such time as such
dispute has been resolved and adjusted by Landlord.
(e) FURTHER EXCLUSIONS FROM ANNUAL OPERATING COSTS. The term "Annual
Operating Costs" shall not include any cost incurred by Landlord for the Repair
Work (defined below). In determining the "prevailing market rate charged in
arm's length transactions" for purposes of determining the maximum amount of the
management fee included in Annual Operating costs pursuant to clause (e) of
Section 4.3.1 of the Lease, the amount of any management fee paid in
transactions under which the management company or any one or more direct or
indirect beneficial owners in the aggregate of at least a ten percent (10%)
interest in such management company or members of the family of such persons
also own a direct or indirect beneficial ownership interest in the building that
is managed by such management company ("Related Management") shall not be
treated as an "arm's length transaction." Nothing herein is intended to or
shall be construed to preclude Related Management from charging or Landlord from
paying a management fee in excess of the "prevailing market rate charged in
arm's length transactions" or Landlord from including the management fees paid
to Related Management in Annual Operating Costs up to (but not in excess of) the
prevailing market rate charged in arm's length transactions (as defined above).
(f) CONTINUING RESPONSIBILITY. Tenant shall continue to be responsible
for Base Rent, Additional Rent (including its share of Annual Operating Costs)
and any other amounts payable by Tenant for the period through December 31, 1994
under the terms of the Lease as amended, but without giving effect to this
Amendment.
(g) GROSS-UP PROVISION. The provisions of Section 4.3.5 of the Lease
shall apply to all calendar years during the Term from and after the Retroactive
Date for all purposes of the Lease, including the computation of the Annual
Operating Costs for calendar year 1995 and for the calendar year in which each
Extension Period commences.
(h) MUTUAL RELEASE. Landlord and Tenant hereby release and discharge each
other from any and all claims, demands or causes of action attributable to any
acts or omissions under the Lease or the Building prior to the date of this
Amendment. Landlord acknowledges that it has received full payment of (and
hereby waives and surrenders all claims for) all amounts payable by Tenant under
the Lease with respect to the period prior to March 1, 1995 and waives all
claims for payment of any Tenant's Operating Costs Amounts for calendar years
ending prior to the Retroactive Date and Tenant acknowledges that Tenant is not
entitled to (and hereby waives and surrenders all claims for) any refunds,
offsets, chargebacks or other amounts that
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may be payable by Landlord to Tenant attributable to the period prior to the
date of this Amendment, except as otherwise provided for in Section 9(b)
(subject to Section 9(c)) of this Amendment.
9. CREDIT/ALLOWANCES.
(a) IMPROVEMENT ALLOWANCE. Landlord agrees to pay to Tenant an amount
("Improvement Allowance") equal to (i) Twelve Dollars ($12.00) per square foot
of Rentable Area in the 10th Floor Space, 11th Floor Space and the 12th Floor
Space (30,362 square feet of Rentable Area) and (ii) Eight Dollars ($8.00) per
square foot of Rentable Area in the Lower Floors Space (37,240 square feet of
Rentable Area) on the date on which Travelers, or its designee, acquires the
Building pursuant to the Joint Plan, but in no event later than June 15, 1996,
provided, however, that in the event that the Improvement Allowance is not paid
to Tenant on or before June 1, 1995, Landlord shall pay to Tenant interest on
the amount of the Improvement Allowance at the rate of five percent (5%) per
annum from June 1, 1995 to the date of payment of the Improvement Allowance to
Tenant.
(b) RENT CREDIT. Landlord agrees that Tenant shall be entitled to a
credit ("Rent Credit") for the amount by which the Base Rent (as adjusted by
Section 4.2 of the Lease) and the Additional Rent payable pursuant to Section
4.3 of the Lease in each case determined by the Lease without giving effect to
this Amendment, for the Premises from the period commencing on the Retroactive
Date and terminating on the date prior to the Court Approval Date and actually
paid by the Tenant exceeds the Base Rent under the Lease for the same period
upon giving effect to this Amendment plus a credit (the "Initial Rent Credit
Interest") equal to interest at the rate of five percent (5%) per annum on the
amount of the Rent Credit from May 1, 1995 to the date prior to the Court
Approval Date. The Rent Credit and the Initial Rent Credit Interest shall be
calculated as aforesaid on the Court Approval Date and the amount of the Rent
Credit and the Initial Rent Credit Interest shall be payable to Tenant only by
Tenant deducting from each of the monthly installments of Base Rent payable
under the Lease after the Court Approval Date one twelfth (1/12) of the amount
of the Rent Credit and Initial Rent Credit Interest, plus interest on the unpaid
portion of the Rent Credit and the Initial Rent Credit Interest at the rate of
five percent (5%) per annum until the full amount of the Rent Credit and Initial
Rent Credit Interest and the aforesaid interest on the unpaid principal balance
thereof has been paid in full.
(c) CONDITIONS. Landlord's obligations to give the Improvement Allowance
to Tenant and Tenant's entitlement to the Rent Credit are expressly subject to
the conditions that Tenant does not object to (except the previously filed
objection which is deemed withdrawn hereby), or raise any new objections,
conditions or requirements with respect to, the Settlement Agreement, the Joint
Plan, the Travelers' Plan or any other transfer of the Building to Travelers
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or its designee, and/or and the assignment and assumption of the Lease in
accordance with the terms of the Joint Plan, the Travelers' Plan or any other
transfer of the Building to Travelers or its designee, including, without
limitation, the assignment of the Lease to Travelers, or its designee, pursuant
thereto on the Effective Date or the transfer of the Building to Travelers or
its designee, other than an objection that Tenant is entitled to make pursuant
to the last sentence of Section 3(b)(iii) of this Amendment. In the event that
at the time the Improvement Allowance and interest thereon becomes payable,
Tenant is in default in the payment of any monetary amount to Landlord and such
default continues uncured for five (5) days after written notice of such default
has been sent by Landlord to Tenant or, in the event Tenant files or has filed
against it a petition for relief under the United States Bankruptcy Code (11
U.S.C. Sections 101 ET SEQ., as amended) or any other insolvency proceedings
(collectively, "Insolvency Proceeding"), Landlord may (i) suspend the payment of
such Improvement Allowance without interest until such time that such default
has been cured by Tenant and, in the case of an Insolvency Proceeding, the Lease
has been assumed by Tenant in accordance with the provisions of the Bankruptcy
Code with Landlord's consent, and (ii) deduct any amounts owed by Tenant from
the Improvement Allowance.
(d) REFURBISHING ALLOWANCE. Article 31 ("Tenant's Refurbishing Allowance;
Refurbishing by Landlord") is hereby deleted. On January 1, 2000 and provided
this Lease is in full force and effect, Landlord shall pay to Tenant an amount
("Refurbishing Allowance") equal to the product of the Rentable Area of the
Allowance Space (as hereafter defined) and Five Dollars ($5.00). The "Allowance
Space" shall mean the Premises as of January 1, 2000, less any Expansion Space
leased by Tenant after December 31, 1997.
(e) TENANT'S RIGHT TO SET OFF CONCERNING IMPROVEMENT ALLOWANCE. If
Landlord has failed to pay to Tenant, as and when due, the Improvement Allowance
and interest thereon which payment is required to be made by Landlord in
accordance with the terms of the Lease (such unpaid allowance and interest
thereon shall be referred to as the "Overdue Allowance"), which Overdue
Allowance remain unpaid after delivery of written notice of such failure
("Failure Notice") to Landlord, Travelers and any subsequent first mortgage
lender designated by Landlord in writing to Tenant in accordance with the terms
of Article 19 of the Lease ("Notices") or who have signed a subordination,
attornment or non-disturbance agreement with Tenant ("Notice Parties") and after
the expiration of fifteen (15) days following delivery to all of the Notice
Parties of such notice from Tenant, during which fifteen (15) day period none of
the Notice Parties pays such Overdue Allowance to Tenant in accordance with the
terms of the Lease, then Tenant shall have the right to set off against any Base
Rent or Tenant's Operating Costs Amount due under the Lease such amount not paid
by Landlord plus interest thereon at the interest rate specified in Section 9.4
of the Lease ("Interest Rate"). The foregoing interest shall be calculated from
the date such amount was originally due through the earlier of the date on which
such amount is reimbursed by any of the Notice Parties or the date on which such
amount is credited against Base Rent or Tenant's Operating Costs Amount as set
forth above. The Failure Notice shall include a statement that Tenant intends
to exercise this right to set off and shall identify in reasonable detail the
basis for the offset and the date on which such amounts should have been paid to
Tenant. Any dispute in which Tenant utilizes this right to set off shall
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be subject to the final determination of a court of competent jurisdiction and
in the event Tenant does not prevail in such dispute, then Tenant shall pay
Landlord, in addition to the amount so set off and reasonable attorneys' fees
and expenses, interest thereon at the Interest Rate, calculated from the date
Tenant should have paid Landlord for the Base Rent or Tenant's Operating Costs
Amount subject to the set off until the date Tenant actually reimburses Landlord
therefor.
10. ASSIGNMENT AND ASSUMPTION AND/OR TERMINATION OF CERTAIN SUBLEASES.
(a) ASSIGNMENT AND ASSUMPTION OF WATKINS AND PALEY SUBLEASES. Effective
as of the Court Approval Date, (i) Tenant hereby assigns to Landlord all of
Tenant's rights under the Agreement of Sublease [undated] and Addendum No. 1
dated , 1988 attached thereto between Tenant, as sublandlord, and
Watkins, Meegan, Drury & Company, as subtenant (the "Watkins Sublease") relating
to 3,522 square feet of Rentable Area on the 9th floor of the Building (the
"3,522 9th Floor Space"), (ii) Tenant hereby assigns to Landlord all of Tenant's
rights under the Agreement of Sublease dated March 4, 1992, Addendum No. 1 dated
March 4, 1992, Addendum No. 2 dated March 4, 1992, Addendum No. 3 dated November
30, 1992, Addendum No. 4 dated June 15, 1993 and Agreement dated as of October
17, 1994 attached thereto between Tenant, as sublandlord, and Paley, Rothman,
Goldstein, Rosenberg & Cooper, Chartered, as subtenant (the "Paley Sublease")
relating to 4,266 square feet of Rentable Area on the 9th floor of the Building
(the "4,266 9th Floor Space"), (iii) Landlord assumes all of Tenant's
obligations under the Watkins Sublease and the Paley Sublease accruing on and
after the Court Approval Date (but not for the period prior thereto), and (iv)
Tenant shall cease to have any rights or obligations with respect to the 3,522
9th Floor Space and the 4,266 9th Floor Space except for obligations with
respect to such space accruing under the Lease prior to the Court Approval Date.
In connection with the foregoing assignments, Tenant hereby transfers to
Landlord the full amount of the security deposit paid by Watkins under the
Watkins Sublease, together with all interest earned or required to be paid
thereon, in accordance with the terms of the Watkins Sublease to the extent that
such security deposit has not been returned to the subtenant or applied as rent
pursuant to the provisions of the Watkins Sublease ("Watkins Deposit").
(b) POST-COURT APPROVAL DATE ADJUSTMENT. Within thirty (30) days after
the Court Approval Date an appropriate adjustment shall be made between Landlord
and Tenant to reflect any rent and additional rent (if any) received by Tenant
from the tenant under the Watkins Sublease and the Paley Sublease attributable
to the period on or after the Court Approval Date (which shall be credited to
Landlord) and any rent and additional rent (if any) paid by Tenant to Landlord
with respect to the 3,522 9th Floor Space and 4,266 9th Floor Space attributable
to the period on and after the Court Approval Date (which shall be credited to
Tenant) and the net amount of such adjustment shall be paid to the party
entitled thereto prior to the expiration of such thirty (30) day period.
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(c) 3,240 9TH FLOOR SPACE. As of 5:00 p.m. on July 31, 1995, time being
of the essence, the Lease with respect to the 3,240 9th Floor Space only shall
be terminated and Tenant shall deliver possession of such space to Landlord,
without the necessity of demand or notice by either Landlord or Tenant. As of
the date of such termination and delivery of possession, both Landlord and
Tenant shall be released from any further obligations and liabilities to the
other with respect to the 3,240 9th Floor Space (but not as to obligations and
liabilities for the period prior thereto). Nothing herein shall modify or waive
any rights and obligations of the Landlord and the Tenant with regard to the
remainder of the Premises and the Storage Space. Upon such termination and
delivery of possession, all rental and other items in the Lease determined by
means of a calculation based on the square feet of Rentable Area in the Premises
shall be adjusted appropriately to reflect the decrease in the number of square
feet in the Rentable Area of the Premises for the period following termination
and delivery of possession (but such adjustment shall not affect any obligations
and liabilities for the period prior to such termination and delivery of
possession).
(d) TENANT INDEMNITY. Tenant hereby agrees to indemnify Landlord and hold
Landlord harmless for any damages, liabilities, costs or expenses (including
reasonable attorneys' fees and costs) arising from or with respect to any and
all liabilities and obligations of the Tenant as "sublessor" under the Watkins
Sublease and/or the Paley Sublease accruing before the Court Approval Date;
provided, however, such indemnity shall not apply to any liabilities or
obligations of Tenant as "sublessor" before the Court Approval Date to the
extent Tenant's nonperformance of such liabilities or obligations is directly
attributable to the failure of the Landlord to provide services or perform
obligations required of it under Tenant's lease with Landlord.
(e) SUBLEASE TERMINATIONS. In the event on or before the Court Approval
Date Landlord executes a lease amendment with Paley to lease the space covered
by the Paley Sublease and/or a lease amendment with Watkins to lease the space
covered by the Watkins Sublease, at Landlord's request, Tenant agrees, in lieu
of assigning the Paley Sublease and/or the Watkins Sublease, as applicable, to
Landlord, to enter into termination agreements with Paley and Watkins, as the
case may be, terminating the Paley Sublease and the Watkins Sublease effective
as of the Court Approval Date and only if the Court Approval Date occurs. In
the event of the full execution of a termination agreement of the applicable
sublease by Paley and/or Watkins, as the case may be, Landlord and Tenant, the
foregoing assignment and assumption of, and corresponding indemnity by Tenant
with respect to, the applicable sublease shall be null and void and of no effect
and Landlord shall return the Watkins Deposit to Tenant or Landlord, if Tenant
so directs.
(f) TENANT REPRESENTATIONS. Tenant represents and warrants to landlord
that Tenant has delivered true and complete copies of the Watkins Sublease and
Paley Sublease (collectively, the "Subleases") to Landlord and neither of the
Subleases has been further amended or modified
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in any respect. Tenant has not assigned, transferred, sold or encumbered the
Subleases or any interest therein or any right to receive the rents, profits or
proceeds arising therefrom.
11. TERMINATION OPTION. Tenant shall have the right to terminate this Lease
with respect to all or part of the Lower Floors Space effective as of 11:59 p.m.
on December 31, 1999 (the "Termination Date"), subject to the following terms
and conditions. Tenant may exercise such right only by delivering to Landlord
no later than June 30, 1999 written notice of termination (the "Termination
Notice") which delineates in reasonable detail which parts, or all, of the Lower
Floors Space shall be subject to this termination right. The effectiveness of
such exercise of this termination right shall also be conditioned upon the
delivery to Landlord on or prior to the Termination Date of: (a) possession of
that portion of the Premises to be terminated as identified in the Termination
Notice; and (b) a termination payment in an amount equal to fifty percent (50%)
of the Improvement Allowance paid by Landlord to Tenant in connection with the
space being so terminated (the "Termination Payment"). Such Termination Payment
shall be in addition to, and not in lieu of, the payments of Base Rent (as
escalated), Additional Rent and other charges due or payable under the Lease for
the period prior to the Termination Date (whether or not due and payable until
after termination). In the event Tenant fails to provide the Termination Notice
on or before June 30, 1999, then all rights of Tenant under this section to
exercise this termination right shall immediately lapse and be of no further
force or effect. Upon such termination, all rental and other items in the Lease
determined by means of a calculation based on the Rentable Area in the Premises
for the period following the termination shall be adjusted appropriately to
reflect the decrease in the Rentable Area of the Premises (but such adjustment
shall not affect any obligations and liabilities for the period prior to such
termination and delivery of possession).
12. OPTION TO RENEW. Article 27 ("Renewal Options") is hereby deleted and the
following substituted therefor:
"SECTION 27.1. Tenant shall have and is hereby granted the option
(the "Extension Option") to extend the Term, with respect to all or any
part of the Premises designated by Tenant (except that if less than all of
the Premises is designated by Tenant, Tenant's designation of any space on
any floor of the Building must include all of the space on such floor of
the Building then included in the Premises), for up to two (2) consecutive
periods of five (5) additional Lease Years each (together referred to as
the "Extension Periods" and individually referred to as an "Extension
Period") provided (i) Tenant gives written notice to Landlord of its
election to exercise such extension option no later than December 31, 2003
with respect to the first Extension Option, and no later than December 31,
2008 with respect to the second Extension Option, (ii) as to the second
Extension Option only, Tenant has exercised the first Extension Option, and
(iii) the Lease is in full force and effect.
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SECTION 27.2. All terms and conditions of this Lease shall remain in
full force and effect during the Extension Period, except that Annual Base
Rent payable during each Extension Period shall be ninety-five percent
(95%) of the respective current fair market rental rate as of the first day
of the calendar year immediately preceding such Extension Period with
respect to comparable space in comparable buildings of comparable age and
condition which are located in the central business district of Bethesda
without taking into account concessions or allowances being offered for new
leases but taking into account concessions or allowances, if any, being
offered for renewal leases for equivalent periods of time, the escalations
of the Base Rent during the Extension Term pursuant to Section 4.2 of the
Lease and the adjustment in the Operating Cost Factor set forth below at
the time of the commencement of the applicable Extension Period (the
"Market Rate") with subsequent escalations of Base Rent for each year after
the first year of such Extension Period to be determined in accordance with
Section 4.2 of the Lease. Additionally, the Operating Cost Factor during
each Extension Period shall be the quotient derived by dividing the Annual
Operating Costs for the calendar year in which the applicable Extension
Period commences by the Rentable Area of the Building, and no Tenant's
Operating Costs Amount shall be payable with respect to the first calendar
year of each such Extension Period.
SECTION 27.3. Landlord shall provide Tenant with written notice of
Landlord's determination of the Market Rate (as defined below) not later
than June 30, 2003 with respect to the first Extension Period, and no later
than June 30, 2008 with respect to the second Extension Period. Landlord
and Tenant shall negotiate in good faith to determine the amount of the
Market Rate for the applicable Extension Period within thirty (30) days of
the date of Tenant's receipt of Landlord's determination of the Market
Rate. In the event Landlord and Tenant are unable to agree upon the Market
Rate for any such Extension Period within said thirty (30)-day period, or
by July 31, 2003 with respect to the first Extension Period or by July 31,
2008 with respect to the second Extension Period if Landlord fails to
designate a Market Rate within the aforesaid time requirements, the
determination of the Market Rate for the applicable Extension Period shall
be submitted to a board of three (3) licensed real estate brokers, one of
whom shall be named by Landlord, one by Tenant, and the two so appointed
shall select a third. Each member of the board of brokers shall be
licensed in the State of Maryland as a real estate broker, specializing in
the field of commercial office leasing in metropolitan Washington, D.C.,
including Bethesda, Maryland, having no less than ten (10) years'
experience in such field. Landlord and Tenant agree to make their
appointments promptly within five (5) days after the expiration of the
thirty (30)-day period, or applicable date for appointment of such brokers,
or sooner if mutually agreed upon, and if either party fails to appoint a
broker within such time period, the other party may appoint such broker.
The two brokers selected by Landlord and Tenant shall promptly select a
third broker within ten (10) days after they both have been
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appointed, and each broker, within fifteen (15) days after the third broker
is selected, shall submit his or her determination of said Market Rate.
The Market Rate shall be the determination of the Market Rate by the broker
that is not the highest or the lowest of the three (3) brokers. Landlord
and Tenant shall each pay the fee of the broker selected by it, and they
shall equally share the payment of the fee of the third broker, which shall
be based on a reasonable hourly basis plus costs. On or before the
applicable date set forth in Section 27.1(i), above, Tenant shall have the
right to exercise the applicable Extension Option and if Tenant so
exercises such option then the Market Rate shall be as agreed to by
Landlord and Tenant or, if no such agreement was reached, as determined by
the brokers in accordance with the terms of this Section 27.3.
SECTION 27.4. Landlord and Tenant shall enter into an amendment
modifying this Lease to set forth the Base Rent for the Premises during the
applicable Extension Period within ten (10) days after the date Tenant has
exercised the applicable Extension Option."
13. EXPANSION OPTION. Article 29 ("Right of First Offering") of the Lease is
hereby deleted and the following substituted therefor:
"ARTICLE 29. EXPANSION OPTION
SECTION 29.1. Subject to Section 29.4, in the event that Rentable
Area (other than the Premises) anywhere in the Building excluding retail
space (the "Expansion Space") from time to time becomes available during
the period commencing on the date hereof until the end of the Term, and
provided this Lease is in full force and effect, Tenant shall have the
option (the "Expansion Option") to lease such Expansion Space on the terms
and conditions hereinafter set forth. Landlord shall send notice in
writing (the "Expansion Notice") to Tenant specifying the location and
configuration of such Expansion Space and the date on which the Expansion
Space is scheduled to become available for occupancy, provided, that in no
event shall Landlord send an Expansion Notice to Tenant more than twelve
(12) months prior to the time at which the space which is the subject of
such Expansion Notice is scheduled to become available for occupancy. Each
Expansion Option shall be exercisable by Tenant giving written notice to
Landlord of the exercise of the particular Expansion Option within thirty
(30) days after Landlord sends the applicable Expansion Notice. Landlord
and Tenant shall enter into an amendment modifying this Lease to add the
Expansion Space to the Premises, adding the Expansion Base Rent for the
Expansion Space, within ten (10) days of the date Tenant exercises its
Expansion Option in accordance with the terms hereof, which shall be
co-terminous with the remaining Term of the Lease. Tenant shall lease the
Expansion Space on the same terms and conditions as the Premises except
that:
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(a) The annual Base Rent for the Expansion Space shall equal the
product of (i) the Rentable Area of the Expansion Space and (ii) an amount
equal to Twenty-two and 50/100 Dollars ($22.50), as escalated in accordance
with Section 4.2 of the Lease ("Expansion Space Base Rent") as of the
Expansion Commencement Date (as hereafter defined). For example, if, on
the first day of the third (3rd) Lease Year, Tenant expands the Premises to
include certain Rentable Area on the fourth (4th) floor of the Building,
the Base Rent per square foot of Rentable Area in such Expansion Space
shall be Twenty-three and 41/100 Dollars ($23.41). The Expansion Space
Base Rent shall escalate thereafter during the remainder of the Term in
accordance with the terms of Section 4.2 of the Lease; and
(b) upon the later of the Court Approval Date or the Expansion
Commencement Date (as hereafter defined), Landlord shall pay to Tenant an
amount ("Expansion Allowance") which shall equal an amount determined by
MULTIPLYING (1) the product of One Dollar ($1.00) and the number of square
feet in the Rentable Area of the applicable Expansion Space BY (2) a
fraction, the numerator of which is the number of months between the
Expansion Commencement Date and the Expiration Date (without regard to any
renewal option being exercised) and the denominator of which is one hundred
twenty (120). Payment of the Expansion Allowance to Tenant is also
conditioned upon the Tenant not objecting to, or raising any new conditions
or requirements with respect to, the Settlement Agreement, the Joint Plan,
the Travelers' Plan and/or any other transfer of the Building to Travelers
or its designee, and the assignment and assumption of the Lease in
accordance with the terms of the Joint Plan, the Travelers' Plan and/or any
other transfer of the Building to Travelers or its designee, including,
without limitation, the assignment of the Lease to Travelers, or its
designee, pursuant thereto on the Effective Date, except in the event and
to the extent that Tenant is permitted to do so under the last sentence of
Section 3(b)(iii) of Amendment No. 5 to Lease Agreement.
In the event that Tenant does not exercise any such Expansion Option
and execute an amendment to the Lease within the time periods required by
this Section 29.1, Landlord shall be free to lease the Expansion Space that
was the subject of such Expansion Option to any other party on such terms
and conditions that Landlord determines in Landlord's sole discretion, but
Tenant's option rights under this Section 29.1 shall continue in full force
and effect with respect to any Expansion space thereafter becoming
available for lease in accordance with this Article 29 (including any
Expansion Space that Tenant did not elect to lease that subsequently
becomes available for leasing after Landlord's leasing of such Expansion
Space) unless Tenant fails to execute an amendment to the Lease.
SECTION 29.2. On the date of delivery of possession of the Expansion
Space to Tenant (but not earlier than the date on which Landlord previously
advised Tenant such
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Expansion Space would be available) ("Expansion Commencement Date"), such
space shall be added to and constitute a part of the Premises. Tenant
shall accept the Expansion Space in its "as is" condition and Tenant's
obligation to pay rent with respect to the Expansion Space shall commence
on the date of delivery of such space by Landlord to Tenant (but not
earlier than the date on which Landlord previously advised Tenant such
Expansion Space would be available). Landlord shall have no obligation to
make any alterations, decorations, additions or improvements in or to the
Expansion Space. Tenant shall not make any alterations, installations,
additions or improvements to the Expansion space unless Tenant complies
with Section 8.2.2, Article 14 and all other applicable provisions of this
Lease.
SECTION 29.3. If Landlord is unable to deliver possession of any
Expansion Space to Tenant for any reason or condition beyond Landlord's
control, including, without limitation, the failure of an existing tenant
to vacate such space, Landlord shall not be liable for any claims, damages
or liabilities in connection therewith or by reason thereof. In such
event, Landlord shall use its reasonable efforts to (a) make such space
available to Tenant at the earliest possible time or (b) cause such
existing tenant(s) to vacate such Expansion Space at the earliest possible
time, and the Expansion Commencement Date shall not occur until Landlord is
able to deliver possession of the Expansion Space to Tenant. If Landlord
is unable to deliver possession of the Expansion Space to Tenant within
ninety (90) days after the date on which Landlord previously advised Tenant
such Expansion Space would be available, Tenant shall have the right, at
its option, to terminate its obligation to lease such Expansion Space upon
giving Landlord written notice thereof prior to the expiration of such
ninety (90) day period. Tenant's rights to lease such Expansion Space
shall automatically and immediately terminate upon giving such notice to
Landlord.
SECTION 29.4. Tenant's option rights under this Article 29 shall be
subject and subordinate to (i) any option granted by Landlord to another
tenant of the Building contained in the original lease executed by Landlord
and such other tenant that permits such other tenant the right to expand
its leased premises to add additional space whose location is specifically
described in such original lease at a particular time (such as, for
example, an option in the original ten (10) year lease of a tenant leasing
seventy-five percent (75%) of the fourth (4th) floor to lease the remainder
of the fourth (4th) floor effective in the fifth (5th) lease year), but
Tenant's rights under this Article 29 shall be superior to any other rights
of first offering or first refusal granted to any other tenant of the
Building (except as set forth hereafter in clauses (ii) and (iii)), (ii)
the right or obligation of Paley, Rothman, Goldstein, Rosenberg & Cooper,
Chartered ("Paley") to expand or a right of first offering with respect to
any space coming available on the sixth (6th) floor of the Building, which
right or obligation exists or shall exist under the terms of Paley's lease
on or before December 31, 1995, (iii) the right of Watkins, Meegan, Drury &
Company, LLC ("Watkins") to an option to expand or a right of first
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offering with respect to any space coming available on the ninth (9th)
floor of the Building which right exists or shall exist under the terms of
Watkins' lease on or before December 31, 1995, and (iv) the right of Blum,
Frank & Kamins to a right of first offering with respect to any space
coming available on the sixth (6th) floor of the Building which right
exists under the term of such tenant's lease prior to the Retroactive
Date."
14. REPAIR WORK. Subject to the provisions of Article 7 of the Lease ("Fire
and Other Casualty") which shall control in the event of any inconsistency
herewith, Landlord agrees to make such repairs as are necessary to cause the
Premises to be watertight and to repair any damage to the Premises or its
contents caused by water leakage into the Premises from the exterior of the
Building or from the interior of the Building if it originated from the exterior
and whether it originated before or after the date of execution of this
Amendment (collectively, the "Repair Work"). Tenant acknowledges that Landlord
is in the process of conducting various tests and investigations for purposes of
identifying the nature, sources and scope of water leakage affecting the
Building, including the Premises, and various methods for effecting the Repair
Work, which testing and investigation is expected to be completed within ninety
(90) days from the date hereof or such longer period of time as may be agreed to
by Landlord and Tenant in their reasonable discretion ("Investigation Phase").
Landlord agrees to perform the Repair Work with reasonable promptness, taking
into account the time required by Landlord for the Investigation Phase and any
delays caused by acts of God, strikes, and similar causes beyond Landlord's
reasonable control or arising from any conduct or actions of Tenant. Landlord
further agrees to cause the Repair Work to be performed in a manner which
minimizes to the extent reasonably feasible the level of disruption of the
Tenant's business during "Normal Business Hours," defined herein to mean the
business hours of 8:30 a.m. to 5:30 p.m., weekdays Monday through Friday
excluding federal holidays and any additional holidays observed by Tenant. To
that end, Landlord agrees: (a) prior to commencement of the Repair Work, to
advise and consult in a reasonable manner with Tenant in developing a master
schedule for the timing of the Repair Work to be performed in or directly
impacting the Premises; (b) from and after Landlord's development of the master
schedule, to provide Tenant with a weekly update to the master schedule to the
extent the same relates to the Repair Work to be performed in or directly
impacting the Premises, such update to be delivered to Tenant no later than
Thursday of the week prior to the week in which the work described in the update
is to be performed; (c) to perform the Repair Work in the interior of the
Premises, to the extent reasonably feasible at times other than Normal Business
Hours and otherwise in accordance with the master schedule, updated as
aforesaid; (d) to take such actions as may be necessary to ensure that the
leasehold improvements and all of Tenant's property are protected from damage
caused by the Repair Work; (e) if and to the extent the seal between the
Premises and the exterior of the Building, including windows, must be removed
and/or replaced, such removal and replacement shall occur at times other than
Normal Business Hours; provided, however, that such removal and replacement may
occur at times during Normal Business Hours if such removal and replacement in
any area is accomplished within two (2) workdays for such area,
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such work is sufficiently staggered for different areas so that at each time a
minimum number of persons are inconvenienced thereby, reasonable advance notice
thereof (which may include the notice provided by the master schedule and
updates thereto) is given to Tenant so that such removal and replacement can be
accomplished at a time reasonably convenient for the occupants of such area and
during such period of removal and replacement of the interior of the Premises,
exclusive of an interior perimeter zone measuring up to five feet from the
Building exterior, shall be sealed from the outside environment by construction
of temporary partitions or other reasonable suitable means for such purposes;
(f) to respond promptly to all reasonable requests of Tenant for information
(provided Landlord shall not be obligated to make any out-of-pocket expenditures
or conduct any additional testing or investigations for such purposes) regarding
the nature and progress of the Repair Work; and (g) not to deprive employees of
Tenant of the use of their offices or work areas during Normal Business Hours
except to the extent permitted by clauses (c) and (e) of this sentence.
Landlord is hereby granted access to the Premises for purposes of conducting the
matters described in the Investigation Phase and for performing the Repair Work.
Landlord shall be entitled to do all things necessary or appropriate in and
directly impacting on the Premises for carrying out the matters described in the
Investigation Phase and performing the Repair Work in accordance with the master
schedule, updated as aforesaid, including the construction of temporary
partitions for the purposes described above within the perimeter zone and
otherwise as may be necessary or appropriate to minimize disruption to the
Tenant's business. Tenant agrees to cooperate with all reasonable requests of
Landlord related to the matters described herein (provided Tenant shall not be
obligated to make any out-of-pocket expenditures). If Landlord materially
breaches its obligations and covenants herein and fails to cure such breach in
all material respects within sixty (60) days, or such longer period of time as
may be reasonably necessary so long as Landlord is continuously and diligently
pursuing such cure, after written notice thereof (specifying each breach with
particularity) is given by Tenant to Landlord in accordance with the notice
provisions hereof, and provided Tenant has not exercised its option to terminate
this Lease pursuant to Section 36 of this Amendment, Tenant shall be entitled to
recover from Landlord all Actual Damages (hereinafter defined) caused thereby,
plus reasonable costs of collection, and in any such action, the prevailing
party shall be entitled to recover from the other party reasonable attorneys'
fees and expenses. Provided Tenant does not exercise its termination option
under Section 36 of this Amendment (but not otherwise), "Actual Damages" means
any actual damages sustained by Tenant for the period from and after April 15,
1996 (including without limitation loss of use damages and diminished rental
value damages), but excluding special, consequential, punitive, lost profits and
loss of business damages.
15. ASSIGNMENT AND SUBLETTING. Notwithstanding any assignment or subletting
permitted under the Lease or consented to by Landlord, it is understood that
Tenant shall remain primarily liable as a principal (and not as a guarantor or
surety) under the Lease and the consent of Landlord (if any) herein or at any
other time to any subletting of all or part of the Premises or assignment of the
Lease shall not modify, diminish, waive or discharge any of Tenant's covenants
and obligations under the Lease, or any other terms and provisions of the Lease.
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16. UTILITIES AND SERVICES.
(a) HVAC. Section 8.1.1(b) of the Lease is hereby deleted and the
following substituted therefore: "(b) heating and air conditioning for the
comfortable use and occupancy of the Premises between 8:00 a.m. and 6:00 p.m.,
Mondays through Fridays, and 8:00 a.m. and 1:00 p.m. on Saturdays [except for
the holidays set forth on Exhibit E ("Holidays")] ("Building Hours"), and
Landlord shall maintain the heating and air conditioning system so that the
temperature in the Premises does not exceed seventy-five (75) degrees Fahrenheit
with fifty percent (50%) relative humidity in the summer and is not lower than
seventy (70) degrees in the winter during the aforesaid hours."
(b) PRORATION. Tenant shall pay the cost of heating and air-conditioning
for any times requested by the Tenant other than for Building Hours within five
(5) days after Landlord gives notice of such amounts owed by Tenant. If Tenant
engages Landlord to furnish special services to Tenant beyond services provided
generally to tenants in the Building and included in Annual Operating Costs,
Tenant shall pay for such services in accordance with the agreement executed by
Landlord and Tenant for the provision of such special services. Landlord agrees
to prorate the cost of such heating and air-conditioning services if Tenant is
on a multi-tenant floor and the other tenant(s) within the same zone as Tenant
have requested the same services for the same time.
(c) HOLIDAYS. The Holidays listed on Exhibit E are hereby deleted and the
following Holidays shall be substituted therefor: New Year's Day, Memorial Day,
Fourth of July, Labor Day, Thanksgiving and Christmas.
(d) JANITORIAL SERVICE. Any janitorial service to be provided by Landlord
under the terms of Section 8.1.1(c) of the Lease shall be provided on weekdays
only, exclusive of Holidays. Notwithstanding anything to the contrary in the
Lease, in the event janitorial services are not being provided in a manner
comparable to that provided for comparable first-class buildings in the
metropolitan Washington, D.C. area and pursuant to Exhibit F to the Lease, and
Tenant has provided Landlord written notice thereof and sixty (60) days in which
to cure such default, during which sixty (60) day period Landlord has failed to
cure the same to Tenant's reasonable satisfaction, then, upon prior written
notice to Landlord, Tenant shall have the right to employ its own janitorial
company to clean the Premises and to collect and remove waste products in
accordance with the applicable laws and regulations. In such case, (1) Landlord
shall have the right, in its reasonable discretion, to approve such janitorial
company and set reasonable rules and regulations in connection with such
janitorial company's access to and use of the Building, (2) Landlord's
obligation set forth in Section 8.1.1(c) of the Lease shall cease on and after
the date Tenant gives written notice of its election to employ its own
janitorial company (unless Tenant thereafter requests, in writing, that Landlord
provide such services again) and (3) on or after the date Tenant's janitorial
company commences providing janitorial services for the Premises, Annual
Operating Costs shall not include expenses for janitorial
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services and cleaning supplies in connection with the space which is leased or
leasable to other tenants in the Building (specifically excluding common areas),
provided, however, in the event Tenant thereafter requests, in writing, that
Landlord provide such janitorial services again, then Annual Operating Costs
shall include such expenses. Tenant shall indemnify and hold harmless Landlord
for all acts and omissions of Tenant's janitorial company and its agents,
employees and invitees and any damages, costs, expenses, liabilities and
lawsuits arising therefrom, including reasonable attorneys' fees and expenses of
Landlord.
(e) REPLACEMENT OF BULBS. Section 8.1.1(g) of the Lease is hereby
modified to reflect that Landlord's obligation to replace lamps and ballasts
shall apply to all incandescent and fluorescent light bulbs, whether or not
Building standard. The costs thereof shall be part of Annual Operating Costs.
(f) KEYS OR CARDS. After the Retroactive Date, Landlord agrees to provide
Tenant with three (3) security access cards or keys for each 1,000 square feet
of net additional Rentable Area leased by Tenant during the Term. Tenant shall
have the right to purchase additional access cards or keys at Landlord's direct
cost.
17. TENANT DEFAULT. Section 9.5 of the Lease is hereby amended to add the
following: "; provided, however, if no first deed of trust exists, then
subclause (a) shall apply."
18. NOTICE TO FIRST MORTGAGE LENDER. Tenant hereby agrees that Tenant shall
not exercise its rights or remedies under this Lease upon a default by the
Landlord without first giving written notice of such default to Landlord's first
mortgage lender, to the extent such lender has been identified to Tenant with an
address, and shall grant to such lender a reasonable period of time after the
giving of such notice to cure such default (which reasonable time period shall
be deemed to be fifteen (15) days in the case of a Failure Notice delivered
pursuant to Section 9(e) or Section 21 of this Amendment), no obligation on the
part of such lender to cure any default by Landlord being implied hereby.
Tenant is hereby notified that, as of the date of the Amendment, Landlord's
first mortgage lender is Travelers and such notice should be sent to Travelers
at 1100 Abernathy Road, N.E., Building 500, Suite 1420, Atlanta, Georgia 30328
in accordance with the terms of Article 19 of the Lease ("Notices").
19. LIABILITY.
(a) LANDLORD. Section 20.11.4 of the Lease is hereby deleted and the
following substituted therefor:
"Notwithstanding any provision to the contrary contained in this Lease,
Tenant shall look solely to the estate and property of Landlord in and to
the Land and the Building in the event of any claim against Landlord and/or
its partners, officers, directors and employees arising out of or in
connection with this Lease, the relationship of Landlord
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and Tenant, and/or Tenant's use of the Premises, and Tenant agrees that the
liability of Landlord and/or its partners, officers, directors and
employees arising out of or in connection with this Lease, the relationship
of Landlord and Tenant, and/or Tenant's use of the Premises, shall be
limited to such estate and property of Landlord in and to the Land and the
Building. No properties or assets of Landlord other than the estate and
property of Landlord in and to the Land and the Building and no property
owned by any partner, officer, director or employee of Landlord shall be
subject to levy, execution or other enforcement procedures for the
satisfaction of any judgment (or other judicial process) or for the
satisfaction of any other remedy of Tenant arising out of or in connection
with this Lease, the relationship of Landlord and Tenant and/or Tenant's
use of the Premises."
(b) TRAVELERS. Notwithstanding the terms of Section 20.11.3 of the Lease,
in the event Travelers or any designee of Travelers becomes the owner of the
Building and the Land, by foreclosure, deed in lieu of foreclosure or otherwise,
Travelers or its designee shall not be liable for any damages or be subject to
any off-set or defense of Tenant to the payment of Base Rent or Additional Rent
by reason of any act or omission of Landlord prior to the date that Travelers or
its designee succeeds to the interest of Landlord under this Lease other than
any offset provided for in Section 9(e) of this Amendment and, only as to such
matters as may arise after Travelers, or its designee, takes title to the
Building, under Section 21 of this Amendment, but the foregoing shall not be
construed to relieve Travelers or its designee of its obligations to perform all
obligations under the Lease during the period after Travelers or its designee
succeeds to the interest of Landlord, subject to the terms of Section 20.11.4 of
the Lease. For purposes of this Amendment, the term "Travelers or its designee"
or "Travelers, or its designee" shall mean Travelers and/or the initial
transferee of the Building pursuant to the Joint Plan or Travelers' Plan or
otherwise pursuant to the loan documents evidencing and securing Travelers' lien
on the Building.
20. PARKING. Section 26.1 of the Lease is hereby deleted and the following
substituted therefor:
"SECTION 26.1.1. Landlord shall provide or require that any parking garage
operator shall offer to Tenant, and Tenant agrees to accept, one hundred
and fifty (150) permits for parking spaces in the parking garage of the
Building. Of such permits, ninety (90) permits shall be for non-tandem
spaces and sixty (60) permits shall be for tandem spaces. All of the
parking spaces related to such one hundred fifty (150) parking permits
shall be marked for Tenant's use and Landlord shall use, or cause its
parking garage operator to use, reasonable efforts to maintain such spaces
free from unauthorized parking. Landlord shall also provide or require
that any garage operator shall offer to Tenant no fewer than two (2)
additional monthly parking contracts, with one (1) applicable to a tandem
space and one (1) applicable to a non-tandem space, for each one thousand
(1,000) square feet of Rentable Area in any Expansion Space leased
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by Tenant pursuant to any right granted in Article 29 hereof, which parking
contracts Tenant shall have the option, but not the obligation, to accept
in whole or in part by written notice to Landlord prior to the expiration
of ninety (90) days after the applicable Expansion Commencement Date.
Three (3) of the non-tandem spaces shall be in a contiguous grouping on the
first (1st) parking level of the Building, of which one (1) space shall be
of handicapped size. The rest of the parking shall be on the third (3rd)
and fourth (4th) parking levels of the Building in a contiguous group, but
such contiguity requirement shall be subject however to the rights of
certain existing tenants under their leases which exist as of the date
hereof ("Existing Rights"). Landlord agrees to install prominent signage
in the drive isle on the third (3rd) and fourth (4th) parking levels of the
Building indicating that the parking beyond such point is reserved, subject
to the Existing rights. In the event that Tenant exercises its option
pursuant to Section 11 of this Amendment to terminate this Lease with
respect to all or part of the Lower Floors space, the amount of permits for
parking spaces in the garage that Tenant is entitled and obligated to use
shall be reduced by an amount equal to two (2) monthly parking contracts
(all of which shall be applicable to tandem space) for each one thousand
(1,000) square feet of Rentable Area in any Lower Floor Space with respect
to which such termination option has been exercised, which reduction shall
be effective as of the Termination Date pursuant to Section 11 of such
Lower Floor Space.
SECTION 26.1.2. Tenant shall pay, as Additional Rent, the prevailing
monthly parking rate charged from time to time by Landlord or the
applicable parking garage operator, which is currently Seventy-five Dollars
($75.00) per parking contract. The monthly parking rate shall not be
escalated more than once in any twelve (12) month period, and said
escalation shall not exceed three percent (3%) of the monthly parking rate
applicable during the immediately preceding twelve (12) month period."
21. TENANT'S RIGHT OF SET OFF. If (i) Landlord has failed to pay to Tenant, as
and when due, any monies due the Tenant which are required to be paid in
accordance with the terms of the Lease, including, without limitation, any
amounts payable by Landlord to Tenant pursuant to Section 14 of this Amendment
(such unpaid amounts being referred to as the "Overdue Amount(s)"), which
Overdue Amount(s) remain unpaid after delivery of a Failure Notice to the Notice
Parties and after the expiration of fifteen (15) days following delivery to all
of the Notice Parties of such notice from Tenant, during which fifteen (15) day
period none of the Notice Parties pays such Overdue Amount(s) to Tenant in
accordance with the terms of the Lease, and (ii) a court of competent
jurisdiction has determined that the Overdue Amount(s) are due and payable by
Landlord under the terms of the Lease, provided that an applicable appellate
court has not stayed Tenant's exercise of such right of set off, then Tenant
shall have the right to set off against any Base Rent or Tenant's Operating
Costs Amount due under the Lease such amount not paid by Landlord plus interest
thereon at the Interest Rate. The foregoing interest shall be calculated from
the date such amount was originally due through the earlier of the date on which
such amount is reimbursed by any of the Notice Parties or the date on which such
amount is
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credited against Base Rent or Tenant's Operating Costs Amount as set forth
above. The Failure Notice shall include a statement that Tenant intends to
exercise this right to set off and shall identify in reasonable detail the basis
for the offset and the date on which such amounts should have been paid to
Tenant. In the event Landlord prevails in any dispute following Tenant's
exercise of its set off rights, Tenant shall then pay Landlord, in addition to
the amount so set off and attorneys' fees and expenses, interest thereon at the
Interest Rate calculated from the date of such set off until the date Tenant
actually reimburses Landlord therefor. The provisions of this Section 21 shall
not apply with respect to the Improvement Allowance since the provisions of
Section 9(e) of this Amendment shall apply with respect thereto.
22. ACCESS.
(a) ROOF. Landlord agrees to provide Tenant with reasonable advance
notice of its need to access the roof and/or penthouse of the Building through
the Premises, except in the case of emergencies.
(b) FACSCARDS. Except for the property management staff and the char
service supervisor, Landlord agrees not to provide FacsCards permitting entry to
the Premises to anyone without Tenant's prior consent, which shall not be
unreasonably withheld, conditioned or delayed for purposes of landlord's
performance of the Repair Work. Landlord shall provide Tenant a list of all
such property management staff and persons who have FacsCard access to the
Premises and shall advise Tenant promptly of any changes to the persons on such
list.
23. NONDISTURBANCE. Sections 17.1 and 17.4 of the Lease and Exhibit H of the
Lease are hereby deleted. Section 20.11.4(a) of the Lease is hereby amended to
delete the phrase "Section 17.4." A new Section 17.1 of the Lease is hereby
added as follows:
"SECTION 17.1. Landlord agrees to provide Tenant with a subordination,
non-disturbance and attornment agreement from Travelers (as defined in the
Amendment No. 5 to Lease between Landlord and Tenant) with respect to the
Lease in the form of EXHIBIT C ("Travelers Agreement"). Landlord agrees
that on and after the date of the Amendment No. 5 to Lease between Landlord
and Tenant there shall be no holders of any deeds of trust, mortgages or
other security interests (collectively, the "Superior Instruments")
covering the Building and/or the Land or any interest of Landlord therein
(collectively, the "Holders of Superior Instruments") unless Landlord
obtains and delivers to Tenant a subordination, non-disturbance and
attornment agreement executed by the Holder of such Superior Instrument in
the form of the Travelers Agreement or in the form provided by such Holder
of Superior Instrument and reasonably satisfactory to Tenant. Tenant
agrees that it shall not unreasonably withhold its consent to any
modifications to the Travelers Agreement that may be requested by the
Holder of such Superior Instrument if such modification does not adversely
affect the interests of Tenant in any material respect."
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24. FIRE STAIRS. Tenant shall have the right to refurbish, at Tenant's
expense, the fire stairs in the Building, subject to the terms of Articles 8 and
14 and all other applicable provisions of the Lease, including without
limitation the reasonable approval by Landlord of any plans, drawings,
specifications prepared in connection with such refurbishment or improvements
intended to be made by Tenant in such area and compliance by Tenant of all
applicable building, fire and other codes, laws and regulations. Such fire
stairs shall remain part of the common areas of the Building and shall be
available to all of the tenants in the Building on a non-exclusive basis.
25. ARBITRATION. Article 21 ("Arbitration") of the Lease is hereby deleted and
all references in the Lease to resolving a dispute by the arbitration method
described in Article 21 shall hereafter be resolved in a court of competent
jurisdiction.
26. PURCHASE OPTION. Article 30 ("Tenant's Option to Purchase") of the Lease
is hereby deleted.
27. TENANT ESTOPPEL. Section 18.1 of the Lease shall be supplemented with the
following new sentence at the end thereof:
"If requested by Landlord, the foregoing estoppel instrument shall also
include a certification by Tenant that to the knowledge, information and
belief of Tenant, Landlord has fully performed its obligations under
Section 14 of Amendment No. 5 to Lease to the extent required prior to the
date of such estoppel (or specifying any exceptions thereto of which the
Tenant has knowledge) and such other information related to the Landlord's
obligations under Section 14 as Landlord may reasonably request."
28. 9TH FLOOR EXPANSION RIGHT. Article 28 ("Additional Space") is hereby
deleted.
29. 1ST FLOOR TERMINATION RIGHT. Section 3 of the Fourth Amendment is hereby
deleted.
30. FINANCIAL STATEMENTS. Tenant covenants and agrees that, at any time,
within thirty (30) days after written request by Landlord, Tenant will furnish
to Landlord financial statements as of the end of Tenant's last fiscal year
certified by Tenant's chief financial officer and, if available, audited by an
independent certified public accountant, and Tenant consents to the delivery of
same by Landlord to lenders or prospective lenders or purchasers of all or part
of the Building or the Land or of any interest in the deed of trust encumbering
the Building or the Land; provided, however, that (i) such request by Landlord
shall be made only if the financial statement is requested by a prospective
mortgage lender (which may include a then existing mortgage lender) seeking to
provide or extend or refinance a mortgage loan secured by all or part of the
Landlord's interest in the Building or the Land or a prospective purchaser of
all or part of Landlord's interest in the Building or the Land and such fact is
certified to in writing to
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Tenant by Landlord and such prospective lender or purchaser, as the case may be,
simultaneously with or prior to such request by Landlord, and (ii) in all such
cases Landlord's request for such statements shall include the names of the
parties to whom the financial statements will be delivered ("Delivery Parties"),
and Landlord and the Delivery Parties shall agree to keep such financial
statements (and the information contained therein) strictly confidential.
Notwithstanding the foregoing, Tenant's obligation to deliver financial
statements under this Section shall not apply with respect to Delivery Parties
who are direct competitors with Tenant's business as of the date requested, as
reasonably determined by Tenant; provided, however, Tenant shall provide a
reasonably detailed written explanation to Landlord why it has made such
determination.
31. RATIFICATION. Except as expressly amended by this Amendment, all other
terms, conditions and provisions of the Lease are hereby ratified and confirmed
and shall continue in full force and effect, without modification.
32. BROKER. Tenant and Landlord represent and warrant to the other that they
have not employed any broker in connection with the subject matter of this
Amendment except for Julien J. Studley, Inc. and The Carey Winston Company, who
Landlord will pay, subject to and on the Effective Date, pursuant to a separate
agreement, provided that each such broker withdraws any previously filed
objections and does not file or otherwise interpose any new objections and
consents to the Settlement Agreement, the Joint Plan, the Travelers' Plan and/or
any other transfer of the Building to Travelers or its designee, and the
assumption and assignment of this Lease pursuant thereto and there is no default
under such separate agreement. The parties agree to indemnify and hold each
other harmless from and against any claims or costs (including, without
limitation, reasonable attorneys' fees) arising out of or constituting a breach
of the representation set forth above.
33. REPRESENTATIONS.
(a) TENANT. Tenant hereby represents and warrants to Landlord that Tenant
has full power and authority to execute and perform this Amendment and has taken
all action necessary to authorize the execution and performance of this
Amendment.
(b) LANDLORD. Landlord hereby represents and warrants to Tenant that
Landlord has full power and authority to execute and perform this Amendment and
has taken all action necessary to authorize the execution and performance of
this Amendment, subject to the conditions described in Section 3(b) above.
34. MISCELLANEOUS. This Amendment (i) shall be binding upon and inure to the
benefit of the parties hereto and their respective successors and assigns and
(ii) shall be governed by and construed in accordance with the laws of the State
of Maryland. Sections 20.13, Article 23 ("Letters of Credit") and Article 25
("Acquisition of Land") of the Lease and the last paragraph
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on the first page of the Third Amendment (relating to the five (5) parking
spaces that previously comprised the storage space) shall be deleted.
35. LIMITATIONS ON EXERCISE OF RENEWAL AND EXPANSION OPTIONS OR PAYMENT OF
REFURBISHING ALLOWANCE. Neither of the Extension Options referred to in Article
27 of the Lease and none of the Expansion Options referred to in Article 29 of
the Lease may be exercised by Tenant, and Landlord shall not have an obligation
to pay the Refurbishing Allowance pursuant to Section 9(d) of this Amendment if,
at the time specified in Article 27 or Article 29, as the case may be, for
exercising such option, or the time specified in Section 9(d) of this Amendment
for paying the Refurbishing Allowance, as the case may be, this Lease shall not
be in full force or effect or upon the occurrence of an Event of Default for
which Landlord has served written notice to Tenant under Section 9.2.
36. TENANT'S OPTION TO TERMINATE TERM AS OF AUGUST 31, 1996. Tenant shall have
the right, at its option, exercisable by sending written notice (the "Term
Reduction Notice") to Landlord and Travelers on or before April 15, 1995 (the
"Term Reduction Deadline Date") to change the Expiration Date of the Lease so
that the Term of the Lease shall expire on August 31, 1996 rather than December
31, 2004. In the event that Tenant sends to Landlord the Term Reduction Notice
on or before the Term Reduction Deadline Date, then the amendments to the Lease
set forth in Sections 4, 6(a), 7, 8(a), 8(b), 8(c), 9, 11, 12, 13, 20, 21 and 35
and the references to Sections 9 and 21 in Section 19 of this Amendment (the
"Term Reduction Notice Deletion Provisions") shall be null and void and of no
force and effect. Notwithstanding any other provision of this Lease, until the
date (the "Lapse Date") on which Tenant's right to send the Term Reduction
Notice expires or terminates (either by the occurrence of the Term Reduction
Deadline Date without Tenant having sent the Term Reduction Notice to Landlord
or the delivery by Tenant to Landlord and Travelers of a written notice pursuant
to which Tenant irrevocably surrenders and terminates its right to send the Term
Reduction Notice), the operation of the Term Reduction Notice Deletion
Provisions shall be suspended but such provisions shall be reinstated
retroactive to the Retroactive Date upon the occurrence of the Lapse Date.
Within fifteen (15) days after the Lapse Date or the date on which the Tenant
delivers the Term Reduction Notice, Landlord and Tenant shall execute an
appropriate amendment to this Lease which shall (i) delete this Section 36 in
the event of the occurrence of the Lapse Date or (ii) delete the Term Reduction
Notice Deletion Provisions.
37. COMMON AND PUBLIC AREAS. Landlord covenants and agrees to renovate and
refurbish the common and public areas of the Building as frequently as necessary
if and to the extent required to maintain the quality of the Building as a
first-class office building in the Washington, D.C. metropolitan area.
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IN WITNESS WHEREOF, the parties hereto have executed this Amendment to
Lease as of the day and year first hereinabove written.
WITNESS: LANDLORD:
COMMUNITY MOTORS PROPERTY
ASSOCIATES LIMITED PARTNERSHIP, a
Maryland limited partnership
/s/ Paul B. Abrams (seal)
- ------------------------------- ------------------------------------
Name: Paul B. Abrams
Title: General Partner
WITNESS: TENANT:
FEDERAL DATA CORPORATION, a Delaware
corporation
/s/ Marvin S. Haber
- ------------------------------- ------------------------------------
Name: Marvin S. Haber
Title: Vice President & General Counsel
APPROVED AND CONSENTED TO:
THE TRAVELERS INSURANCE COMPANY
/s/ MELODY B. SHUPE (seal)
- ------------------------
Name: Melody B. Shupe
Title:
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EXHIBIT B
EXAMPLE COMPILATION STATEMENT (1)
Payroll
Administrative
Management fees
Office expenses
Professional services
Telephone
Miscellaneous
Utilities
Electricity
Water and sewer
Fuel oil
Repairs and Supplies
Building
Bulbs
Cleaning
Electric
Elevator
Fire prevention
Floor and carpet
Garage
Glass
Grounds
Hardware
HVAC
Locks and keys
Plumbing
Roofing
Signs
Miscellaneous
Maintenance Services
Custodial cleaning
- -----------------------
(1) *Additional line items may be included at Landlord's option.
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Elevator
Extermination
Music system
Plant maintenance
Protection services
Trash collection
Uniforms
Taxes, Insurance, and Other
Insurance expense
Licenses and permits
Real estate taxes
Total
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EXHIBIT C
SUBORDINATION, NON-DISTURBANCE AND
ATTORNMENT AGREEMENT
THIS SUBORDINATION, NON-DISTURBANCE AND ATTORNMENT AGREEMENT (this
"Agreement") is made this day of March, 1995, by and among THE TRAVELERS
INSURANCE COMPANY, a Connecticut corporation, its legal representatives,
successors and assigns ("Travelers"), having an address at 1100 Abernathy Road,
N.E., Building 500, Suite 1420, Atlanta, Georgia 30328, FEDERAL DATA
CORPORATION, a Delaware corporation ("Tenant"), having an address at 4800
Hampden Lane, 12th Floor, Bethesda, Maryland 20814, and COMMUNITY MOTORS
PROPERTY ASSOCIATES LIMITED PARTNERSHIP ("Borrower"), having an address at c/o
Paul B. Abrams, 1350 Eye Street, N.W., Suite LL 200, Washington, D.C. 20005.
WITNESSETH:
WHEREAS, Travelers is the owner and holder of that certain Consolidated and
Restated Promissory Note dated as of September 2, 1988, executed and delivered
by Borrower payable to the order of Travelers, in the consolidated and restated
principal sum of Thirty-One Million Four Hundred Thousand Dollars ($31,400,000)
(the "Note");
WHEREAS, Travelers is the beneficiary under that certain Deed of Trust and
Security Agreement and Consolidation and Modification Agreement dated as of
September 2, 1988, executed and delivered by Borrower to Kandis A. Ulrich and
Alan P. Vollmann, as trustees for the benefit of Travelers, and recorded among
the land records of Montgomery County, Maryland in Liber 8450, Folio 72, as
modified by a Deed of Removal and Appointment of Substitute Trustee dated
effective as of October 31, 1994, and recorded among the aforesaid land records
on November 1, 1994 (collectively, the "Deed of Trust") and the assignee under
that certain Amended and Restated Collateral Assignment of Income, Rents and
Leases dated as of September 2, 1988, executed and delivered by Borrower to
Travelers and recorded among the aforesaid land records in Liber 8450, Folio 134
(the "Assignment of Rents"). The Deed of Trust and Assignment of Rents encumber
certain real property and improvements located at 4800 Hampden Lane, Bethesda,
Montgomery County, Maryland, as more fully described in the Deed of Trust and
Assignment of Rents, and including without limitation, the real property
described on EXHIBIT A attached hereto (the "Property"), and secure repayment of
the Note. The Note, the Deed of Trust, the Assignment of Rents and all further
documents, certificates, affidavits and other instruments executed at any time
in connection therewith or relating to the indebtedness
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evidenced and secured thereby are hereinafter sometimes collectively referred to
as the "Loan Documents";
WHEREAS, by virtue of that certain Agreement of Lease dated December 5,
1984 between Borrower, as "Landlord" therein and Tenant, as "Tenant" therein, as
amended, modified or qualified by: (a) Amendment to Agreement of Lease dated
January 7, 1985; (b) Amendment No. 2 to Lease Agreement dated November 14, 1986;
(c) Amendment No. 3 to Lease Agreement dated February 6, 1987; (d) Amendment No.
4 to Lease Agreement dated March 31, 1993; and (e) Amendment No. 5 to Lease
Agreement ("Amendment 5") dated , 1995 (collectively, and as the
same may be further amended, modified, extended, renewed, restated or replaced,
the "Lease"), Tenant has leased from Borrower 70,842 rentable square feet of
space in the Property and 726 square feet of storage space (collectively, the
"Premises"), which Premises are a portion of the Property; and
WHEREAS, Tenant desires to be assured of continued occupancy of the
Premises under the terms of the Lease.
NOW, THEREFORE, in consideration of the sum of One Dollar ($1.00) by each
party in hand paid to the other, receipt of which is hereby acknowledged, the
premises and the mutual covenants and agreements hereinafter contained, and
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto, intending to be legally bound hereby,
hereby agree as follows:
1. AGREEMENT BY TENANT. Tenant hereby agrees that:
(a) subject to this Agreement, the Lease, Tenant's leasehold estate
in the Premises, and any and all estates, options, liens and charges contained
in the Lease or created thereby are, and shall be and remain, subject and
subordinate in all respects to the lien of the Deed of Trust and to all of the
terms, conditions and provisions thereof, to all advances made or to be made
thereunder, and to any renewals, extensions, modifications, consolidations,
restatements or replacements thereof, with the same force and effect as if the
Deed of Trust and any such renewal, extension, modification, consolidation,
restatements or replacement had been executed, delivered and duly recorded in
the above-mentioned land records prior to the execution and delivery of the
Lease;
(b) from time to time, upon request by Travelers, Tenant shall
provide to Travelers within ten (10) days after such request an estoppel
certificate in the form attached hereto as EXHIBIT B certifying that there exist
under the Lease no defaults, claims or offsets, or events or situations which,
with the passage of time, the giving of notice or both could become a default or
the basis for a claim or offset against Borrower by Tenant, or, if any of the
same do exist, certifying and describing such items as are in existence;
C-2
<PAGE>
(c) Tenant will comply with its obligations under Section 18 of
Amendment 5;
(d) without the prior written consent of Travelers; (i) no rent or
other sums due under the Lease shall be paid more than thirty (30) days in
advance of the due date therefor established by the Lease; (ii) no modifications
shall be made in the provisions of the Lease without the prior written consent
of Travelers, which shall not be unreasonably withheld or delayed, nor shall the
term be extended or renewed, except as may be provided therein; (iii) the Lease
shall not be terminated by Tenant, except as may be provided therein, nor shall
Tenant tender or accept a surrender of the Lease except incident to a
termination provided for in said Lease; and (iv) Tenant shall only sublet the
Premises demised by the Lease or assign Tenant's interest in the Lease or the
Premises in accordance with the provisions of said Lease;
(e) in the event of any act or omission by Borrower which would give
Tenant the right to terminate the Lease by reason of a default by Borrower
thereunder, claim a partial or total eviction, reduce rents or credit or offset
any amounts against future rents, Tenant will not exercise such right (i) until
it shall have given written notice of such act or omission to Travelers; and
(ii) permitted Travelers a reasonable period of time following the giving of
such notice to remedy such act or omission (which reasonable time period shall
be deemed to be fifteen (15) days in the case of a "Failure Notice" (as defined
in Amendment 5) delivered pursuant to Section 9(e) or Section 21 of Amendment
5). If it so elects, Travelers shall have the right, but not the obligation, to
cure and to take any actions necessary to cure, any default by Borrower under
the Lease, including, without limitation, the right to enter the Premises in
accordance with the terms of the Lease if entry is necessary to cure such
defaults;
(f) notices required to be given to Travelers under this Agreement
will be given to any successor-in-interest of Travelers under the Deed of Trust
provided that, prior to the event for which notice is required to be given to
Travelers, Travelers and such successor-in-interest of Travelers shall have
given written notice to Tenant of the acquisition of Travelers's interest
therein, and designated the address to which such notice is to be directed;
(g) in the event that the holder of the Deed of Trust (as now or
hereafter constituted), including Travelers, or anyone claiming from or through
any such holder, shall enter into and lawfully become possessed of the Property
or the Premises, or shall succeed to the rights of Borrower under the Lease,
either through foreclosure of said Deed of Trust or otherwise: (i) Tenant shall
attorn to, and recognize, such holder including Travelers, or anyone claiming
from or through such holder, as the "Landlord" under the Lease for the unexpired
balance of the term of the Lease and any extension or renewal thereof, subject
to all of the terms and conditions of the Lease; and (ii) Tenant shall make all
payments payable by Tenant under the Lease directly to the holder of the Deed of
Trust upon such holder's written instructions to Tenant; and if, by operation of
law, or otherwise, the institution of any action or other proceedings by
Travelers or any other holder of the Deed of Trust or the entry into and taking
C-3
<PAGE>
possession of the Premises shall result in the cancellation or termination of
the Lease or Tenant's obligations thereunder, Tenant shall, upon request by
Travelers or such holder, execute and deliver a new lease of the Premises
pursuant to the Lease, containing the same terms and conditions as the Lease,
except that the term and any extension thereof shall be the unexpired term and
unexpired extended term or terms of the Lease as of the date of execution and
delivery of said new lease and Tenant shall have the right to offset against
rent payable under such new lease any defaults of Landlord prior to the
execution of such new lease to the extent permitted by the provisions of Section
9(e) of Amendment 5 and, as to matters arising from and after Travelers, or its
designee, takes title to the Property, Section 21 of Amendment 5, as fully and
effectively as if the Lease has continued in effect. For purposes of this
Agreement, the term "Travelers or its designee" or "Travelers, or its designee"
shall mean Travelers or the initial transferee of the Property pursuant to the
Joint Plan or Travelers' Plan (each as defined in Amendment 5) or otherwise
pursuant to the Loan Documents;
(h) Tenant has no right or option, whether under the Lease or
otherwise, to purchase any portion of the Property or any interest therein, and
to the extent that Tenant has or hereafter acquires any such right or option,
the same is hereby subordinated to the Deed of Trust;
(i) Travelers shall have no responsibility, liability or obligation
to cure any defaults by Borrower under the Lease, nor be subject to claims,
defenses or offsets under the Lease or against Borrower possessed by Tenant and
which arose or existed prior to actual foreclosure of the Deed of Trust or entry
under and taking possession of the Property by Travelers. If Travelers or any
subsequent holder forecloses the Deed of Trust and enters upon and takes actual
possession of the Property, Travelers or such holder shall do so free and clear
of all such prior defaults, claims, or offsets and shall not be liable or
responsible to Tenant for any act or omission of any prior landlord (including
Borrower), or be responsible or liable for any deposit or security which was
delivered by Tenant to any prior landlord (including Borrower) but which was not
subsequently delivered to Travelers, or be subject to any claims, defenses or
offsets which Tenant might have against any prior landlord (including Borrower).
Notwithstanding the preceding two (2) sentences or any other provision in this
Agreement, the foregoing shall not be construed to release Travelers or such
holder of its obligations to perform all obligations arising under the Lease
from and after the date on which Travelers, or its designee, succeeds to the
interest of Borrower as "Landlord" under the Lease, or relieve Travelers, or its
designee, from any offset provided for in Section 9(e), and only as to matters
that may arise from and after the date on which Travelers, or its designee,
takes title to the Property, Section 21, of Amendment 5; and
(j) the institution of any action or other proceedings by Travelers
or any other holder under the Deed of Trust in order to realize upon Borrower's
interest in the Property shall not by operation of law, or otherwise, result in
the cancellation or termination of the Lease or Tenant's obligations thereunder.
C-4
<PAGE>
2. AGREEMENTS BY TRAVELERS. Travelers hereby agrees that:
(a) so long as Tenant is not in default under the Lease (beyond all
applicable periods given Tenant under the Lease to cure such default) in the
payment of the rents and additional rents due thereunder or in the performance
of all the terms, covenants, conditions and provisions of the Lease on the part
of Tenant thereunder to be complied with and performed, (i) Tenant's possession
and occupancy of the Premises and Tenant's rights and privileges under the
Lease, or any extension or renewal thereof which may be effected in accordance
with the terms of the Lease, shall not be disturbed, diminished or interfered
with by Travelers or any successor-in-interest to Travelers in the exercise of
any of its rights under the Deed of Trust, other loan and security documents, or
otherwise provided by law; and (ii) Travelers shall not join Tenant as a party
to any action or proceeding brought as a result of a default under the Deed of
Trust for the purposes of terminating Tenant's interest and estate under the
Lease, subject to Tenant's obligations under PARAGRAPH 1(g) above and subject
further to the condition that Travelers shall not be bound by any rent or other
payment which Tenant might have paid more than thirty (30) days in advance of
the time stipulated for payment under the Lease or by any amendment or
modification of the Lease made without its written consent or that is not made
in accordance with the terms hereof; and
(b) in the event that the interest of Borrower as "Landlord" under
the Lease shall vest in Travelers by reason of foreclosure or any other
procedures brought by it, or in any other manner, Travelers and its
successors-in-interest agree to be bound by all of the undischarged obligations
of "Landlord" under the Lease occurring after such foreclosure or other action
and any offset rights of Tenant pursuant to Section 9(e) and, as to matters
arising from and after the date on which Travelers, or its designee, takes title
to the Property, Section 21, of Amendment 5.
3. REPRESENTATIONS BY TENANT. Tenant hereby represents and warrants
that:
(a) the Lease is in full force and effect;
(b) Tenant is not in default in the performance of or compliance with
any provision of the Lease. To the best of Tenant's knowledge, Borrower is not
in default in the performance of its obligations as "Landlord" under the Lease;
(c) Tenant has not received any notice of default or termination of
the Lease;
(d) the Lease is a complete statement of the agreement of the parties
thereto with respect to the leasing of the Premises; and
(e) Tenant has accepted possession of the Premises and is the sole
owner of the leasehold estate created thereby.
C-5
<PAGE>
4. AUTHORIZATION FOR PAYMENT OF RENTS. Borrower hereby authorizes and
directs Tenant, upon receipt of written notice from Travelers to do so, to pay
all rents and other monies payable by Tenant under the Lease to or at the
direction of Travelers. Borrower irrevocably releases Tenant of any liability
to Borrower for all payments so made, and Borrower agrees to defend, indemnify
and hold Tenant harmless from and against any and all claims, demands, losses,
expenses (including reasonable attorneys' fees), or liabilities asserted by,
through, or under Borrower (except by Travelers) for any and all payments so
made. Tenant agrees that upon receipt of such notice it will pay all monies
then due and becoming due from Tenant under the Lease to or at the direction of
Travelers, notwithstanding any provision of the Lease to the contrary. Such
payments shall continue until Travelers directs Tenant otherwise in writing.
Tenant agrees that neither Travelers' demanding or receiving any such payments,
nor Travelers' exercising any other right, remedy, privilege, power or immunity
granted by the Lease or this Agreement will operate to impose any liability upon
Travelers for performance of any obligation of the "Landlord" under the Lease
unless and until Travelers elects otherwise in writing or unless Travelers takes
possession of the Premises and succeeds to the interest of borrower as
"Landlord" under the Lease.
5. NOTICES. Any notice, demand or consent hereunder shall be in writing
and shall be deemed given or received: (a) when delivered if delivered by hand;
(b) if delivered by registered or certified mail, return receipt requested, upon
delivery as established by return receipt or when acceptance of delivery is
refused by the addressee as established by the return receipt; or (c) if
delivered by a nationally recognized overnight delivery service which requires a
receipt upon delivery, upon delivery as established by the delivery service's
receipt. All such notices shall be addressed to the party for whom it is
intended at the address for such party set forth on the first page of this
Agreement. Any party may designate a new address for notices under this
Agreement by giving written notice in accordance with the provisions of this
Agreement to each of the other parties hereto.
6. SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and
inure to the benefit of the successors and assigns of each of the parties
hereto. The term "Travelers" shall include the respective holders from time to
time of the Deed of Trust (as now or hereafter constituted), the term "Borrower"
shall be synonymous with the term "Landlord" during the term of the Deed of
Trust and the terms "Landlord" and "Tenant" shall include the holder from time
to time of the landlord's interest, and the holder from time to time of the
tenant's interest, respectively, in the Lease.
7. LIMITATION OF TRAVELERS' LIABILITY. In the event Travelers, or its
designee, succeeds to the interest of Borrower as "Landlord" under the Lease,
any claim Tenant may have against Travelers, or such designee, under the Lease
shall be subject to the provisions of Section 20.11.4 thereof, as modified by
Amendment 5.
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<PAGE>
8. NO RECORDATION. At no time shall any party hereto record this
Agreement in any public records, including without limitation, the land records
of Montgomery County, Maryland.
9. GOVERNING LAW. This Agreement shall be governed by, and construed
under the internal laws of the State of Maryland, excluding conflicts of law
principles.
10. EFFECTIVENESS. This Agreement shall not become effective unless and
until such time as Amendment 5 becomes effective in accordance with its terms.
11. SUPERSEDES PRIOR AGREEMENT. From and after such time as this
Agreement becomes effective in accordance with PARAGRAPH 10 hereof, this
Agreement shall supersede in all respects that certain Non-Disturbance and
Attornment Agreement dated September 15, 1988 among Tenant, Borrower and
Travelers.
C-7
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused the execution hereof as
a sealed instrument as of the day and year first above written.
TRAVELERS:
THE TRAVELERS INSURANCE COMPANY
By: /s/ Melody B. Shupe
--------------------------------------
Name: Melody B. Shupe
--------------------------------
Title:
-------------------------------
TENANT:
FEDERAL DATA CORPORATION
By: /s/ Marvin S. Haber
--------------------------------------
Name: Marvin S. Haber
--------------------------------
Title: Vice President & General Counsel
-------------------------------
BORROWER:
COMMUNITY MOTORS PROPERTY
ASSOCIATES LIMITED PARTNERSHIP
By: /s/ Paul B. Abrams
--------------------------------------
Paul B. Abrams, Sole General Partner
C-8
<PAGE>
EXHIBIT A
PROPERTY DESCRIPTION
ALL THAT certain lot or parcel of land lying and being situate in Montgomery
County, Maryland, more particularly described as follows:
Commercial Unit No. C-1 in One Bethesda Center, a Condominium, situate in the
Seventh Election District of Montgomery County, Maryland, and the Common
Elements appurtenant thereto, pursuant to the Declaration recorded in Liber 7433
at folio 787 among the Land Records of Montgomery County, Maryland, and the plat
recorded in Condominium Plat Book 42 at Plat 4417, ET SEQ. among the Land
Records of Montgomery County, Maryland.
PARCEL IDENTIFICATION NO./TAX ACCOUNT: 7-189-2699758
STREET ADDRESS: 4800 Hampden Lane, Bethesda, Maryland
C-9
<PAGE>
EXHIBIT B
TENANT ESTOPPEL CERTIFICATE
- --------------------------------------------------------------------------------
TO: The Travelers Insurance Company, its affiliates, subsidiaries, successors
and assigns ("Travelers")
RE: PROPERTY ADDRESS: 4800 Hampden Lane, Bethesda, Maryland ("Building")
LEASE: Agreement of Lease dated December 5, 1984, as amended, modified or
qualified by: (a) Amendment to Agreement of Lease dated January 7, 1985;
(b) Amendment No. 2 to Lease Agreement dated November 14, 1986; (c)
Amendment No. 3 to Lease Agreement dated February 6, 1987; (d) Amendment
No. 4 to Lease Agreement dated March 31, 1993; (e) Amendment No. 5 to Lease
Agreement dated ______________, 1995, and (f) the additional amendments, if
any, set forth on Exhibit A attached hereto
LANDLORD: Community Motors Property Associates Limited Partnership
("Landlord")
TENANT: Federal Data Corporation ("Tenant")
SQUARE FOOTAGE LEASED: 70,842
SUITE NUMBER:_________________________________________ (the "Leased
Premises")
- --------------------------------------------------------------------------------
THE UNDERSIGNED, Tenant under the above-referenced Lease ("Lease"),
certifies to Travelers the following:
1. A true and complete copy of the Lease, and any and all amendments,
extensions, assignments and other modifications thereto, are attached hereto as
EXHIBIT A. There are no other agreements, either oral or written, between
Landlord and Tenant with respect to the Lease, the Leased Premises and/or the
Building.
2. Rent has been paid to the first day of the current month and all
additional rent has been paid and collected in a current manner. There is no
prepaid rent except _______________________________. No security deposit has
been posted pursuant to the Lease.
3. Base rent is currently payable in the amount of __________________ per
month, and payments are currently being paid under the Lease in the amount of
______________________ per month for Tenant's share of annual operating costs as
provided in the Lease.
4. The Lease terminates on ____________________________ and Tenant has no
expansion or renewal rights except set forth in the Lease.
C-10
<PAGE>
5. To Tenant's knowledge, all work, including construction, tenant
improvements and alterations, to be performed for Tenant under the Lease has
been performed as required under and in accordance with the terms of the Lease
and has been accepted by Tenant, except as follows:___________________________
C-11
<PAGE>
AMENDMENT NO. 6 TO LEASE AGREEMENT
AMENDMENT NO. 6 TO LEASE (the "Amendment") is made as of the 27th day of
April, 1995, by and between COMMUNITY MOTORS PROPERTY ASSOCIATES LIMITED
PARTNERSHIP, a Maryland limited partnership, having its principal offices in
Montgomery County, State of Maryland ("Landlord"), and FEDERAL DATA CORPORATION,
a Delaware corporation having its principal offices at 4800 Hampden Lane,
Bethesda, Maryland ("Tenant").
WHEREAS, Landlord and Tenant entered into that certain Agreement of Lease
(the "Lease") dated December 5, 1984, with respect to certain space as further
described in the Lease (the "Premises") in the building with an address of 4800
Hampden Lane, Bethesda, Maryland (the "Building);
WHEREAS, Landlord and Tenant amended the Lease pursuant to that certain
Amendment to Agreement of Lease dated January 7, 1985 (the "First Amendment");
WHEREAS, Landlord and Tenant amended the Lease pursuant to that certain
Amendment No. 2 to Lease Agreement dated November 14, 1986 (the "Second
Amendment");
WHEREAS, Landlord and Tenant amended the Lease pursuant to that certain
Amendment No. 3 to Lease Agreement dated February 6, 1987 (the "Third
Amendment");
WHEREAS, Landlord and Tenant amended the Lease pursuant to that certain
Amendment No. 4 to Lease Agreement dated March 31, 1993 (the "Fourth
Amendment");
WHEREAS, Landlord and Tenant amended the Lease pursuant to that certain
Amendment No. 5 to Lease Agreement dated March 8, 1995 (the "Fifth Amendment")
(hereinafter all references herein to the "Lease" shall refer to the Lease as
amended by the First Amendment, Second Amendment, Third Amendment, Fourth
Amendment and Fifth Amendment, as amended hereby);
WHEREAS, Landlord and Tenant desire to confirm that Section 36 of the Fifth
Amendment is hereby deleted, all on such terms and conditions hereinafter set
forth;
WHEREAS, Landlord is a debtor in bankruptcy proceedings Case No.
94-1-5830-DK (Chapter 11) (the "Bankruptcy Proceeding") pending before the U.S.
Bankruptcy Court for the District of Maryland (the "Court"); and
WHEREAS, Landlord's authority to accept and execute this Amendment is set
forth in that certain Settlement Agreement by and among Landlord, The Travelers
Insurance Company
C-12
<PAGE>
("Travelers") and Paul B. Abrams dated March 27, 1995, as evidenced by that
certain Order Approving Settlement Agreement between Debtor and Travelers,
Including Transactions and Orders Contemplated Thereby and New Leases to be
Entered into and 364(c)(1) Financing to be Extended Pursuant Thereto entered by
the Court on March 29, 1995.
NOW, THEREFORE, in consideration of the foregoing premises, the mutual
covenants set forth herein, and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, Landlord and Tenant,
intending to be legally bound, hereby agree as follows:
1. INCORPORATION OF RECITALS. The foregoing recitals are hereby incorporated
herein and made a part hereof by this reference.
2. DEFINITIONS. All capitalized terms in this Amendment shall have the
meanings assigned thereto in the Lease unless otherwise specified.
3. EXPIRATION OF OPTION TO TERMINATE. Tenant and Landlord hereby agree and
acknowledge that the Lapse Date has passed, Tenant has not exercised its right
to terminate described in Section 36 of the Fifth Amendment and Section 36 is
hereby deleted and deemed null and void.
4. RATIFICATION. Except as expressly amended by this Amendment, all other
terms, conditions and provisions of the Lease are hereby ratified and confirmed
and shall continue in full force and effect, without modification.
5. EFFECTIVENESS. This Amendment becomes effective only upon execution and
delivery thereof by Landlord and Tenant and approval thereof by Travelers.
6. MISCELLANEOUS. This Amendment (i) shall be binding upon and inure to the
benefit of the parties hereto and their respective successors and assigns and
(ii) shall be governed by and construed in accordance with the laws of the State
of Maryland.
C-13
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Amendment to
Lease as of the day and year first hereinabove written.
LANDLORD:
WITNESS: COMMUNITY MOTORS PROPERTY
ASSOCIATES LIMITED PARTNERSHIP, a
Maryland limited partnership
(seal)
- ----------------------------------- ----------------------------------
Name: Paul B. Abrams
Title: General Partner
TENANT:
WITNESS: FEDERAL DATA CORPORATION, a Delaware
corporation
(seal)
- ----------------------------------- ----------------------------------
Name:
Title:
APPROVED AND CONSENTED TO:
THE TRAVELERS INSURANCE COMPANY
(seal)
- -------------------------------
Name:
Title:
C-14
<PAGE>
Heitman D.C. Properties Ltd.
VIA CERTIFIED MAIL - RETURN RECEIPT REQUESTED
27 July, 1995
Federal Data Corporation
4800 Hampden Lane
Suite 201
Bethesda, MD 20814
Re: Lease Agreement between COMMUNITY MOTORS PROPERTY ASSOCIATES LIMITED
PARTNERSHIP, A MARYLAND LIMITED PARTNERSHIP ("Landlord") and FEDERAL DATA
CORPORATION, A CORPORATION ORGANIZED AND EXISTING UNDER THE LAWS OF THE DISTRICT
OF COLUMBIA ("Tenant") dated DECEMBER 5, 1984 at One Bethesda Center.
Dear Sir / Ms.:
Please be advised that Ownership of the Property (as defined in the above
referenced Lease) has been transferred to ONE BETHESDA INVESTORS, L.L.C.
effective today. Please forward all future correspondence and rental payments
to:
One Bethesda Investors, L.L.C.
c/o Heitman Properties, Ltd.
1330 Connecticut Avenue, NW
Suite 230
Washington, DC 20036
Attention: Property Manager - One Bethesda Center
A representative from Heitman Properties, Ltd. will be contacting you to set up
a meeting in your office in the near future. In the meantime, if you have any
questions regarding the transfer of Ownership, please call Will Young at Heitman
Properties, Ltd. at (202) 828-9034.
COMMUNITY MOTORS PROPERTY ASSOCIATES LIMITED PARTNERSHIP
By:
-----------------------------------------
Michael D. Abrams
Its:
-----------------------------------------
C-15
<PAGE>
ONE BETHESDA INVESTORS, L.L.C.
By: HEITMAN PROPERTIES, LTD., AN ILLINOIS CORPORATION, ITS
------------------------------------------------------
MANAGING AGENT
--------------
By:
------------------------------------------------------
William C. Young
Its:
------------------------------------------------------
C-16
<PAGE>
NOTICE
August 8, 1997
VIA CERTIFIED MAIL
RETURN RECEIPT REQUESTED
Federal Data Corporation
4800 Hampden Lane, 11th Floor
Bethesda, Maryland 20814
Attention: Chief Financial Officer
Re: ONE BETHESDA CENTER - 4800 HAMPDEN LANE
BETHESDA, MARYLAND
Ladies and Gentlemen:
All future notices and other communications under your lease (the "LEASE")
of space at 4800 Hampden Lane should be delivered at the following address:
One Bethesda Investors, L.L.C.
c/o Compass Management and Leasing, Inc.
15825 Shady Grove Road, Suite 55
Rockville, Maryland 20850
Commencing with the rent and other charges due on or after the date hereof,
ALL PAYMENTS DUE UNDER THE LEASE, INCLUDING MONTHLY PAYMENT OF RENT, SHOULD BE
PAID AND DELIVERED AS FOLLOWS:
One Bethesda Investors, L.L.C.
c/o Compass Management and Leasing, Inc.
P.O. Box 905555
Charlotte, NC 28290-5555
C-17
<PAGE>
EXHIBIT 10.5
FORM OF LANDLORD'S CONSENT AND ESTOPPEL CERTIFICATE
This LANDLORD CONSENT AND ESTOPPEL CERTIFICATE (the "Certificate") is
delivered and made effective as of May 2, 1997 (the "Effective Date"),
by TECHPARK Limited Partnership (the "Landlord").
The Landlord is the landlord under that certain Lease Agreement dated
January 6, 1989, which Lease was amended by (i) that certain First Modification
to Lease dated as of December 21, 1990; (ii) that certain Second Modification to
Lease dated as of December 20, 1990; and (iii) that certain Third Modification
to Lease dated as of January 31, 1994 (collectively, the "Lease") with NYMA,
Inc., a Maryland corporation (the "Lessee") demising premises located at
approximately 2001 Aerospace Parkway, Brook Park, Ohio 44142 (which premises are
referred to herein as the "Leasehold Premises"), as more described in the Lease
attached hereto as EXHIBIT A.
In consideration of good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, and to enable the merger of NYMA
Acquisition, Inc., a Delaware corporation with and into NYMA, Inc. (the
"Merger"), with NYMA, Inc. as the surviving corporation (the "Surviving
Corporation") as contemplated by that certain Agreement and Plan of Merger dated
April 9, 1997, by and among Azmat All, Peter Belford, Arthur Verbin, Peter
Belford as holder representative, NYMA, Inc. and NYMA Acquisition, Inc. (the
"Agreement"), the undersigned hereby acknowledges and agrees as follows:
WHEREAS, Lessee desires to assign its rights and obligations under the
Lease to the Surviving Corporation in connection with the Merger.
NOW THEREFORE, Lessor certifies as follows:
1. A complete and correct copy of the Lease is now in full force and
effect with or without modifications as attached hereto as EXHIBIT A.
2. The current term of the Lease will expire on December 31, 1998.
3. Lessee is obligated to pay Lessor annual lease payments of
$1,703,205.48 under the Lease, payable in equal monthly installments of
$141,933.79 each. Lessee is current with the payment of all monetary
obligations under the Lease.
4. Notwithstanding consummation of the Agreement, the Lease will
continue in full force and effect without further action of any of the
parties thereto with the Surviving Corporation entitled to all the rights of
tenant thereunder.
5. The Lease constitutes the entire agreement between Landlord
and the Lessee thereunder with respect to the Leasehold Premises, and, except
as indicated on an attachment hereto, the Lease has not been supplemented,
amended, modified, canceled or terminated and remains in full force and
effect. Attached hereto is a true and correct copy of the Lease and all
supplements, amendments and modifications thereto.
1 of 2
<PAGE>
6. No default or event of default by the Lessee exists under the
Lease nor to the Landlord's actual knowledge does any fact or circumstance exist
which, with notice or the passage of time, or both, would constitute such a
default or event of default.
7. To the Landlord's actual knowledge there is no condemnation
proceeding pending, or threatened against the Leasehold Premises.
8. All equipment owned by Tenant presently located on the Leasehold
Premises or which may hereafter be located thereon (the "Equipment") shall be
and remain personal property and not fixtures or part of the realty or an
appurtenance thereto; and Landlord hereby agrees to subordinate to any lender
providing financing for such Equipment and Personal Property any and all liens
and to such Equipment (machinery, tools, parts, trade fixtures, office equipment
and supplies, and all motor vehicles) and all other inventory, goods and other
personal property owned by Tenant presently located on the Leasehold Premises or
which may hereafter be located thereon (the "Personal Property") that Landlord
may have or in the future may have, however these liens may arise, whether
through a levy for rent or otherwise. This subordination shall not prevent
Landlord from exercising any right and remedy against Tenant to which Landlord
is entitled, as long as Landlord recognizes such a lender's prior right to the
Equipment and Personal Property.
9. The person or persons executing this instrument on behalf of
Landlord have all necessary power and authority to execute and deliver this
instrument on behalf of Landlord and, in so doing, to bind Landlord in
accordance with the terms and provisions hereof.
IN WITNESS WHEREOF, Landlord has caused this instrument to be executed and
its seal placed hereon this 2nd day of May, 1997.
TECHPARK Limited Partnership
By: /s/ Kerry Chelm
---------------------------------------------
Title: President
------------------------------------------
2 of 2
<PAGE>
THIRD MODIFICATION TO LEASE
THIS THIRD MODIFICATION TO LEASE (this "Modification"), dated as of the
31st day of January, 1994, is entered into by and between TECHPARK LIMITED
PARTNERSHIP, an Ohio limited partnership (the "Landlord") and NYMA, INC., a
Maryland corporation (the "Tenant").
RECITALS:
1. Landlord and Sverdrup Technology, Inc. ("Sverdrup") entered into
that certain Lease dated as of January 6, 1989, for the lease of property and
improvements known as 2001 Aerospace Parkway, Brook Park, Ohio (the "Premises"),
which Lease was amended by that certain First Modification to Lease dated as of
December 21, 1990 and that certain Second Modification to Lease dated as of
December 20, 1990 (the Lease and foregoing modifications are hereinafter
collectively referred to as the "Lease");
2. Tenant assumed Sverdrup's interest in the Lease pursuant to the
terms of that certain Assignment and Assumption of Lease dated as of January 31,
1994 (the "Assignment"); and
3. The parties hereto desire to further modify the terms of the
Lease in accordance with the terms of this Modification;
In consideration of the mutual promises contained herein, and for
other good and valuable consideration, the sufficiency of which is hereby
acknowledged and agreed upon, Landlord and Tenant hereby agree as follows:
1. Section 3.1 of the Lease shall be amended to provide that December 31,
1998 shall be the termination date.
2. Section 4.1 of the Lease shall be deleted and the following
substituted therefore:
"4.1 Tenant shall pay during the term of this Lease Annual Base Rent
as follows:
TERM ANNUAL MONTHLY
BASE RENT BASE RENT
(a) January 1, 1994 - October 14, 1994: $1,318,237.20 $109,853.10
(b) October 15, 1994 - December 31, 1995: $1,381,010.40 $115,084.20
(c) January 1, 1996 - December 31, 1996: $1,443,783.60 $120,315.30
(d) January 1, 1997 - December 31, 1997: $1,515,524.40 $126,293.70
(e) January 1, 1998 - December 31, 1998: $1,578,297.60 $131,524.80
<PAGE>
The monthly installment of rent shall be payable in advance on the first day of
each calendar month during the term of this Lease. The amount of Annual Base
Rent is subject to adjustment from time to time as set forth in Article 4.4."
3. The following shall be added to the Lease as Article 36 as follows:
In the event the Federal Government or any of its instrumentalities (the
"Government"), including the National Aeronautics and Space Administration,
terminates its contract (number 0353-94-3-20, subcontract number NAS3-27186)
(the "Contract") with the Tenant, then Tenant shall have the right to cancel and
terminate this Lease on December 31st of the year of the receipt of the
termination notice ("Termination Notice") from the Government (such date being
hereinafter referred to as the "Lease Termination Date") by giving notice to
Landlord of such termination by the Government within fourteen (14) days of
receipt by Tenant of the Termination Notice from the Government, together with a
copy of the Termination Notice.
In the event such notice of termination from Tenant is received by Landlord
less than six (6) months prior to the Lease Termination Date, Tenant shall
continue to pay Landlord for a period of time beyond the Lease Termination Date
the same monthly base rent Tenant was paying to Landlord at the Lease
Termination Date, so as to provide Landlord with a total of six (6) months of
rent after receipt of Tenant's notice of termination of this Lease necessitated
by the Termination Notice received by Tenant from the Government. That portion
of said six (6) months of rent to be paid after the Lease Termination Date shall
be hereinafter referred to as "Additional Rent".
In the event Tenant terminates this Lease as a result of the termination of
the Contract by the Government (but not as a result of the election of the
Government not to exercise its option to extend the Contract), then, in addition
to any payments of Additional Rent required to be paid by Tenant, Tenant shall
pay to Landlord a cancellation fee ("Cancellation Fee"), as shown in the
following schedule, payable in monthly installments equal to the Monthly Base
Rent that corresponds to the year in which the Lease is cancelled:
<TABLE>
<CAPTION>
LEASE CANCELLED DURING: MONTHLY CANCELLATION TOTAL
BASE RENT FEE CANCELLATION
FEE
<S> <C> <C> <C>
(a) January 1, 1994 - October 14, 1994 $109,853.10 N/A N/A
(b) October 15, 1994 - December 31, 1995 $115,084.20 3 months $345,252.60
(c) January 1, 1996 - December 31, 1996 $120,315.30 2 months $240,630.40
(d) January 1, 1997 - December 31, 1997 $126,293.70 1 1/2 months $189,440.55
(e) January 1, 1998 - December 31, 1998 $131,524.80 N/A N/A
</TABLE>
2
<PAGE>
In the event the Landlord re-leases the building to another tenant prior to the
expiration of the period of time for which the Tenant is required to pay the
Additional Rent and/or Cancellation Fee, any remaining unpaid balance of the
Additional Rent and/or Cancellation Fee shall be due and payable forthwith by
Tenant upon receipt of notice from the Landlord of Landlord's having re-leased
the building to another tenant.
So long as the Government has not terminated the Contract, and the
Government has not exercised its option to extend the term of the Contract for a
succeeding year, then for each of the months of October, November and December
of 1995, 1996 and 1997, Tenant shall pay to Landlord (in addition to the rent
required to be paid by Tenant to Landlord in accordance with the terms of this
Lease) an amount equal to the rent that was paid or required to be paid during
the month of September of 1995, 1996 and 1997, respectively, as the case may be,
as a security payment ("Security Payment(s)").
In the event the Government exercises its option to extend the Contract for
a succeeding year, the requirement for Security Payment(s) shall cease for the
months of October, November and December of the year in which such option is
exercised, and if the Tenant has paid any Security Payment(s) as required in the
preceding paragraph, then Tenant shall pay as rent for the first three (3)
months after the exercise of the option to extend the Contract by the
Government, the amount of rent required to be paid as set forth in Section 4.1
above, less a credit equal to the amount of the Security Payment(s), if any,
paid in the preceding months of that year. Once the Tenant has received credit
for the Security Payment(s) in the manner and under the circumstances set forth
in this Paragraph, Tenant shall continue to pay the amount of rent required to
be paid as set forth in Section 4.1 above.
In the event the Government fails to exercise its option to renew the
Contract for an additional year, this Lease shall be terminated on the last day
of the term of the Contract, and Landlord shall not be required to return any
Security Payment(s) made by Tenant.
4. Article 10 of the Lease shall be amended by deleting the words:
"reasonable wear and tear", appearing in the penultimate and last line of this
Article and substituting the following in place thereof: "damages by reasonable
wear and tear and unavoidable casualty."
5. Article 15 of the Lease shall be amended by adding the following
Section 15.5:
" 15.5 During the term of this Lease, Landlord shall maintain
special form insurance, written at replacement cost value and
with replacement cost endorsement, covering the Building and
Landlord's interest in the Premises."
6. Upon execution of this agreement, Landlord will proceed at its costs
to make the improvements as shown on EXHIBIT "A" attached hereto.
7. Except as herein provided, all of the terms, covenants and conditions
of the Lease are hereby ratified and shall continue in full force and effect and
be binding upon the Landlord and Tenant, and their successors and assigns.
3
<PAGE>
IN WITNESS WHEREOF, this Third Modification to Lease has been executed and
delivered as of the date set forth hereinabove.
Signed and acknowledged "LANDLORD"
in the presence of the
following witnesses: TECHPARK LIMITED PARTNERSHIP,
an Ohio limited partnership
By:
/s/ Nancy Cook TECHPARK DEVELOPMENT COMPANY,
- ------------------------- an Ohio general partnership, its General
Witness Partner
Print name: Nancy Cook
--------------- By:
IJC TECHPARK CORPORATION
an Ohio corporation, a general partner
/s/ Patricia A. Schriner By: /s/ Kerry Chelm
- -------------------------- -------------------------------------
Witness
Print name: Patricia A. Schriner Its: Pres.
------------------- -----------------------------------
"TENANT"
NYMA, INC.
a Maryland corporation
/s/ Pamela Thompson
- ----------------------------
Witness By: /s/ Peter C. Belford
Print name: Pamela Thompson ------------------------------------
----------------- Its: President
------------------------------
/s/ Michael W. Polk
- -----------------------------
Witness
Print name: Michael W. Polk
-----------------
4
<PAGE>
STATE OF OHIO )
) ss.
COUNTY OF CUYAHOGA )
BEFORE ME, a Notary Public in and for said County and State,
personally appeared TECHPARK LIMITED PARTNERSHIP, an Ohio limited
partnership, by TechPark Development Company, an Ohio general partnership,
its General Partner, by IJC TechPark Corporation, an Ohio corporation, a
general partner, by KERRY CHELM its PRESIDENT, who acknowledges that he did
sign the foregoing instrument and that the same is the free act and deed of
said Corporation and Partnerships and the free act and deed of him personally
and as such officer.
IN TESTIMONY WHEREOF, I have hereunto set my hand and affixed my
official seal at SOLON, Ohio this 5TH day of AUGUST, 1996.
/s/ Patricia A. Schriner
-------------------------
Notary Public
PATRICIA A. SCHRINER
Notary Public, State of Ohio, Cuy. Cty.
My Commission Expires Dec. 21, 2000
STATE OF MARYLAND )
) ss.
COUNTY OF HOWARD )
BEFORE ME, a Notary Public in and for said County and State,
personally appeared NYMA, Inc., a Maryland corporation, by PETER C. BELFORD,
its President , who acknowledges that he did sign the foregoing instrument
and that the same is the free act and deed of said Corporation and the free act
and deed of him personally and as such officer.
IN TESTIMONY WHEREOF, I have hereunto set my hand and affixed my
official seal at GREENBELT, MD this 20TH day of MAY, 1996.
/s/ Pamela Thompson
----------------------
Notary Public
My Commission Expires: 1/10/99
------------
5
<PAGE>
EXHIBIT "A"
THE WORK LETTER
The Landlord will provide the following:
A finish-out allowance of Fifty Thousand Dollars ($50,000.00) to be used
to complete the Demised Premises as per mutually acceptable drawings to be
prepared.
<PAGE>
SECOND MODIFICATION TO LEASE
THIS SECOND MODIFICATION TO LEASE made as of the twentieth (20) day
of December, 1990, by and between TECHPARK LIMITED PARTNERSHIP, an Ohio
Limited Partnership having offices c/o IJC Techpark, Inc., 3100 Aurora Road,
Solon, Ohio 44139 (hereinafter referred to "Landlord") and SVERDRUP
TECHNOLOGY, INC. having an address at 2001 Aerospace Park, Brook Park, Ohio
44142 (hereinafter referred to as the "Tenant").
WHEREAS, Landlord and Tenant have entered into a certain lease
dated January 6, 1989 (the "Lease") for certain premises (the "Demised
Premises") as more particularly described in Exhibit A to the Lease; and,
WHEREAS, pursuant to the Lease, Tenant was permitted an allowance
for Tenant improvements of $1,793,520.00 ($20.00 x 89,676 square feet) and
said allowance was incorporated into the Annual Base Rent provided in Article
4 of the Lease; and
WHEREAS, Tenant has requested that Landlord install certain Tenant
Improvements the cost of which exceeds the allowance for said Tenant
Improvements which is incorporated in the Annual Base Rent provided for in
Article 4 of the Lease by $417,861.00 (the "Excess"); and
WHEREAS, Tenant has requested Tenant Improvements pursuant to
Article 5.4 of the Lease beyond those items specified in the Work Letter
attached to the Lease as Exhibit B; and
WHEREAS, Landlord and Tenant wish to modify the terms of the Lease
to Increase the monthly rental payment of Annual Base Rent payable from
Tenant to Landlord pursuant to Article 4 of the Lease to account for the
Extra Work.
NOW THEREFORE, in consideration of the mutual covenants and promises
of the parties, the receipt adequacy and sufficiency of which is hereby
acknowledged, the parties hereto agree as follows:
1. ADDITIONAL ANNUAL BASE RENT
In addition to the monthly payment of the Annual Base Rent provided
for in Article 4 of the Lease, Tenant shall pay Landlord a monthly payment equal
to the excess amortized over a four (4) year period deemed to have commenced on
October 1, 1990 and ending on October 14, 1994. Tenant shall pay Landlord the
sum of all monthly payments due pursuant to the preceding sentence for the
months preceding the date of execution hereof within sixty (60) days from event
date hereof. All future monthly payments for Extra Work shall be payable
simultaneously with the amount of the monthly installment as provided in Article
4 of the Lease and subject to the terms thereof.
The amount of the monthly payments provided for in this section shall
be in accordance with the following schedule:
Amount
-----------
Payment Due Within 60 Days $ 47,369.24
For Prior Months
<PAGE>
Additional Payment Due For $ 11,842.31
Remaining Lease Term until 10/14/94
2. MODIFIED TOTAL MONTHLY RENTAL
Landlord and Tenant agree and understand the payment for Extra Work as
provided for herein shall apply exclusively to the Excess as defined herein.
The parties agree and understand that no other past or future
expenditures for Extra Work shall be paid for in the manner provided for in this
Second Modification To Lease unless so provided in a separate written
instrument.
3. LEASE TO GOVERN
The rights, duties and obligations of parties hereto as expressed
herein, except as modified by execution of this Agreement, shall continue to be
governed by the terms of the Lease and, accordingly the Lease is incorporated by
reference herein.
WITNESSES: LANDLORD:
- ----------- ----------
TECHPARK LIMITED PARTNERSHIP,
an Ohio Limited Partnership
By: TECHPARK DEVELOPMENT COMPANY,
an Ohio General Partnership,
its General Partner
By: IJC TECHPARK, INC.
an Ohio Corporation,
its General Partner
/s/ By: /s/ Kerry Chelm
- ------------------- ---------------------------------------
Kerry Chelm, Vice President
TENANT:
--------
SVERDRUP TECHNOLOGY, INC.
/s/ By: /s/ Stuart L. Petrie
- ---------------------- ---------------------------------------
Dr. Stuart L. Petrie, Vice President
<PAGE>
FIRST MODIFICATION TO LEASE
THIS FIRST MODIFICATION TO LEASE made as of the twenty-first (21) day
of December, 1990 and between TECHPARK LIMITED PARTNERSHIP, an Ohio limited
partnership having offices c/o IJC Techpark, Inc., 3100 Aurora Road, Solon, Ohio
44139 (hereinafter referred to as "Landlord") and SVERDRUP TECHNOLOGY, INC.
having an address at 2001 Aerospace Parkway (hereinafter referred to as the
"Tenant").
WHEREAS, Landlord and Tenant entered into a certain Lease (the
"Lease") dated January 6, 1989 regarding certain premises (the "Demised
Premises") which are more particularly described in the Lease, and
WHEREAS, Landlord and Tenant wish to amend said Lease such that the
Demised Premises pursuant to the Lease include only that property and legal
description of which is set forth in Exhibit A which is attached hereto and
incorporated by reference herein, and
WHEREAS, Landlord is the owner of a certain premises as more
particularly described in Exhibit B which is attached hereto and incorporated by
reference herein (the "Contiguous Premises") upon a portion of which currently
exists a certain parking facility (the "Parking Facility") for Tenant's
nonexclusive use as is outlined in red ink upon Exhibit C which is attached
hereto and incorporated by reference herein, and
WHEREAS, Tenant recognized that the Demised Premises compose a
portion of the Aerospace Technology Park which is designed primarily for the
benefit of tenants servicing the Lewis Research Center (hereinafter "LeRC") of
the National Aeronautics and Space Administration (hereinafter "N.A.S.A.") and
that LeRC of N.A.S.A. requires a centralized communication system be installed
as part of the Aerospace Technology Park, and
WHEREAS, Landlord and Tenant now wish to modify the terms of the Lease
to express their agreement with respect to the Parking Facilities and arrange
for the installation of a centralized communication system in Aerospace
Technology Park, and to amend the legal description of the Demised Premises.
NOW, THEREFORE, in consideration of the mutual covenants and promises
of the parties, the receipt, adequacy and sufficiency of which is hereby
acknowledged, the parties hereto agree as follows:
SECTION 1. Landlord and Tenant agree that the Lease is hereby
amended such that the Demised Premises shall mean that property particularly
described in Exhibit A of this First Modification of Lease which is attached
hereto and incorporated by reference herein.
<PAGE>
SECTION 2. Subject to the limitations and for the period set forth
in this Article, Landlord hereby grants to Tenant as part of the Demised
Premises: (1) the non-exclusive right to use the Parking Facility; and (2) a
non-exclusive easement of ingress and egress upon the Parking Facility for the
sole purpose of parking for Tenant's employees and visitors.
In addition, Tenant agrees to take reasonable efforts to remove snow
and ice from the Parking Facility and shall indemnify Landlord from all claims
arising out of Tenant's failure to remove ice and snow or negligent removal of
ice and snow.
In no event shall the granting of said easement interfere with
Landlord's right to enter said property for any reason. Moreover, Landlord
retains the right to terminate said easement for any reason provided that
Landlord first provides parking facilities reasonably equivalent to the Parking
Facility, subject to Tenant's approval not to be unreasonably withheld.
SECTION 3. After one (1) day notice to Tenant, Landlord or his agents
shall have the right to enter or permit such other persons to enter the Demised
Premises during all reasonable hours for the purpose of installing, maintaining,
repairing, monitoring and/or operating a communication system on behalf of the
LeRC of N.A.S.A., exclusive of general telephone systems provided by commercial
telephone companies (e.g., The Ohio Bell Telephone Company). Tenant hereby
grants to Landlord and its agents and employees an irrevocable license and
easement to enter the Demised Premises consistent with the purposes herein
stated however, subject to the limitations set forth in paragraph 12.3 of the
Lease. Upon completion of the installation, maintenance, repair, monitoring
and/or operation of the communication system described herein, Landlord shall
repair and restore the Demised Premises to substantially the same form as prior
to such acts.
Tenant agrees and understands that said communication system is to be
used for the non-exclusive, general purpose of providing communication services,
exclusive of general telephone services provided by commercial telephone
companies (e.g., Ohio Bell Telephone), throughout the area known as the
Aerospace Technology Park in Brook Park, Ohio, within which Tenant's Building is
located.
IN WITNESS WHEREOF, the parties hereto have set their hands and seals
as of the day and date first above written.
<PAGE>
WITNESSES: LANDLORD:
- ---------- ---------
TECHPARK LIMITED PARTNERSHIP,
an Ohio limited partnership
By: TECHPARK DEVELOPMENT COMPANY,
an Ohio General Partnership,
its General Partner
By: IJC TECHPARK, INC.,
an Ohio Corporation,
its General Partner
/s/ By: /s/ Kerry Chelm
- -------------------- -----------------------------
Kerry Chelm, Vice President
TENANT:
-------
SVERDRUP TECHNOLOGY, INC.
/s/ By: /s/ Stuart L. Petrie
- ------------------- ------------------------------------
Dr. Stuart L. Petrie, Vice President
<PAGE>
LEASE
THIS INDENTURE OF LEASE made this 6TH day of JANUARY, 1989, by and
between TECHPARK LIMITED PARTNERSHIP, an Ohio limited partnership having offices
c/o Flagship Properties, Inc., Four Commerce Park Square, Beachwood, Ohio 44122
(hereinafter referred to as the "Landlord") and SVERDRUP TECHNOLOGY, INC. having
an address at 16530 Commerce Ct., Middleburg Heights, Ohio 44130 (hereinafter
referred to as the "Tenant").
WITNESSETH:
ARTICLE 1
DEMISED PREMISES
Landlord does hereby lease to Tenant, and Tenant does hereby hire and
lease from Landlord, upon and subject to the terms, covenants and conditions
herein set forth, that certain premises consisting in the aggregate of
approximately 89,676 square feet of leasable space (sometimes hereinafter
referred to as the "floor space"), as shown on the plan or plans annexed hereto
as Exhibit "A-l" in the building (the "Building") located on that certain parcel
of land described in Exhibit "A-2" attached hereto in Brook Park, Ohio, together
with the parking areas, landscaping, driveways, loading areas, etc., which land,
Building and appurtenances are more particularly described on Exhibit "A-l,"
(hereinafter called the "Demised Premises"). The floor space comprises 100% of
the leasable space in the Building.
ARTICLE 2
USE
The Tenant shall use and occupy the Demised Premises for the following
purposes: general and administrative offices, instrument laboratories and other
lawful purposes necessary or incidental to the conduct of Tenant's present
business and for no other purpose.
ARTICLE 3
TERM: OPTION TO RENEW
3.1 The term for which the Demised Premises are hereby leased shall
commence on the Commencement Date, as herein defined, and shall terminate on
October 15, 1994, subject to earlier termination or extension as hereinafter
provided. The parties estimate that the Commencement Date will be October 15,
1989. After the Commencement Date the Landlord and the Tenant shall enter into
an agreement specifying the Commencement Date hereof.
3.2 The "Commencement Date" shall be the latter of (i) the date the
Tenant fully occupies and uses the Demised Premises if Tenant has been prevented
from taking occupancy thereof on or about the Date of Substantial Completion
because of Landlord's delay in completing the
<PAGE>
Landlord's work by October 15, 1989 and (ii) the date upon which the Landlord
shall have substantially completed all of Landlord's Work (as hereinafter
defined) in connection with the construction of the Demised Premises. The
construction of the Demised Premises shall be deemed substantially completed
when (a) the Tenant would be able to use and occupy the Demised Premises to
reasonably conduct its ordinary business operations (exclusive of the
Tenant's installation of its own machinery, equipment and trade fixtures)
without undue interference therewith by Landlord, (b) the Landlord shall have
received from its architects or engineers a certificate of substantial
completion or final completion, and (c) the appropriate governmental agencies
shall have issued any necessary occupancy certificates or permits relating to
Landlord's Work, but exclusive of permits required for Tenant's specialized
use of the Demised Premises. Landlord shall give Tenant as much advance
notice of the date when the certificate(s) of occupancy will be issued.
3.3 Tenant's inability or failure to take possession of the Demised
Premises when delivered by Landlord upon substantial completion shall not delay
the Commencement Date or Tenant's obligation to pay rent or additional rent, or
comply with any of its other obligations hereunder.
3.4 Tenant is hereby granted an option to extend the term of this
Lease for one (1) additional term commencing October 16, 1994 and ending March
21, 1998, provided that: (a) Tenant shall notify Landlord, in writing, no less
than one hundred eighty (180) days prior to the commencement of any such renewal
term, of Tenant's intention to exercise such option; and (b) Tenant at the time
of notice of renewal as well as the commencement date of the renewal term has
fully complied with the terms and conditions of this Lease. The terms and
conditions of the renewal term shall be the same as the terms and conditions of
the initial term of this Lease excepting for the following modifications:
(i) The Tenant shall have no further right of renewal after the expiration
of the last renewal term; and
(ii) The Annual Base Rent payable during the renewal term shall be as
stated in Article 4.1, subject to adjustment as provided
in Article 4.4.
ARTICLE 4
RENT PAYMENTS
4.1 Tenant shall pay during the initial and renewal terms of this
Lease Annual Base Rent as follows:
Annual Base Rent Monthly Installment
---------------- -------------------
From the Commencement Date
until Oct. 15, 1994 $1,318,237 $109,853
From Oct. 16, 1994 to
March 21, 1998 1,682,322 140,193
-2-
<PAGE>
The monthly installment of rent shall be payable in advance on the
first day of each calendar month during the term of this Lease. The amount of
Annual Base Rent is subject to adjustment from time to time as set forth in
Article 4.4.
4.2 If the Commencement Date shall not be the first day of a calendar
month, then the rent for the month in which the Commencement Date shall occur
shall be prorated on a daily basis and shall be paid on the Commencement Date.
Rent for any month during which two rates of Annual Base Rent apply shall be
prorated upon a daily basis for each applicable rate of rent. The monthly
installment of rent for any partial month shall likewise be prorated on a daily
basis.
4.3 DEFINITIONS. As used in this Lease, the following terms shall
have the following respective meanings:
a. "Annual Base Rent" - The annual rent to be paid by Tenant to
Landlord pursuant to the provisions of Article 4.1.
b. "Adjusted Annual Rent" - The Annual Base Rent as hereinafter
adjusted in accordance with the provisions hereof, but in no
event less than the Annual Base Rent.
c. "Base Year" - The full calendar year commencing January 1,
1989, and ending December 31, 1989. If in the Base Year the
Demised Premises are not fully occupied or substantially
completed during the entire year, then the amount of
Operating Expenses and Taxes the Base Year shall be
corrected to reflect Operating Expenses and Taxes for a
fully occupied Demised Premises, for the entire year, by
projecting the actual operating expenses and taxes to cover
the periods when there is less than full occupancy or a
substantially completed Demised Premises.
d. "Comparison Year" - The first full calendar year following
the Base Year and each subsequent full calendar year, or
fraction thereof at the termination of this Lease, during
which this Lease shall continue in effect.
e. "Operating Expense" - Those expenses incurred by Landlord
during the year, whether the Base Year or a Comparison Year,
in respect of the operation and maintenance of the Demised
Premises by Landlord in accordance with generally accepted
principles of sound management and accounting practices as
applied to the operation and maintenance of first-class
office buildings, including without limitation thereof, cost
of cleaning, insurance, materials and supplies, labor,
utilities, heat, air-conditioning, repairs and maintenance
and expenses for elevator maintenance, window washing,
management, rubbish removal and other services but shall not
include:
-3-
<PAGE>
(1) cost of any capital improvement made after the
completion of the Building, unless such capital
improvement shall constitute a substantial labor or
cost saving device or operation in which case Operating
Expenses in each year shall continue to include the
expenses which would have been made;
(2) expenses for painting, redecorating, or other work
performed for other tenants in the Building other than
painting, redecorating and other work which is standard
for the Building;
(3) expenses for repairs and other work occasioned by fire,
windstorm or other insurable casualty to the extent
covered by insurance;
(4) expenses incurred in leasing or procuring new tenants
including lease commissions, advertising expense and
expenses of renovating space for new tenants;
(5) legal expenses incurred in enforcing the terms of any
lease;
(6) interest or amortization payment of any mortgages;
(7) wages, salaries or other compensation paid to any
employees above the grade of building superintendent.
f. "Taxes" - The taxes and assessments, special or otherwise
and sewer charges, if any, including expenses incurred in
connection with disputing or contesting the amount thereof,
levied or assessed for the year in question, whether the
Base Year or Comparison Year, or a partial year, upon or
with respect to the Building and the land upon which it is
located, by Federal, State or local government. Tenant
shall be solely responsible for the payment of personal
property taxes assessed against Tenant's personal property.
Should any governmental authority having jurisdiction impose
a tax and/or assessment (other than an income or franchise
tax) upon or against the rentals payable hereunder or on the
privilege of renting, leasing or letting real property,
either by way of substitution for the taxes and assessments
levied or assessed against such land and such buildings, or
in addition thereto, such tax and/or assessment shall be
deemed to constitute a tax and/or assessment against such
land and improvements for the purposes of this Article 4.3f.
g. Landlord shall with reasonable promptness after the
expiration of the Base Year furnish the Tenant with copies
of the actual real estate tax bills along with a statement
in writing, signed by the Landlord, setting
-4-
<PAGE>
forth in reasonable detail the actual and adjusted expenses
for the Base Year and at the expiration of each Comparison
Year furnish the Tenant with a comparative statement setting
forth in reasonable detail the expenses for the Comparison
Year and the amount of increase payable by Tenant to
Landlord based thereon or the amount of decrease to be
credited against Tenant's rent. Tenant shall pay to
Landlord within thirty (30) days after receipt of such
statement the amount due or Landlord shall credit Tenant's
rent account with the amount of decrease.
4.4 RENT ADJUSTMENT. The Annual Base Rent shall be adjusted for each
Comparison Year by Tenant's Share of the net aggregate increase, or decrease, if
any, in the amount of Taxes and Operating Expenses for the Comparison Year over
or under those for the Base Year, as adjusted, but shall not in any event be
less than the amount stipulated in Article 4.1. The Adjusted Annual Rent for
any Comparison Year shall serve as the basis for an estimate of the Adjusted
Annual Rent to become due for the next succeeding Comparison Year until the
computation for that Comparison Year is made. All monthly installments of rent
coming due after an Adjusted Annual Rent has been established shall be adjusted
to the extent necessary to pay an estimated Adjusted Annual Rent for the
previous Comparison Year in equal monthly installments on such basis. The
increase reflected in Adjusted Annual Rent for the last Comparison Year shall be
paid by Tenant in a lump sum promptly upon presentation by Landlord to Tenant of
a statement of said adjustment.
Landlord shall keep and make available to Tenant for a period of
ninety (90) days after each statement for rental payments are rendered to
Tenant, records in reasonable detail of Taxes and Operating Expenses for the
period covered by such statement or statements and shall permit Tenant and the
representatives of Tenant to examine and audit such statements at any reasonable
time during business hours. If Tenant shall dispute any item or items included
by Landlord in determining Taxes or Operating Expenses for the Base Year or any
Comparison Year, and such dispute is not amicably settled between Landlord and
Tenant within thirty (30) days after any statement for adjusted Annual Rent has
been rendered or after the date for settling the rent payable for any Comparison
Year, either party may, during the twenty (20) days next following the
expiration of said thirty (30) day period, notify the other of its election to
arbitrate said dispute and may then refer such disputed item or items to a
reputable firm of certified public accountants selected by Landlord for decision
and the decision of such firm shall be conclusive and binding upon Landlord and
Tenant. The expense involved in such determination shall be borne by the party
against whom a decision is rendered by said accountants, provided that if more
than one item is disputed and the decision shall be in part against each party,
the expenses shall be fairly apportioned by said accountants. Pending a
decision, Tenant shall pay on the basis of Adjusted Annual Rent subject to a
proper adjustment upon rendition of the decision. If Tenant shall not dispute
any item or items of any such statement within sixty (60) days after such
statement has been rendered, Tenant shall be deemed to have approved such
statement.
4.5 In addition to the amounts set forth in Articles 4.1 and 4.4,
Tenant shall pay the actual charges for electrical services for the Demised
Premises, as well as all other utility charges, at the rates charged by the
public utility company or entity providing such service.
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4.6 All increases in Operating Expenses and Taxes, charges and costs
which the Tenant is required to pay pursuant to this Lease, together with all
interest and penalties that may accrue thereon in the event of Tenant's failure
to pay such amounts, and all damages, costs and expenses which the Landlord may
incur by reason of any default of the Tenant or failure on the Tenant's part to
comply with the terms of this Lease, shall be deemed to be additional rent and,
in the event of nonpayment by Tenant, the Landlord shall have all the rights and
remedies with respect thereto as the Landlord has for the nonpayment of Base
Rent.
4.7 In addition to any other remedies provided for herein, in the
event that any installment of Base Rent, Adjusted Annual Rent, additional rent,
or any other charges under this Lease shall be overdue for a period of ten (10)
or more days after delivery to Tenant of written notice of such non-payment, a
"late charge" of 1.5 cents for each dollar so overdue may be charged by Landlord
for each month or part thereof that the same remains overdue. This charge shall
be in addition to and not in lieu of any other remedy the Landlord may have
under the circumstances and is in addition to any reasonable fees and charges of
any agents or attorneys Landlord may employ on any rental default hereunder,
whether authorized herein or by law. Any such "late charges" if not previously
paid shall, at the option of the Landlord, be added to and become part of the
succeeding rental payment to be made hereunder.
ARTICLE 5
PREPARATION FOR OCCUPANCY AND DELAY
5.1 The Landlord agrees to construct (herein called the "Landlord's
Work") the floor space substantially in accordance with the plans and
specifications shown on Exhibit "B" attached hereto (herein called the "Work
Letter"). Said plans and specifications shall be prepared by Landlord and
Tenant shall give final approval thereof or submit proposed changes thereto
within thirty (30) days of receipt thereof so that Landlord may commence
construction thereof. Failure of Tenant to either approve or submit proposed
changes within said thirty day period shall be deemed to be Tenant's approval of
the plans and specifications as submitted by Landlord. Any proposed changes
submitted by Tenant that in the aggregate would increase the cost of Landlord's
Work shall be mutually agreed upon prior to commencement of construction.
Exhibits "A", "A1", "A-2" and "B" shall be initialled by Landlord and Tenant and
become a part hereof.
5.2 The Landlord agrees that construction of the Demised Premises
shall commence not later than February 10, 1989. Commencement of construction
shall mean that, at a minimum, construction equipment is moved on the site and
clearing of the site commences. If construction is not commenced by February
24, 1989, Tenant shall have the right and option, exercised in writing,
delivered to Landlord not later than February 27, 1989, to terminate this Lease
and be relieved of any further liability hereunder.
5.3 The Landlord agrees that the Demised Premises shall be
constructed in compliance with the most current safety requirements of city,
state and federal regulations. During the period of construction and prior to
the Commencement Date, the Tenant and its representatives shall have the right
to inspect the Demised Premises and to request and receive of the Landlord all
copies
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of all inspection and progress reports and certificates, if any, of the
Landlord's architects, engineers or other construction supervisors.
5.4 Any tenant improvement beyond those items specified in the Work Letter
shall be constructed by or on behalf of Landlord and be paid by the Tenant
("Extra Work"). The charge for Extra Work, which shall be agreed upon between
Landlord and Tenant prior to the particular item of Extra Work is undertaken and
shall be paid by the Tenant upon completion by Landlord unless otherwise agreed
to by the Tenant; provided, however, that if the charge for such Extra Work
shall exceed $10,000 in the aggregate Tenant shall pay to Landlord 50% of the
charge therefor prior to the undertaking of such Extra Work if requested by
Landlord. Any Extra Work performed by Landlord shall be done only if Tenant has
submitted a request for such work to Landlord in writing; and any such written
request shall be deemed Tenant's authorization to be liable for the cost of the
Extra Work, but only after Tenant and Landlord have agreed in writing to the
cost therefor. Tenant shall have the right to review all estimates for Extra
Work prior to authorization of such work. Tenant shall also have the right to
contract with third parties for such Extra Work if Landlord and Tenant are
unable to agree as aforesaid. Additionally, any Extra Work performed at the
request of Tenant which increases the cost of any work Landlord is performing
under the Work Letter shall be borne by Tenant.
5.5 If the Landlord is prevented from complying with its obligations
set forth in this paragraph or any other paragraph of this Lease, because of
delays (whether affecting Landlord or its contractors or subcontractors) caused
by or due to actual administrative proceedings or litigation which interfere
with Landlord's ability to complete construction, delay in obtaining approval of
construction plans, building permits or certificates of occupancy, strikes or
other labor troubles, riots, fire, Acts of God, governmental intervention or
regulations, inability to obtain materials, unusually severe weather, or any
other matters which are not within the reasonable control of the Landlord
(hereinafter referred to as "Excusable Delay"), the date of occupancy, if
adversely affected by an Excusable Delay, shall be extended.
5.6 The Landlord agrees that the construction of the Demised Premises
shall progress and be completed in accordance with the following time schedule,
subject only to Excusable Delays:
a. By September 1, 1989, the Demised Premises shall be
sufficiently completed, including the floors, exterior walls
and roof to permit the Tenant to securely store machinery,
equipment and trade fixtures in the unfinished portions of
the lower level of the Demised Premises.
b. By October 15, 1989, the Demised Premises shall be
substantially completed and a certificate(s) of occupancy
issued therefor by the City of Brook Park and any other
governmental entity having jurisdiction thereof ("Date of
Substantial Completion").
c. By December 31, 1989, the Demised Premises shall be finally
completed, including all punch list items.
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lt is understood and agreed that time is of the essence with respect
to the foregoing time schedule and that Tenant will suffer substantial damages
if it is unable to fully occupy and use the Demised Premises by the Date of
Substantial Completion by reason of Landlord's failure to substantially complete
the Landlord's Work as aforesaid. Landlord agrees to pay Tenant as its damages
its costs incurred by reason of its not being able to fully occupy the Demised
Premises, including, but not limited to, holdover rent, cancellation charges and
overtime, but not to exceed $3,500.00 per day for each day after the Date of
Substantial Completion that Tenant is unable to take possession of the Demised
Premises; Landlord agrees to pay the claimed amount to Tenant upon receipt of
reasonable evidence of the expenditure. If the applicable certificate(s) of
occupancy for the Demises Premises which Landlord is obligated to obtain has
(have) not been issued by December 10, 1989 (subject to Excusable Delays),
Tenant shall have the right and option to terminate this Lease and be relieved
of any further liability hereunder.
5.7 The Landlord warrants that all Landlord's Work shall be free from
defects in workmanship or materials, shall conform to the requirements of the
Work Letter, and shall be fit and sufficient for the purposes expressed in or
reasonably to be inferred from, this Lease. The Landlord shall, at no expense
to Tenant, correct any failure to fulfill the above warranty which may appear at
any time within one year (or, in the case of items as to which a longer warranty
period is set forth in the Work Letter, within such longer period) after the
Date of Substantial Completion. In any event, the warranty herein expressed
shall not be sole and exclusive and is additional to any other warranty express
or implied.
ARTICLE 6
UTILITIES AND SERVICES
6.1 Landlord shall provide adequate electric energy for Tenant's use
in accordance with the specifications stated in Exhibit B hereto. Tenant's use
of electric energy in the Demised Premises shall not at any time exceed the
capacity of any of the electrical conductors and equipment in or otherwise
servicing the Demised Premises. In order to insure that such capacity is not
exceeded and to avert possible adverse effect upon the Building's electric
service, Tenant shall not, without Landlord's prior written consent in each
instance, connect any additional fixtures, appliances or equipment to the
Building's electrical distribution system other than the usual lamps,
typewriters and small office machines, or make an alteration or addition to the
electric system after the Commencement Date. Should Landlord grant such
consent, all additional risers or other equipment required therefor shall be
provided by Landlord and the charges therefor which shall be agreed upon by
Tenant and Landlord in advance of such work, shall be paid by Tenant upon
Landlord's demand. As a condition of granting such consent, Landlord may
require Tenant to agree to an increase in the Operating Expenses to an amount
which will reflect the value to Tenant of the additional service to be furnished
by Landlord, i.e., the potential additional electrical energy to be made
available to Tenant based upon the estimated additional capacity of such
additional risers or other equipment. When the amount of such increase is so
determined, the parties shall execute an agreement supplementary hereto to
reflect such increase in the amount of Operation Expenses stated in this Lease,
effective from the date such additional service is made available to Tenant.
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6.2 Tenant shall be responsible for the following which Landlord
shall not be required to furnish Tenant:
a. Removal of ice and snow from the walks, drives and parking
facilities;
b. Cleaning and janitorial services;
c. Landscaping maintenance, including shrubbery;
d. Cleaning and filter replacement for the HVAC system as
necessary to keep the system in good working order and
repair. If the HVAC units are roof mounted, Tenant agrees
not to leave any debris on the roof nor to make any
penetrations in the roof;
e. Minor electrical repairs including light bulbs, switch and
outlet repairs and the like;
f. All other items of minor repair and maintenance in order to
keep the Demised Premises in a clean and sightly condition.
g. All utility charges and deposits, including but not limited
to gas, electric, telephone, and sewer and water service,
but excluding all installation, hookup and turn-on charges.
6.3 Landlord shall be responsible for the following:
a. Maintenance and repair of all elevators;
b. Maintenance and repair of all HVAC systems, except as
specified in subparagraph 6.2 above;
c. Repair and replacement of all exterior and structural
portions of the Demised Premises, including but not limited
to, walkways, stairs, paved areas, parking lots, roof and
foundations; and
d. Installation, hookup and turn on charges for utility
services.
6.4 Tenant expressly agrees that Landlord shall not be liable or
responsible for, nor shall there be any abatement of rent or other charges due
under this Lease as a result of the failure of supply to Tenant of any of the
aforesaid, or any other utility or service; provided, however, that in the event
that (a) the failure of supply results from Landlord's negligence when the
Building was designed and/or constructed and (b) as a result of the failure of
supply, the Demised Premises become untenantable for two (2) consecutive
business days, then from and after the expiration of said two (2) day period and
until such failure is cured, Tenant's Base Rent and Adjusted Annual Rent shall
be abated
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in such proportion as the square footage of the portion of the Demised
Premises which become untenantable bears to the total square footage of the
Demised Premises.
ARTICLE 7
USE AND COMPLIANCE WITH LAW, ETC.
7.1 Tenant shall use and occupy the Demised Premises only for the
purposes specified in Article 2. Tenant shall not use, permit or suffer the
Demised Premises, or any part thereof, to be used for any illegal purpose.
7.2 Tenant shall, at its expense, properly observe, comply, or cause
compliance, with all laws and ordinances and the orders, rules, regulations and
requirements of all federal, state, county and municipal governments, and
appropriate departments, commissions, boards and offices thereof, and of the
Board of Fire Underwriters and/or of any other body exercising similar functions
and of all insurance companies writing policies covering the Demised Premises,
or any part thereof, foreseen or unforeseen, ordinary as well as extraordinary,
which relate or pertain to Tenant's use and occupancy thereof, including the
conduct of Tenant's business therein and whether or not the same shall (a)
involve any change of governmental policy, (b) are now in force or are hereafter
passed, enacted or directed, or (c) require extraordinary repairs, alterations,
equipment or additions or any work of any kind which may be applicable to, or in
and about, the Demised Premises, or to changes or requirements incident thereto,
including, without limitation, the fixtures and equipment thereof, or the
purposes to which the Demised Premises are put, or manner of use of the Demised
Premises at the commencement of or during the term of the Lease, or any renewal
term hereof.
7.3 Tenant's obligations as set forth in Article 7.2 shall include,
but not be limited to, compliance with any and all laws, orders, rules,
regulations and requirements relating to environmental control or protection as
they relate to Tenant's use of the Demised Premises.
7.4 Tenant specifically agrees not to discriminate in its hiring on
the basis of race, color, creed, sex or national original and shall further
impose all these requirements upon any potential assignee or subtenant. Tenant
agrees to report to Landlord from time to time as reasonably required by
Landlord concerning the number and kinds of jobs created and retained by Tenant
with respect to Tenant's operation in the Demised Premises and concerning other
matters as Landlord may reasonably request to evidence compliance with grants
received from the County of Cuyahoga's CDBG Program.
ARTICLE 8
DEFAULT PROVISIONS
8.1 This Lease and the demised term are subject to the limitation
that, if at any time after the date hereof, any one of the following events
(herein called "event of default") shall occur, that is to say:
a. If Tenant shall make an assignment for the benefit of its
creditors; or
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b. If any petition shall be filed by or against Tenant in any
court, whether or not pursuant to any statute of the United States or of any
State, in any bankruptcy, reorganization, composition, extension, arrangement or
insolvency proceedings, and the same is not dismissed in 60 days as respects a
petition filed against the Tenant provided during such period Tenant continues
to pay all rent, impositions and other charges and performs all of its
obligations under this Lease; or
c. If, in any proceeding, a receiver or trustee be appointed
for all or any substantial portion of Tenant's property and the same is not
dismissed in 60 days as respects any proceeding brought against Tenant provided
during such period Tenant continues to pay all rent, impositions and other
charges and performs all of its obligations under this Lease; or
d. If Tenant shall assign, mortgage or encumber this Lease, or
sublet the whole or any part of the Demised Premises, otherwise than as
expressly permitted hereunder or as otherwise permitted by Landlord; or
e. If Tenant shall fail to pay an installment of the Annual
Base Rent or Adjusted Annual Rent set forth in Article 4 of this Lease, or any
part thereof, for five (5) days after written notice thereof from Landlord to
Tenant that the same is due and payable; or
f. If Tenant shall fail to pay any other item of additional
rent or any other charges required to be paid by Tenant hereunder other than as
set forth in Article 4 hereof and such failure shall continue for twenty (20)
days after written notice thereof from Landlord to Tenant; or
g. If Tenant shall fail to perform any of the requirements of
this Lease (not hereinbefore in this Article 8.1 specifically referred to) on
the part of Tenant to be performed or observed, and such failure shall continue
for 30 days after notice thereof from Landlord to Tenant; or
h. If Tenant shall fail to keep the Demised Premises occupied
to the extent necessary to maintain fire insurance coverage; or
i. If a petition or a proceeding is filed or commenced by or
against Tenant for its dissolution or liquidation (other than in connection with
any merger permitted hereunder), or if its property is taken by any governmental
authority in connection with a dissolution or liquidation, and if filed or
commenced against Tenant the same is not dismissed within 30 days,
Then upon the happening of any one or more of the aforementioned
events of default, and the expiration of the period of time for notice and
curing the same, if any, Landlord may give to Tenant a written notice
(hereinafter called "Notice of Termination") of intention to end the term of
this Lease at the expiration of twenty-five (25) days from the date of service
of such Notice of Termination, and at the expiration of such twenty-five (25)
days the term hereof, as well as all of the right, title and interest of Tenant
hereunder, shall wholly cease and expire in the same manner and with the same
force and effect as if the date of expiration of such twenty-five (25) day
period were the date originally specified herein for the expiration of this
Lease and the demised term, and Tenant shall then quit and surrender the Demised
Premises to Landlord, but Tenant shall remain liable as hereinafter provided.
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8.2 If this Lease shall be terminated as in the preceding Article 8.1
hereof provided, Landlord, or Landlord's agents or servants, may as and if
provided by law re-enter the Demised Premises and remove therefrom Tenant, its
agents, employees, servants, licensees, any subtenants and other persons, firms
or corporations, and all or any of its or their property therefrom, either by
summary proceedings or by suitable action or proceeding at law, without being
liable to assessments or damages of any nature, and recover and enjoy the
Demised Premises, together with all additions, alterations and improvements
thereto, subject to the rights of Tenant under law and the rights of the
National Aeronautics and Space Administration to recover its property,
equipment, fixtures, etc.
8.3 In case of any such termination by summary proceedings or
otherwise, Tenant agrees that:
a. The Annual Base Rent, Adjusted Annual Rent, additional rent,
impositions and all other charges required to be paid by Tenant hereunder shall
thereupon become due and be paid up to the time of such termination or
dispossession, and Tenant shall also pay to Landlord all reasonable expenses
which Landlord may then or thereafter incur for legal expenses, attorneys' fees,
brokerage commissions and all other costs paid or incurred by Landlord for
retaking and repossession of the Demised Premises (including the removal of
persons and property therefrom), restoring the Demised Premises to good order
and condition, and for all other reasonable costs and expenses sustained in
securing a new tenant or tenants.
b. Landlord may, at any time and from time to time, relet the
Demised Premises, in whole or in part, in its own name, for a term or terms
which, at Landlord's option, may be for the remainder of the then current term
of this Lease, or for any longer or shorter period. Landlord undertakes to use
reasonable efforts to relet the Demised Premises so as to mitigate its damages.
c. Tenant shall be obligated to and agrees to pay to Landlord,
upon demand, the Landlord shall be entitled to recover from Tenant, damages in
an amount equal to the excess, if any, of all Annual Base Rent, Annual Adjusted
Rent, additional rent, impositions and other charges and items as would be
required hereunder to be paid by Tenant for each calendar month had this Lease
and the demised term not been so terminated over the rents, if any, collected by
Landlord in respect of such calendar month pursuant to any reletting. Said
damages shall be payable by Tenant to Landlord in monthly installments in the
same manner as Annual Base Rent hereunder, any suit or action brought to collect
the amount of the deficiency for any month shall not prejudice in any way the
rights of Landlord to collect the deficiency for any subsequent month by a
similar proceeding.
Alternatively, in any case where Landlord has recovered possession of
the Demised Premises by reason of Tenant's default, Landlord may at Landlord's
option, and at any time thereafter, and without notice or other action by
Landlord, and without prejudice to any other rights or remedies it might have
hereunder at law or equity, become entitled to recover from Tenant, as damages
for such breach, in addition to such other sums herein agreed to be paid by
Tenant (except those described in the previous paragraph), to the date of
re-entry, expiration and/or dispossession, an amount equal to the difference
between the Annual Base Rent and additional rent reserved in this Lease from the
date of such default to the date of expiration of the original term demised and
the then fair and reasonable rental value of the Demised Premises for the same
period. Said damages shall become due and payable
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to Landlord ninety (90) days following such breach of this Lease and without
regard to whether this Lease be terminated or not, and if the Lease be
terminated, without regard to the manner in which it is terminated; provided,
however, that during said ninety (90) day period of time following such
breach, Landlord makes good faith efforts to relet the Demised Premises on a
commercially reasonable basis at a fair and reasonable rental value. In
computation of such damages, the difference between any installments of rent
(basic and additional) thereafter becoming due and the fair and reasonable
rental value of the Demised Premises for the period for which such
installment was payable shall be discounted to the date of such default at
the rate of ten percent (10%) per annum.
If any statute or rule of law governing Landlord's claim for damages
shall limit the amount of such claim capable of being so proved and allowed,
Landlord shall be entitled to prove and have allowed an amount equal to the
maximum allowed by or under statute or rule of law.
ARTICLE 9
CUMULATIVE REMEDIES, WAIVER, ORAL CHANGE
9.1 Every term, condition, agreement or provision contained in this
Lease shall be deemed to be also a covenant.
9.2 The specified remedies of which Landlord may resort under the
terms of this Lease are cumulative and are not intended to be exclusive of any
other remedies or means of redress to which Landlord may be lawfully entitled in
case of any breach by Tenant of any provisions of this Lease.
9.3 The failure of Landlord to insist in any one or more cases upon
the strict performance of any of the terms, covenants, conditions, provisions or
agreements of this Lease or to exercise any option herein contained shall not be
construed as a waiver or a relinquishment for the future of any such term,
covenant, condition, provision, agreement or option. Neither the payment by
Tenant nor acceptance by Landlord of performance of anything required by this
Lease to be performed, with the knowledge of the breach of any term, covenant,
condition, provision or agreement of this Lease, shall not be deemed a waiver of
any rights, and no waiver by Landlord of any term, covenant, condition,
provision or agreement of this Lease shall be deemed to have been made unless
expressed in writing and signed by such Landlord.
9.4 In addition to the other remedies in this Lease provided,
Landlord shall be entitled to the restraint by injunction of any violation or
attempted or threatened violation, of any of the terms, covenants, conditions,
provisions or agreements of this Lease.
9.5 This Lease may not be changed orally, but only by agreement in
writing signed by the party against whom enforcement of the change, modification
or discharge is sought, or by its agent.
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ARTICLE 10
SURRENDER OF PREMISES
Tenant shall, upon the expiration or termination of this Lease for any
reason whatsoever, surrender to Landlord the Demised Premises, together with all
alterations, (unless Landlord shall elect otherwise as hereinafter provided) and
replacements thereof then on the Demised Premises, in good order, condition and
repair, except for reasonable wear and tear.
ARTICLE 11
ASSIGNMENT AND SUBLETTING
Tenant shall neither assign this Lease, sublet the Demised Premises,
nor encumber its interest in this Lease unless it first complies with this
Article 11.
11.1 Provided that (a) Tenant is not then in default of any of the
terms and conditions of this Lease, and (b) Landlord gives prior written consent
to the proposed assignment or subletting, which consent shall not be
unreasonably withheld, the Tenant shall be entitled to sublet the Demised
Premises or any portion thereof, and further, shall be entitled to assign this
Lease, but only in accordance with and subject to the provisions of this
Article 11.
11.2 Tenant's right to make an assignment shall be conditional upon
Tenant's delivery to Landlord, in recordable form, and within three (3) days
after their execution of (i) a duplicate original of the assignment, and (ii) an
agreement wherein the assignee assumes and agrees to keep, observe and perform
all of the covenants, conditions and obligations to be kept, performed and
observed under this Lease on the part of the Tenant. If the Demised Premises or
any part thereof be sublet or occupied by anybody other than Tenant, Landlord
may, after default by Tenant, collect rent from the subtenant or occupant, and
apply the net amount collected to the rent herein reserved, but no such
subletting, occupancy or collection shall be deemed a waiver of this covenant,
or the acceptance of the subtenant or occupant as tenant, or a release of Tenant
from the further performance by Tenant of the terms, covenants and conditions of
this Lease on the part of Tenant to be performed. Any violation of any
provision of this Lease, whether by act or omission, by any subtenant or similar
occupant, shall be deemed a violation of such provision by Tenant, it being the
intention and meaning of the parties hereto that Tenant, shall assume and be
liable to Landlord for any and all acts and omissions of any and all subtenants
and similar occupants.
11.3 If Tenant desires to assign this Lease or to sublet all or part
of the Demised Premises, it shall, prior to entering into such assignment or
sublease, serve notice upon Landlord of its intention to make such assignment or
subletting, which notice shall set forth (i) the name and address of the
proposed assignee or subtenant; (ii) the full and complete terms and condition
of the assignment or subletting; (iii) in the case of subletting, the exact
space to be sublet, the amount of rental to be paid by subtenant, and a
statement of all of the other terms and conditions of the sublease; (iv) the
nature of the proposed assignee or subtenant's business and its proposed use of
the Demised Premises; (v) such
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information as to the proposed assignee or subtenant's financial
responsibility and general reputation as Landlord may require. Landlord and
Tenant acknowledge that the Tenant has not leased all or any part of the
Demised Premises for the purpose of assigning or subletting in order to
secure a profit. Therefore, if any assignment or sublet is at a rental rate
higher than that which Tenant is obligated to pay under this Lease, the
Landlord shall be entitled to any such excess upon payment by assignee or
subtenant; and Tenant's right to said payment is hereby assigned to Landlord.
Similarly, any fee or charge to any subtenant or assignee shall also be the
property of the Landlord.
11.4 Landlord and Tenant acknowledge that Tenant currently has a
contract with The Lewis Research Center ("LeRC") of The National Aeronautics and
Space Administration ("NASA") due to expire on March 21, 1993 for the supplying
of services. If after said date another entity ("Successor Entity"), not an
affiliate of Tenant, is awarded a replacement contract by NASA for the provision
of the same or similar services, Tenant may, without the permission of the
Landlord, assign this Lease to the Successor Entity or sublet a portion of the
Demised Premises to said Successor Entity and be relieved of liability under
this Lease (to the extent sublet or assigned) for the remainder of the term
(provided the same is subsequent to March 21, 1993), Landlord acknowledging
NASA's right and option under its contract with Tenant to compel Tenant to
assign its interest in and to this Lease to such Successor Entity and/or the
right to condition the award of such replacement contract on the assumption of
this Lease by a Successor Entity. Except as specifically provided to the
contrary in this Section 11.4, the conditions for an effective assignment
contained in Sections 11.1, 11.2, and 11.3 shall remain in full force and
effect.
ARTICLE 12
MAINTENANCE AND REPAIRS; COVENANT AGAINST WASTE
AND RIGHT OF INSPECTION
12.1 Tenant shall, throughout the demised term take good care of and
maintain the Demised Premises and shall not do or suffer any waste with respect
thereto. In case of the destruction of or any damage to the glass in or at the
Demised Premises, or the destruction or damage of any kind whatsoever to said
Demised Premises, or any part thereof or system therein caused by Tenant,
Tenant's employees, guests, invitees, or agents, the Tenant shall repair said
damage or replace or restore any destroyed parts of the Demised Premises, or
system therein, as speedily as possible, at the Tenant's own cost and expense;
provided, however, that if any such repairs shall result from the act, fault or
negligence of Landlord, or anyone acting under Landlord, then it shall be the
responsibility of Landlord to make the repairs at its expense. When used in this
Article, the term "repairs" shall include replacements, restorations, additions,
improvements, alterations and/or renewals when necessary. Prior to making any
repairs, Tenant shall notify Landlord of the nature of the damage or destruction
and the individuals whom Tenant shall employ to repair the damage or destruction
and the provisions and conditions of Article 14 applicable to changes or
alterations shall similarly apply to repairs required to be done by Tenant under
this Article. Tenant shall keep and maintain at its own cost all portions of
the Demised Premises in a clean and orderly condition, free of accumulation of
dirt and rubbish, and Tenant shall not permit or suffer any overloading of the
floors of the Demised Premises.
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12.2 Landlord shall be responsible for and shall at its sole expense
make all necessary replacements to the bearing walls, foundation and roof of the
Building; provided, however, that if any such replacements shall result from the
act, fault or negligence of the Tenant, or anyone acting or claiming under
Tenant, it shall be the responsibility of Tenant to make same at Tenant's
expense. Should Landlord fail to make such repairs or replacements in a timely
manner after reasonable notice to Landlord, Tenant shall have the right to make
the same and to deduct the cost thereof from the rent and other charges due
Landlord hereunder.
12.3 Tenant shall permit Landlord and the authorized representatives
of Landlord, upon notice which is reasonable under the circumstances, to enter
the Demised Premises (except these portions of the Demised Premises which are
designated "secure areas" for reasons of National Security) at all reasonable
times during the usual business hours for the purpose of exhibiting, during the
last year of the term, or inspecting the same and of curing any defaults on the
part of Tenant in making any necessary repairs to the Demised Premises; or in
the performance of any work therein that may be necessary to comply with any
laws, ordinances, rules, regulations, or requirements of any public authority,
or that may be necessary to prevent waste or deterioration in connection with
the Demised Premises. No notice of such entry shall be necessary in case of
emergency. Nothing in this Article 12.3 shall imply any duty upon the part of
Landlord to do any such work or to make any alterations or repairs, additions or
improvements to the Demised Premises, of any kind whatsoever except as in this
Lease specifically provided. The performance thereof by Landlord shall not
constitute a waiver of Tenant's default in failing to perform the same. Landlord
shall promptly, after Tenant shall have given Landlord notice of the necessity
therefor, make all repairs required to be made by Landlord. Landlord will
exercise due diligence not to interfere with Tenant's business operation, but
shall not be required to employ overtime labor to avoid such interference;
provided, however, Landlord will employ overtime labor, at Tenant's expense, if
requested to do so by Tenant. Should any portion of the Demised Premises become
untenantable so as to interfere in any material way in the conduct of Tenant's
business for a period of time in excess of two (2) business days after Landlord
receives notice from Tenant of such condition, there shall be abated a pro-rata
portion of the Annual Base Rent and Adjusted Annual Rent until such time as the
necessary repairs and replacements are made and the full Demised Premises are
usable by Tenant once again.
12.4 To the extent that there are any warranties or guaranties
applicable to the Demised Premises, including the equipment and systems therein,
which would be applicable to the obligations of Tenant under this Article 12,
Landlord shall assign said warranties or guaranties to Tenant.
ARTICLE 13
MECHANIC'S LIENS
13.1 Tenant shall not suffer or permit any liens to stand against the
Demised Premises or any part thereof by reason of any work, labor, services or
materials done for, or supplied, or claimed to have been done for, or supplied
to, Tenant or anyone holding the Demised Premises or any part thereof through or
under Tenant. If such lien shall at any time be filed against the Demised
Premises, Tenant shall cause the same to be discharged of record within thirty
(30) days after the date of filing
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the same, by either payment, deposit, bond or commencement of legal action to
challenge the validity of such lien. If Tenant shall fail to commence suit
or to discharge any such lien within such period, then, in addition to any
other right or remedy of Landlord, Landlord may, but shall not be obligated
to, procure the discharge of the same either by paying the amount claimed to
be due by deposit in court or bonding, and/or Landlord shall be entitled, if
Landlord so elects, to compel the prosecution of an action for the
foreclosure of such lien by the lienor and to pay the amount of the judgment,
if any, in favor of the lienor with interest, costs and allowances. Any
amount paid or deposited by Landlord for any of the aforesaid purposes, and
all legal and other expenses of Landlord, including reasonable counsel fees,
in defending any such action or in or about procuring the discharge of such
lien, with all necessary disbursements in connection therewith, together with
interest thereon at the rate which Chemical Bank announces as its prime rate,
from time to time, plus two (2%) percent, from the date of payment or
deposit, shall become due and payable forthwith by Tenant to Landlord, or, at
the option of Landlord, shall be payable by Tenant to Landlord as additional
rent, as provided in Article 4 hereof.
13.2 Nothing in this Lease shall be deemed to be, or construed in any
way as constituting, the consent or request of Landlord, expressed or implied,
by inference or otherwise, to any person, firm or corporation for the
performance of any labor or the furnishing of any materials for any
construction, rebuilding, alteration or repair of or to the Demised Premises or
any part thereof, nor as giving Tenant any right, power or authority to contract
for or permit the rendering of any services or the furnishing of any materials
which might in any way give rise to the right to file any lien against
Landlord's interest in the Demised Premises.
ARTICLE 14
ALTERATIONS
14.1 Tenant shall not make, or cause, or permit the making of any
structural alterations, additions, or improvements in or to the Demised
Premises, without obtaining Landlord's prior written consent thereto in each
instance. By way of illustration but not limitation, Landlord shall be entitled
to withholding its consent if the proposed alterations, additions or
improvements (i) impair or adversely affect the structural soundness or
integrity of the Demised Premises, Building, or any of the systems or equipment
therein; (ii) lessen the present or future value of the Demised Premises or
Building; (iii) change the type of use of the Demised Premises; (iv) increase
the risk of damage or injury to the Demised Premises, the Building or the
occupants of the Building; or (v) increase Landlord's insurance premiums. If
Landlord shall so elect and notify Tenant at the time of Tenant's request to
make such alterations, Tenant shall, at its sole cost and expense, remove any
structural alterations, additions and improvements at the expiration or other
termination of this Lease and repair all damage caused by such removal and
restore the premises to the condition they were in prior to the installation of
any such alteration, addition or improvement. Tenant shall not make or cause,
or permit the making of any non-structural alterations, additions, or
improvements costing $10,000 or more in each instance in or to the Demised
Premises, without obtaining Landlord's prior written consent thereto in each
instance, which consent shall not be unreasonably withheld. Nothing herein
contained shall be construed in any way to restrict Tenant's right to make any
non-structural alterations, additions or improvements within Tenant's floor
space costing less than $10,000 to make in each instance or in
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Tenant's own movable trade fixtures or to qualify Landlord's obligation to
make structural replacements as provided in Article 12.2.
Plans and specifications showing such proposed alterations, additions
and improvements shall be submitted to Landlord for approval upon the
application for its consent, if required; and if not required, prior to
commencement of the work together with a reputable contractor's (which may
include an electrician, carpenter, plumber, millworker and/or painter in
Tenant's employ) estimate of the cost thereof.
14.2 In making any alterations contemplated by this Article or any
repairs or restoration work contemplated by other terms and conditions of this
Lease, the parties shall comply with all applicable laws, regulations,
ordinances and orders and shall procure all requisite permits at the expense of
the party obligated to do the work. Copies of all such approvals,
authorizations and permits shall be delivered to and retained by Landlord. Each
party will, on written request from the other, execute any documents necessary
to be signed on its part to obtain any such permit. All alterations, additions
and improvements made hereunder shall be performed in a first-class, workmanlike
manner. Notwithstanding the provisions of Article 6.3 hereof, Tenant shall be
responsible for the maintenance of all structural and nonstructural alterations,
additions and improvements made by Tenant in or to the Demised Premises.
14.3 All alterations, changes and additions (other than within
Tenant's floor space and Tenant's trade fixtures) made by Tenant shall upon
termination of this Lease immediately be and become part of the realty and the
sole and absolute property of Landlord and shall remain upon and be surrendered
with the Demised Premises at the expiration or other termination of this Lease
unless Landlord shall have elected as provided in Article 14.1 above that any
such alterations, changes and additions be removed; in which event they shall be
removed by Tenant and the Demised Premises restored to their original condition
at Tenant's expense upon or prior to the expiration of the term.
14.4 If Landlord determines that the performance or manner of any work
to be completed by Tenant's contractors interferes with, delays, hampers or
prevents Landlord's contractor from preceding with completion of its work in the
Building, the Demised Premises, or the premises of any other tenant, at the
earliest possible time after Landlord's determination (which shall be given in
writing by Landlord or its agents to Tenant or its agents), Tenant shall cause
its contractors to cease its interference with Landlord's contractors.
To the end that there shall be no labor dispute which would interfere
with the construction, completion or operation of the Demised Premises, or any
part hereof including, but not limited to, the Building, Tenant agrees to engage
the services of only such contractors and subcontractors (for any work which
Tenant does, whether or not such work is permitted or required pursuant to the
Lease) as will work in harmony and without causing any labor dispute with each
other, with Landlord's contractors and subcontractors and with the contractors
and subcontractors or all others working in or upon the Demised Premises or any
part thereof, and Tenant shall employ and shall require its contractors and
subcontractors to employ only such labor as will work in harmony and without
causing labor dispute with all other labor then working in the Demised Premises
or any part thereof including, but not limited to, the Building.
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14.5 Tenant shall maintain, or cause Tenant's contractors to maintain,
at all times during any period of such contractors' entry upon the Demised
Premises, worker's compensation and public liability insurance and property
damage insurance, all in amounts and with companies and on forms reasonably
satisfactory to Landlord, and certificates of such insurance shall be delivered
to Landlord prior to any such entry by Tenant or Tenant's contractors. If
required by Landlord, such insurance shall name Landlord and Landlord's
contractor as additional insureds, and shall be primary insurance as to Landlord
and not contributing with other insurance Landlord may carry. Landlord shall
not be liable in any way for any injury, loss or damage that may occur to any
supplies or equipment of, or any decorations or installations made by Tenant or
Tenant's contractors, the same being at the sole risk of Tenant and Tenant's
contractors.
ARTICLE 15
INSURANCE
15.1 During the term hereof, Tenant shall, at its own cost and
expense, provide and keep in force the following insurance:
a. Comprehensive public liability insurance for the mutual
benefit of Landlord and Tenant against claims for bodily injury, death or
property damage occurring in or about the Demised Premises, including the
parking lots and the Building (including, without limitation, bodily injury,
death or property damage resulting directly or indirectly from or in connection
with any change, alteration, improvement or repair thereof made by or on behalf
of Tenant), with limits of not less than $1,000,000 for bodily injury or death
to any one person and $3,000,000 for bodily injury or death to any number of
persons and property damage with limits of not less than $250,000.
b. Insurance covering its contents.
15.2 All insurance to be provided and kept in force by Tenant
under the provisions hereof shall name the Landlord as an additional insured.
15.3 All policies shall be obtained by Tenant and certificates thereof
shall be delivered to Landlord at or before the commencement of the term hereof
and shall be taken in responsible companies authorized to do business in the
State of Ohio. All policies shall be for periods of not less than one year and
shall contain a provision whereby the same cannot be cancelled unless Landlord
is given at least thirty (30) days written notice of such cancellation. Tenant
shall procure and pay for renewals of such insurance from time to time and
Tenant shall promptly deliver to Landlord certificates thereof.
15.4 All policies of insurance to be obtained pursuant to this Article
15 and all other policies which Landlord or Tenant may carry which affect,
relate or pertain to the Demised Premises, the Building or any of Tenant's
contents, fixtures and property shall include, if obtainable, a waiver by the
insurer of all right of subrogation against Landlord and Tenant, as the case may
be. Neither party, nor its agents, employees or guests, shall be liable to the
other for loss or damage caused by any risk covered by such insurance, provided
such policies shall be obtainable, to the extent that the amount of the loss is
recoverable thereunder. If such policies shall be obtainable or shall be
obtainable only at a
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premium over that chargeable without such waiver, the affected insured party
shall notify the other thereof, and the affected insured party shall have ten
(10) days thereafter to (a) procure such insurance in companies reasonably
satisfactory to the other or (b) to agree to pay such additional premium. If
neither (a) or (b) can be done, this Article 15.4 shall have no effect during
such time as such policies shall not be obtainable. If such policies shall
at any time be unobtainable, but shall be subsequently obtainable, neither
party shall be subsequently liable for a failure to obtain such insurance
until a reasonable time after notification thereof by the other party. If
the mutual release of the parties, as set forth in the second sentence of
this paragraph, shall contravene any law with respect to exculpatory
agreements, the liability of one party to the other shall be deemed not
released but shall be secondary to the other's insurer.
ARTICLE 16
QUIET ENJOYMENT
Landlord covenants that so long as this Lease is in full force and
effect and Tenant pays the rental and performs the covenants and conditions in
this Lease herein contained, Tenant shall and may peacefully hold and enjoy the
Demised Premises during the term thereof, subject, however, to the terms of this
Lease.
ARTICLE 17
DAMAGE OR DESTRUCTION
17.1 In case of any damage to or destruction of the Demised Premises,
or any part hereof, Tenant shall promptly give written notice thereof to
Landlord.
17.2 In the event that any buildings which are a part of the Demises
Premises or any improvements thereto which have been made by Landlord for Tenant
are damaged or destroyed by fire or other casualty, to the extent of not more
than twenty percent (20%) of the replacement value, this Lease shall not
terminate but Landlord shall restore, replace or rebuild the Demised Premises
with all reasonable speed to the condition they were in prior to the happening
of the fire or other casualty, but in no event later than nine (9) months from
the occurrence of the casualty.
In the event that any buildings which are part of the Demised Premises
or any improvements thereto which have been made by Landlord for Tenant are
damaged or destroyed by fire or other casualty to the extent of twenty percent
(20%) or more of the replacement value, the Landlord shall have the option of
either (1) restoring, replacing or rebuilding the Demised Premises to the
condition they were in prior to the happening of the fire or other casualty or
(2) terminating this lease, which option shall be exercised within sixty (60)
days of the occurrence of such casualty by written notice to Tenant. If the
Landlord exercises the option to restore, replace or rebuild, such shall be
accomplished within nine (9) months from the occurrence of the casualty.
Should the Demised Premises be damaged or destroyed to the extent of
fifty percent (50%) or more of the replacement value during the last two (2)
years of the term, either Landlord or
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Tenant shall have the right to terminate this lease by written notice to the
other party within ninety (90) days of the occurrence of such casualty.
17.3 If Landlord causes the Demised Premises to be repaired or
restored pursuant to Article 17.2, such repair and/or restoration work shall be
done with reasonable diligence and promptness (subject to ordinary delays,
delays beyond the control of Landlord, and/or delays in making insurance
adjustments) and further subject to Excusable Delays described in Article 5. In
such event, the provisions of this Lease shall be unaffected and Tenant shall
remain liable for the payment of Annual Base Rent, Adjusted Annual Rent,
additional rent, impositions and all other charges required hereunder to be paid
by Tenant, but such rent, charges and impositions shall be abated in such
proposition as the square footage of the damaged portion of the Building bears
to the square footage of the Building.
ARTICLE 18
CONDEMNATION
In the event that at any time during the term of this Lease the Demised
Premises, or any part thereof, is taken by eminent domain by any public or
quasi-public authority (or in the event a voluntary conveyance is made by
Landlord to such public or quasi-public authority by reason of or by threat or
imminence of the exercise of said power of eminent domain by said authority),
the following terms and conditions shall apply:
a. ln the event of a total taking, this Lease shall terminate
as of the date of taking and rent and other charges provided
for in this Lease shall be adjusted as of said date. Tenant
shall be entitled to any portion of the award or damages for
termination of this Lease, as well as that portion of the
award attributable to leasehold improvements made and paid
for by Tenant.
b. In the event of a partial taking, if in the reasonable
judgment of the Tenant it shall be deprived of the use of
the Demised Premises for the purposes for which they are
intended, Tenant may, by written notice to Landlord within
fifteen (15) days of the taking by the condemning authority,
terminate this Lease. In the event Tenant does not elect to
so terminate this Lease, Landlord agrees to restore the
Demised Premises to usable condition with all reasonable
speed, but in no event later than nine (9) months from the
date of such partial taking, and Tenant shall be entitled to
an equitable abatement in the rent based upon the extent to
which it has been deprived of the use of the Demised
Premises as originally provided for in this Lease. Any
dispute as to whether the Tenant has been deprived of the
use of the Demised Premises for Tenant's business purposes
shall be settled by arbitration to be held in Ohio in
accordance with the rules of the American Arbitration
Association then in effect. Judgment may be entered on the
arbitrator's determination in any court having jurisdiction
and the parties consent to the jurisdiction of the Ohio
court for this purpose.
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ARTICLE 19
SELF-HELP
Tenant covenants and agrees that if it shall at any time fail to make
any payments or perform any act which it is obligated to make or perform under
this Lease, then Landlord may, but shall not be obligated so to do, after the
Tenant's time to make any such payment or perform any such act as provided in
this Lease has expired and any required notice has been given and cure period,
if any, has elapsed, and without waiving or releasing the Tenant from any of its
obligations in this Lease contained, make any payment or perform any act which
the Tenant is obligated to perform under this Lease, in such manner and to such
extent as shall be necessary and consistent with the Tenant's obligations
hereunder, and in exercising such rights, pay necessary and incidental costs and
expenses, employ counsel and incur and pay reasonable attorneys' fees.
Notwithstanding the foregoing, Landlord, after notice to Tenant, may make any
such payment or perform any such act before Tenant's time to do so as provided
in Article 8 has expired if payment or performance of the same is necessary or
required prior to the expiration of the applicable grace or cure period for the
preservation or protection of the Demised Premises. All sums to be paid and all
necessary and incidental costs and expenses in connection with the performance
of any such act by Landlord, together with interest thereon from the date that
the Landlord made such expenditure at the then prime lending rate charged by
Citibank, N.A., of New York for the first month after the making of such
expenditure, and thereafter at the rate of two percentage points above the then
prime lending rate charged by Citibank, N.A., of New York or the maximum rate
allowed by law, whichever is less, shall be deemed additional rent hereunder
and, except as otherwise in this Lease expressly provided, shall be payable to
Landlord on demand or at the option of Landlord may be added to any rent then
due or thereafter becoming due under this Lease, and Tenant covenants to pay any
such sum or sums with interest as aforesaid and Landlord shall have (in addition
to any other right or remedy of Landlord) the same rights and remedies in the
event of the non-payment thereof by Tenant as in the case of default by Tenant
in the payment of rent.
ARTICLE 20
ESTOPPEL CERTIFICATE
The parties agree at any time from time to time, upon not less than
ten (10) business days' prior request by the other, to execute, acknowledge and
deliver a statement in writing certifying that this Lease is unmodified and in
full force and effect (or if there have been modifications that the same is in
full force and effect as modified and stating the modification), and the dates
to which the rent and other charges have been paid in advance, and to the best
of knowledge of the certifying party if there are any defaults or rent
abatements or offsets claimed; it being intended that any such statement
delivered pursuant to this Article may be relied upon by any prospective
purchaser of the fee or mortgage or assignee of any mortgage upon the fee of the
Demised Premises.
ARTICLE 21
SUBORDINATION AND NON-DISTURBANCE
21.1 This Lease is and shall be subject and subordinate to the lien of
any mortgage or mortgages on or affecting the Demised Premises, parking areas
and Building or any part thereof, at the date hereof, and, subject to the
provisions of Article 21.2 to any mortgage or mortgages hereafter
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made affecting the Demised Premises, and to all renewals, modifications,
consolidations, replacements or extensions thereof, irrespective of the time
of recording any such mortgage. The provisions of this subordination shall
be self executing, but in confirmation of this subordination Tenant shall, at
Landlord's request, execute and deliver such further instruments as may be
reasonably desired by the holders of said mortgages.
21.2 If any mortgagee or any other person claiming by or through any
mortgagee, or by or through any foreclosure proceeding or sale in lieu of
foreclosure, shall succeed to the rights of Landlord under this Lease, Tenant
shall, at Landlord's request, attorn to and recognize such successor as the
landlord of Tenant under this Lease provided such successor shall agree not to
disturb Tenant's possession of the Demised Premises under this Lease, and Tenant
and such successor to Landlord shall promptly execute, acknowledge and deliver
at any time any instruments to evidence such attornment and non-disturbance;
provided, however, if such successor to Landlord is a recognized competitor of
Tenant, Tenant shall have the right and option to terminate this Lease effective
on the date that title to the Demised Premises transfers to such successor. The
aforesaid option to terminate is personal only to Sverdrup Technology, Inc.
Upon the attornment and agreement for non-disturbance, this Lease shall continue
as a direct Lease from such successor Landlord to Tenant, upon and subject to
all of the provisions of this Lease for the remainder of the term of this Lease,
except that the successor Landlord will not:
a. be liable for any previous act or omission of Landlord under
this Lease;
b. be subject to any offset, not expressly provided for in this
Lease, which shall have theretofore accrued to Tenant against Landlord; or
c. be bound by any previous prepayment of more than one month's
installment of Annual Base Rent, additional rent or other charge unless such
modification or prepayment shall have been expressly approved in writing by the
holder of such mortgage through or by reason of which the successor Landlord
shall have succeeded to the right of Landlord under this Lease.
ARTICLE 22
NOTICES
All notices, demands and requests which are required or desired to be
given by either party to the other shall be in writing and shall be sent by
United States registered or certified mail, return receipt requested, addressed
to Landlord at its address set forth above, with a copy to Landlord's mortgagee
(as specified from time to time in a written notice from Landlord to Tenant) and
to Tenant at the Demised Premises, or at such other place as either party may
from time to time designate in a written notice to the other party. Until
Tenant takes occupancy of the Demised Premises, notices to Tenant shall be at
Tenant's address set forth above. Notices, demands and requests which are
served upon Landlord or Tenant in the manner aforesaid shall be deemed to have
been given or served for all purposes hereunder on the date on which such
notice, demand or request shall have been mailed as aforesaid.
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ARTICLE 23
CAPTIONS AND MARGINAL NOTES
The captions and marginal notes of this Lease are for convenience and
reference only, and in no way define, limit or describe the scope or intent of
this Lease nor in any way affect this Lease.
ARTICLE 24
ENTIRE AGREEMENT
This instrument constitutes the entire agreement between the parties
relating to the subject matter of this Lease; cancels and supersedes any prior
agreements between the parties and may not be modified except by an instrument
in writing which is signed by both parties.
ARTICLE 25
COVENANTS BINDING ON RESPECTIVE PARTIES
The terms, conditions, covenants, provisions and undertakings herein
contained shall be binding upon and inure to the benefit of the parties hereto
and their respective successors and assigns, but nothing herein shall grant to
Tenant the right to assign this Lease other than pursuant to the provisions
hereof.
ARTICLE 26
BROKER
Landlord and Tenant represent to each other that they have not dealt
with any other broker in connection with this Lease except Michael C. Rath of
Rath & Company, 19035 Old Detroit Road, Rocky River, Ohio 44116. Landlord shall
be responsible for payment of any commission due said broker in connection with
this Lease. Each party shall indemnify, defend and save the other harmless from
and against all costs, expenses or losses should their respective
representations prove to be false. Defense of any claim for a real estate
commission shall be undertaken by the party whose representation would be false
if the claim for such commission were upheld.
ARTICLE 27
SIGNS
The Tenant shall not place any signs on the land or exterior of the
Building except described in Exhibit C attached hereto and as otherwise agreed
to in writing by Landlord. Tenant shall be obligated to obtain at its sole cost
and expense, any and all permits, licenses or approvals which may be necessary
in connection with its sign or signs.
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ARTICLE 28
HOLDOVER
If Tenant continues in the occupancy of the Demised Premises after the
expiration of the term or any extended term with the consent or acquiescence of
Landlord, such occupancy shall be deemed a tenancy at will but at the same
Annual Base Rent in effect upon expiration of the term.
If Tenant continues in the occupancy of the Demised Premises after the
expiration of the term or any extended term to which Landlord expressly objects,
such occupancy shall be deemed a tenancy at will but at 150% of the Annual Base
Rent in effect upon expiration of the term.
ARTICLE 29
SHORT FORM LEASE
The parties will at any time, at the request of either one, execute
duplicate originals of a Memorandum of Lease in recordable form which shall set
forth a description of the Demised Premises, the term of this Lease and any
other portions hereof, except the rent provisions, that either party may
request. All expenses for preparation and recording thereof shall be paid by
Landlord.
ARTICLE 30
APPLICABILITY TO HEIRS SUCCESSORS AND ASSIGNS
The provisions of this Lease shall apply to, bind and inure to the
benefit of Landlord and Tenant, and their respective heirs, successors, legal
representatives and assigns. It is understood that the term "Landlord" as used
in this Lease means only the owner or a mortgagee in possession of the Demised
Premises, so that in the event of any sale of the Demised Premises or of any
lease thereof, or if a mortgagee shall take possession of the Demised Premises,
the Landlord named herein is entirely freed and relieved of all covenants and
obligations of Landlord hereunder accruing thereafter, and it shall be deemed
without further agreement, that the purchaser or the mortgagee in possession has
assumed and agreed to carry out any and all covenants and obligations of
Landlord hereunder. Tenant shall attorn to the purchaser or mortgagee in
possession, as the case may be and execute a written attornment agreement if
requested, provided such purchaser or mortgagee in possession executes a
non-disturbance agreement with Tenant. Notwithstanding anything to the contrary
hereinabove contained, if any successor or assignee of Landlord is a recognized
competitor of Tenant, Tenant shall have the right and option to terminate this
Lease effective on the date that title, legal or beneficial to the Demised
Premises, transfers to such successor or assignee. The aforesaid option to
terminate is personal only to Sverdrup Technology, Inc.
ARTICLE 31
MODIFICATIONS REQUESTED BY MORTGAGEE
Tenant hereby agrees that if any lender to the Landlord proposing to
make a mortgage on Landlord's interest in the Building and/or Demised Premises
shall require as a condition to making any loan secured by such mortgage that
the Tenant agrees to modifications of this Lease, then Tenant agrees that it
will enter into an agreement with Landlord making modifications that are
requested by
-25-
<PAGE>
such lender provided that such changes are in Tenant's sole opinion
reasonable. In no circumstances shall Tenant be required to make any
agreement that changes the Demised Premises; increases the rent or additional
rent; abridges or enlarges the term of this Lease; or requires the
expenditure of funds by Tenant which Tenant is not obligated to expend
pursuant to the terms of this Lease. Tenant shall execute such modifications
within ten (10) days after Tenant agrees with the Landlord's request.
ARTICLE 32
PARKING
Tenant shall have the exclusive right to utilize parking spaces in the
parking lot of the Building, which is located as shown on Exhibit A-2.
ARTICLE 33
RULES AND REGULATIONS
Tenant, its agents, employees, invitees, licensees, customers,
clients, family members and guests shall at all times abide by and observe the
rules and regulations attached hereto as Exhibit "D", provided such rules are
uniformly applied and enforced against all tenants of the Demised Premises. In
addition, Tenant, its agents, employees, invitees, licensees, customers,
clients, family members and guests shall abide by and observe such other
reasonable rules or regulations as may be promulgated from time to time by
Landlord, with a copy sent to Tenant, for the operation and maintenance of the
Building; provided, however, that the same are in conformity with common
practice and usage in similar buildings and are not inconsistent with the
provisions of this Lease. Landlord shall not be liable to Tenant for violation
of the same by any other tenant, its employees, agents, or business invitees.
If there is any inconsistency between this Lease and the rules and regulations
set forth in Exhibit "D", the Lease shall govern.
ARTICLE 34
LIMITATION OF LIABILITY
Notwithstanding any contrary provision contained herein and as a
material inducement and a primary consideration for Landlord entering into this
Lease, it is agreed that:
a. Neither Landlord nor any of its partners shall be responsible or
liable to the Tenant for any damage or injury resulting from acts or omissions
of persons occupying property adjoining the Demised Premises or any part of the
Building or any injury or damage resulting to Tenant from bursting, stoppage or
leakage of water, gas, sewer or steam pipes unless arising from the negligence
of Landlord, its employees, agents or partners.
b. Landlord nor any of the partners comprising the Landlord shall be
under no personal liability with respect to any of the provisions of this Lease,
and if it is in breach or default with respect to its obligations hereunder or
otherwise liable to Tenant (whether as a result of negligence, strict liability,
breach of warranty or any other theory or concept of liability), Tenant shall
look solely to the equity of Landlord in the Building following the final
judgment establishing such default or liability to the satisfaction to the
Tenant's remedies. It is expressly understood and agreed that
-26-
<PAGE>
Landlord's liability under the terms, covenants, warranties and obligations
of this Lease or otherwise shall in no event exceed the proceeds of its
insurance and the loss of its equity in the building.
ARTICLE 35
INDEMNIFICATION
Tenant covenants and agrees, at its sole cost and expense to indemnify
and to hold Landlord harmless from and against any liability from claims by
third parties (but excluding any claims or liability arising out of Landlord's
act or negligence and the act or negligence of Landlord's agents, employees,
contractors, invitees, servants or licensees), including, without being limited
to, reasonable attorneys' fees and court costs, arising from or in connection
with (a) the conduct of management of, or from, any work or thing whatsoever
done in or on the Demised Premises during the demised term by, under the
direction or at the request of, the Tenant; (b) any breach of default on the
part of Tenant in the performance of any covenant or agreement on the part of
Tenant to be performed pursuant to the terms of this Lease; (c) any act or
negligence of Tenant, or any of its agents, contractors, servants, employees or
licensees; or (d) any accident, injury or damage whatsoever caused to any
person, firm or corporation occurring during the demised term, in or on the
Demised Premises; and in case any action or proceeding is brought against
Landlord by reason of any claims covered by the foregoing indemnity Tenant upon
notice from Landlord agrees to resist or defend such action or proceeding by
counsel reasonably satisfactory to Landlord. Landlord will not defend such
action or proceeding so long as Tenant is diligently doing so. Landlord will
give prompt notice to Tenant of any action or proceeding brought against
Landlord by reason of any claims covered by the foregoing indemnity, together
with copies of any documents served on Landlord in connection therewith, and
Landlord will not settle any such claim without Tenant's written consent.
-27-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have set their hands and seals
as of the day and date first above written.
WITNESSES: LANDLORD:
---------
TECHPARK LIMITED PARTNERSHIP, an
Ohio limited partnership
By: Techpark Development Company, an
Ohio general partnership, its
General Partner
By: Flagship Properties, Inc., an Ohio
corporations, its General Partner
/s/ By: /s/ Paul Goldberg
- ----------------------- ------------------------------, President
/s/ Attest
- ----------------------- -----------------------------, Secretary
TENANT:
-------
SVERDRUP TECHNOLOGY,
INC.
/s/ By: /s/ Stuart L. Petrie
- ----------------------- ----------------------------------------
Vice President
/s/ Attest
- ----------------------- ---------------------------------------
, Secretary
-28-
<PAGE>
EXHIBIT "A-2"
Situated in the City of Brook Park, County of Cuyahoga and State of Ohio: and
known as being part of Original Middleburgh Township Lot No. 3, Section No. 21
and part of Original Middleburgh Township Lot No. 4, Section No. 22, bounded and
described as follows:
Beginning on the center line of Cedar Point Road (60 feet wide), at a point
distant South 89 degrees 10' 35" East (measured along said center line) 1205.78
feet from its intersection with the Westerly line of said City of Brook Park;
thence North 89 degrees 10' 35" West along said center line of Cedar Point Road,
74.23 feet; thence South 0 degrees 31' 55" West, 1215 feet to an iron pin;
thence South 89 degrees 10' 35" East 450 feet to an iron pin and a Westerly line
of land conveyed to Fred C. Hotes and Helen Hotes by deed dated October 4, 1933,
and recorded in Volume 4317, Page 116 of Cuyahoga County Records; thence North 4
degrees 04' 05" West along a Westerly line of land so conveyed to Fred C. Hotes
and Helen Hotes, 649.55 feet to an iron pin; thence North 89 degrees 22' 05"
West along a Southerly line of land so conveyed, 200 feet to an iron pin; thence
North 10 degrees 37' 05" West along a Westerly line of land so conveyed 285.55
feet to an iron pin; thence North 28 degrees 50' 55" East along a Westerly line
of land so conveyed, 406.222 feet to the center line of Cedar Point Road; thence
Southwesterly along the center line of Cedar Point Road which is a curved line
deflecting to the right, the chord of which bears South 75 degrees 48' 03" West,
270.22 feet, an arc distance of 273.146 feet to the place of beginning, be the
same more or less, but subject to all legal highways.
<PAGE>
ACKNOWLEDGMENT
STATE OF OHIO )
COUNTY OF CUYAHOGA )
Before me, a Notary Public in and for said County, personally appeared
the above named Techpark Limited Partnership, an Ohio limited partnership, by
Techpark Development Company, an Ohio general partnership, its General Partner,
by Flagship Properties, Inc., an Ohio corporation, its General Partner, by Paul
Goldberg, its President, who acknowledged that he did sign the foregoing
instrument on behalf of said partnerships and corporation, and that the same is
the free act and deed of said partnerships and corporation, and his free act and
deed as such officer.
IN TESTIMONY WHEREOF, I have hereunto subscribed my name and affixed
my seal, the day and year above written.
/s/ Kenneth M. Lapine
--------------------------------------
Notary Public
KENNETH M. LAPINE, Attorney at Law
Notary Public, STATE OF OHIO
Non-Expiring Commission
ACKNOWLEDGMENT
STATE OF OHIO )
COUNTY OF CUYAHOGA )
Before me, a Notary Public, in and for said County and State,
personally appeared the above named Sverdrup Technology, Inc., by Dr. Stuart L.
Petrie, its Vice President, who acknowledged that he did sign the foregoing
instrument on behalf of said corporation and that the same is the free act and
deed of said corporation and his free act and deed as such officer.
<PAGE>
IN TESTIMONY WHEREOF, I have hereunto subscribed my name and affixed
my seal, the day and year above written.
/s/ Kenneth M. Lapine
--------------------------------------
Notary Public
KENNETH M. LAPINE, Attorney at Law
Notary Public, STATE OF OHIO
Non-Expiring Commission
<PAGE>
EXHIBIT 10.6
LEASE MODIFICATION AGREEMENT
Made this 22ND day of DECEMBER, 1988, by and between SECOND TRADE CENTER
OFFICE ASSOCIATES LIMITED PARTNERSHIP hereinafter called the "Lessor", and
NYMA, INC., hereinafter called the "Lessee".
W I T N E S S E T H:
WHEREAS, the Lessor and the Lessee entered into a certain Lease
Agreement dated February 2, 1988 where the Lessee leased 69,000 rentable
square feet in the premises known as 7300 Greenway Center Drive, on the 12th
floor, 11th floor, 10th floor, 9th floor and part of the 8th floor and the
first floor, Greenbelt, Maryland 20770, for a total term of ten (10) years
beginning January 1, 1989, and ending December 31, 1998, upon the terms and
conditions therein fully set out; and,
WHEREAS, the parties hereto now desire to modify the terms of the said
Lease.
NOW, THEREFORE, THIS LEASE MODIFICATION AGREEMENT WITNESSETH, that in
consideration of the premises and of the mutual covenants herein contained,
the parties undertake and agree as follows:
1. The building address is now changed from 7300 Greenway Center Drive to
7501 Greenway Center Drive, Greenbelt, Maryland 20770.
EXCEPT AS HEREIN AMENDED, all other terms and conditions of the Lease
Agreement as hereinbefore modified not inconsistent herewith shall remain in
full force and effect and the parties hereby ratify and reaffirm such terms
and conditions.
IN WITNESS WHEREOF, the Lessor has caused the Agreement to be executed
in its behalf by one of its Partners, and the Lessee has caused its corporate
name to be hereunto subscribed and its corporate seal to be hereunto affixed
and attested by its duly authorized officers, as the day and year first
hereinabove written
WITNESS: LESSOR: SECOND TRADE CENTER OFFICE
ASSOCIATES LIMITED PARTNERSHIP
/s/ BY: /s/ T.C. Coakley
- ---------------------- ------------------------------------------
Neil T. Coakley Family Business Trust,
General Partner, T.C. Coakley, Trustee
WITNESS: LESSEE: NYMA, INC.
/s/ BY: /s/ Pamela Thompson
- ---------------------- -----------------------------------------
TITLE: Director, Contracts, Administration
----------------------------------------
NAME PRINTED: Pamela Thompson
--------------------------------
EXHIBIT "A"
<PAGE>
LEASE
between
SECOND TRADE CENTER OFFICE ASSOCIATES
LIMITED PARTNERSHIP, LANDLORD
and
NYMA, INC., TENANT
TABLE OF CONTENTS
Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE 1 - PREMISES AND TERM. . . . . . . . . . . . . . . . . . . . . . . 1
1.1 Premises . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.2 Term . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.3 Commencement of Possession . . . . . . . . . . . . . . . . . . . . 1
ARTICLE II - RENTAL. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
2.1 Basic Rent. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
2.2 Consumer Price Index. . . . . . . . . . . . . . . . . . . . . . . . . 2
2.3 Real Estate Tax-Escalation. . . . . . . . . . . . . . . . . . . . . . 2
2.4 Gross Receipts Taxes. . . . . . . . . . . . . . . . . . . . . . . . . 2
2.5 Additional Rent . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
ARTICLE III - USE AND OCCUPANCY. . . . . . . . . . . . . . . . . . . . . . . 3
3.1 Use of Premises . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
3.2 Tenant Requirements for Space Improvement . . . . . . . . . . . . . . 3
3.3 Alterations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
3.4 Fixtures, Etc.. . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
3.5 Signs, Weight, Moving, Etc. . . . . . . . . . . . . . . . . . . . . . 3
3.6 Electrical Equipment. . . . . . . . . . . . . . . . . . . . . . . . . 4
3.7 Access. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
3.8 Rules and Regulations . . . . . . . . . . . . . . . . . . . . . . . . 4
3.9 Subletting and Assignment . . . . . . . . . . . . . . . . . . . . . . 4
ARTICLE IV - MAINTENANCE, REPAIRS & SERVICES . . . . . . . . . . . . . . . . 5
4.1 Services. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
4.2 Maintenance and Repairs . . . . . . . . . . . . . . . . . . . . . . . 5
ARTICLE V - INSURANCE, DAMAGES AND CONDEMNATION. . . . . . . . . . . . . . . 5
5.1 Insurance and Indemnification . . . . . . . . . . . . . . . . . . . . 5
5.2 Damage by Tenant. . . . . . . . . . . . . . . . . . . . . . . . . . . 5
5.3 Water Damage, Etc.. . . . . . . . . . . . . . . . . . . . . . . . . . 6
5.4 Other Damages . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
5.5 Damage by Fire or Casualty. . . . . . . . . . . . . . . . . . . . . . 6
5.6 Condemnation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
ARTICLE VI - SURRENDER OF PREMISES . . . . . . . . . . . . . . . . . . . . . 6
6.1 Surrender and Restoration . . . . . . . . . . . . . . . . . . . . . . 6
6.2 Tenant Holding Over . . . . . . . . . . . . . . . . . . . . . . . . . 6
6.3 Security Deposit. . . . . . . . . . . . . . . . . . . . . . . . . . . 7
ARTICLE VII - DEFAULTS . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
7.1 Defaults and Remedies . . . . . . . . . . . . . . . . . . . . . . . . 7
7.2 Bankruptcy. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
7.3 Landlord's Liability. . . . . . . . . . . . . . . . . . . . . . . . . 8
<PAGE>
ARTICLE VIII - LANDLORD'S MORTGAGE . . . . . . . . . . . . . . . . . . . . . 8
8.1 Subordination . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
8.2 Tenant's Estoppel Certificate . . . . . . . . . . . . . . . . . . . . 8
8.3 Notice to Mortgagee . . . . . . . . . . . . . . . . . . . . . . . . . 8
8.4 Approval by Mortgagee . . . . . . . . . . . . . . . . . . . . . . . . 8
ARTICLE IX - MISCELLANEOUS PROVISIONS. . . . . . . . . . . . . . . . . . . . 8
9.1 Non Constructive Waiver . . . . . . . . . . . . . . . . . . . . . . . 8
9.2 Broker's Commission . . . . . . . . . . . . . . . . . . . . . . . . . 8
9.3 Waiver of Trial by Jury . . . . . . . . . . . . . . . . . . . . . . . 9
9.4 Attorney's Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
9.5 Time of Essence . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
9.6 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
9.7 Force Majeure . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
9.8 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
9.9 Successors and Assigns. . . . . . . . . . . . . . . . . . . . . . . . 9
9.10 Gender and Number . . . . . . . . . . . . . . . . . . . . . . . . . . 9
9.11 Section Headings. . . . . . . . . . . . . . . . . . . . . . . . . . . 9
9.12 Entire Agreement. . . . . . . . . . . . . . . . . . . . . . . . . . . 9
<PAGE>
Lease
This Lease made this 2ND day of FEBRUARY, 1988, by and between
SECOND TRADE CENTER OFFICE ASSOCIATES LIMITED PARTNERSHIP, HEREINAFTER CALLED
"LANDLORD", whose principal office is located at Suite 1600, 7500 Greenway
Center Drive, Greenbelt, MD 20770 and NYMA, INC., A --------------ORGANIZED
AND EXISTING UNDER THE LAWS OF THE STATE OF MARYLAND hereinafter called
"Tenant", whose principal office is located at 7300 GREENWAY CENTER DRIVE,
GREENBELT, MARYLAND 20770.
WITNESSETH:
ARTICLE 1
PREMISES AND TERM
1.1 Premises. See Addendum, Paragraph 1.
Landlord, for and in consideration of the covenants and agreements
hereinafter set forth and the rent hereinafter reserved, has, and does hereby
lease, unto Tenant and Tenant, subject to the terms and conditions herein
contained, hereby leases from Landlord, the space described as follows:
APPROXIMATELY 69,000 RENTABLE SQUARE FEET LOCATED ON THE ENTIRE 12TH FLOOR,
11TH FLOOR, 10TH FLOOR, 9TH FLOOR AND PART OF THE 8TH FLOOR AND THE FIRST
(1ST) FLOOR AS SHOWN ON ATTACHED EXHIBIT A in the building (hereinafter
called the "Building") known as the MARYLAND TRADE CENTER III located at 7300
GREENWAY CENTER DRIVE, GREENBELT, MARYLAND 20770, such leased space being
hereinafter referred to as the "Leased Premises".
1.2 Term. See Addendum, Paragraph 2.
Subject to the provisions hereof, the term of this Lease shall be for a
term of TEN (10) years, commencing on the 1ST day of JANUARY, 1989
and ending on the 31ST day of DECEMBER, 1998 both dates inclusive.
1.3 Commencement of Possession.
If the Landlord shall be unable to give possession of the Leased
Premises on the date of the commencement of the term hereof by reason of the
fact that the premises are located in a building being constructed and which
has not been sufficiently completed to make the Leased Premises ready for
occupancy or by reason of the fact that a certificate of occupancy for
general office use has not been obtained or if Landlord is unable to give
possession of the Leased Premises on the date of commencement of the term
hereof by reason of holding over or retention of possession of any tenant or
occupant, or if repairs, improvements or decoration of the Leased Premises,
or of the Building, are not completed, or for any other reason, Landlord
shall not be subject to any liability for failure to give possession on said
date. Under such circumstances, the rent reserved and covenanted to be paid
herein shall not commence until possession of the Leased Premises is given or
the Leased Premises are available for occupancy by Tenant, and no such
failure to give possession on the date of commencement of the term shall in
any other respect affect the validity of this Lease or the obligations of
Tenant hereunder. However, if by the scheduled commencement date the Leased
Premises are not ready for Tenant's occupancy, the expiration date of this
Lease shall be extended for the number of days that elapse between such date
and the date possession of the Leased Premises fully completed and ready for
occupancy is tendered to Tenant, or as soon thereafter as the space is ready
for occupancy. If permission is given to Tenant to enter into the possession
of the Leased Premises or to occupy premises other than the Leased Premises
prior to the date specified as the commencement of the term of this Lease,
Tenant covenants and agrees that such occupancy shall be deemed to be under
all the terms, covenants, conditions and provisions of this Lease.
ARTICLE II
RENTAL
2.1 Basic Rent. See Addendum, Paragraph 3.
(a) Tenant covenants and agrees to pay to Landlord for the first year of
the term hereof, but subject to adjustments as hereinafter provided, an annual
basic rent, hereinafter called "Basic Rent", of ______________________________
_______________________________________________________________________________
per annum, payable in equal monthly installments of __________________________
_______________________________________________________________________________
in advance of the first of each calendar month during the term hereof. A rent
installment for one full month shall be paid at the time of execution and
delivery of this Lease. If this Lease shall commence on the date other than the
first day of the month, the rent for such month shall be pro-rated and a portion
of the first rental payment shall be credited to the second month's rent. The
balance of the second month's rent shall be paid by Tenant on the first day of
the second month. The aforementioned rent includes an apportionment for the
"Core" and "Corridor" attributable to the Leased Premises. Tenant's applicable
share of the common or public area of the Building has been computed to be
square feet.
(b) All payments of Basic Rent, additional rent (as hereinafter
provided) and other payments to Landlord required hereunder shall be made
without demand, deduction or offset, in cash or by check payable to Landlord
and shall be delivered in C & W Properties, Inc. (hereinafter called
"Agent"), as Agent for Landlord, at its offices at Suite 1600, 7500 Greenway
Dr., Greenbelt, MD 20770, or to such other party and place as may be
designated by notice in writing from Landlord to Tenant from time to time.
(c) Any monthly installment of Basic Rent not paid within ten (10) days
of the due date shall be subject to a late charge of five percent (5%), but
this does not extend the due date of the rent from the first day of each
month. All other rent and all other payments becoming due hereunder
(including additional rent) shall bear interest at the rate of twelve (12%)
per annum from the date when the same shall become due and payable.
(d) No payment by Tenant or receipt and acceptance by Landlord of a
lesser amount than the Basic Rent, additional rent, or other payments to
Landlord required hereunder shall be deemed to be other than part payment of
the full amount then due and payable, nor shall any endorsement or statement
on any check or any letter accompanying any check, payment of rent or other
payment, be deemed an accord and satisfaction; and Landlord may accept such
part payment without prejudice to Landlord's right to recover the balance due
and payable or pursue any other remedy provided in this Lease.
<PAGE>
2.2 Consumer Price Index.
Each year that the Lease remains in effect after the first full year of
the term hereof, Tenant shall pay to Landlord as Basis Rent such sums as
determined by application of the following formula:
(a) To the Basic Rent payable annually during the previous twelve
months shall be added that sum representing the full amount, if any, after
multiplying such Basic Rent payable during the previous twelve months, by a
fraction the numerator of which shall be the Consumer Price Index (CPI) for
Urban Wage Earners and Clerical Workers, All Items, Washington, D.C. as
published in the United States Department of Labor, Bureau of Labor
Statistics Consumer Price Index for the United States and Selected Areas
(Base 1967=100) for the month which is two months prior to the last month of
the previous twelve months, and the denominator of which shall be such CPI
for the month which is two months prior to the first month of such previous
twelve months, and subtracting from such product the Basic Rent payable
during the previous twelve months.
(b) The resulting new Basic Rent, which in each instance, shall in no
event be less than the Basic Rent payable during the preceding twelve months,
shall be payable in twelve equal monthly installments on the first day of
each month of the applicable year.
(c) In the event the CPI is discontinued, ceases to incorporate a
significant number of the items now incorporated therein, or if a substantial
change is made in such CPI, the parties hereto shall attempt to agree on an
alternative formula and if agreement cannot be reached, the matter shall be
submitted to arbitration under the rules of the American Arbitration
Association then in effect.
2.3 Real Estate Tax-Escalation.
(a) For the purposes of this Lease.
(i) The term "real estate taxes" means all taxes, rates and
assessments, general and special, levied or imposed with respect to the Land,
Building and improvements constructed thereon of which the Leased Premises
are a part, including all taxes, rates and assessments, general and special,
levied or imposed for school, public betterment, general or local
improvements. If the system of real estate taxation shall be altered or
varied in any new tax or levy shall be levied or imposed on said land,
Building and improvements, and/or on Landlord, in substitution for real
estate taxes presently levied or imposed on immovables in the jurisdiction
where the property is located, then any such new tax or levy shall be
included within the term "real estate taxes".
(ii) The term "base real estate taxes" means (x) the assessed value
of the land, Building and improvements, multiplied by the then current rate,
for the first tax year for which real estate taxes are payable by Landlord
after assessment of the land, Building and improvements as a completed
building, or (y) the assessed value of the land, Building and improvements,
multiplied by the then current rate, for the tax year during which this Lease
commences or Seventy-Five Percent (75%) occupancy of the building, whichever
is earlier.
(iii) The term "real estate tax year" means each successive
twelve-month (12) period following and corresponding to the period for which
the base real estate taxes are established, irrespective of the period or
periods which may from time to time in the future be established by competent
authority for the purposes of levying or imposing real estate taxes.
(b) Each year Tenant shall pay to Landlord within thirty (30) days
after demand in writing therefor (accompanied by a statement showing the
computation of Tenant's share of such increase), as additional rent, Tenant's
pro rata share of any increase in real estate taxes for the then current real
estate tax year over the base real estate taxes (all as defined above).
Tenant's share as aforesaid, shall be ____35.13__% of the total increase,
based on ___196,388___ gross square foot floor area in the Building.
(c) Real estate taxes which are being contested by Landlord shall
nevertheless be included for purposes of the computation of the liability of
Tenant under this Section, provided, however, that in the event that Tenant
shall have paid any amount of increased rent pursuant to this Section and
Landlord shall thereafter receive a refund of any portion of any real estate
taxes on which such payment shall have been based. Landlord shall pay to
Tenant the appropriate portion of such refund. Landlord shall have no
obligation to contest, object or litigate the levying or imposition of any
real estate taxes and may settle, compromise, consent to, waive or otherwise
determine in its discretion any real estate taxes without consent or approval
of Tenant.
(d) Nothing contained in this Section shall be construed at any time to
reduce the monthly installments of rent payable hereunder below the amounts
stipulated in Sections 2.1 and 2.2 of this Lease.
(e) If the termination date of the Lease shall not coincide with the
end of a real estate tax year, then in computing the amount payable under
this Section for the period between the commencement of the applicable real
estate tax year in question and the termination date of this Lease, the base
real estate taxes shall be deducted from the real estate taxes for the
applicable real estate tax year and, if there shall be a difference, such
difference prorated on a monthly basis shall be payable by Tenant. Tenant's
obligation to pay increased real estate taxes under this Section for the
final period of the Lease shall survive the expiration of the term of this
Lease.
2.4 Gross Receipts Taxes.
After notification by Landlord, Tenant shall pay to Landlord, as
additional rent together with each monthly payment of Basic Rent, an amount
equal to any taxes (other than income taxes) levied or imposed upon the
rentals payment under this Lease, whether described as gross receipts taxes,
excise tax, or by any other term.
2.5 Additional Rental.
If Landlord shall incur any charge or expense on behalf of Tenant under
the terms of this Lease, such charge or expense shall be considered
additional rent hereunder. In addition to and not in limitation of any other
rights and remedies which Landlord may have in case of the failure by Tenant
to pay such sums when due, such nonpayment shall entitle Landlord to the
remedies available to it hereunder for non-payment of rent. All such charges
or expenses shall be paid to Landlord at Agent's office or to its successor
or at such other place and to such other person as Landlord may from time to
time designate in writing.
<PAGE>
ARTICLE III
USE AND OCCUPANCY
3.1 Use of Premises.
(a) Tenant covenants to use and occupy the Leased Premises for executive
and general offices for normal office use, and for no other purpose whatsoever,
and to permit Landlord to transmit heat, air conditioning, and electric current
throughout the Leased Premises at all times at the discretion of Landlord,
provided, however, that Landlord shall not exercise this right in such a way as
to unreasonably inconvenience Tenant, or unreasonably interfere with Tenant's
use of the Leased Premises.
(b) Tenant will not use or permit the Leased Premises or any part thereof
to be used for any disorderly, unlawful or extra hazardous purpose nor for any
other purpose than hereinbefore specified; and will not manufacture any
commodity therein, without the prior written consent of Landlord.
(c) Tenant will not do or permit to be done in the Leased Premises, or
the Building, or bring or keep anything therein, which shall in any way increase
the rate of fire or other insurance on the Building, or on the property kept in
the Building, or obstruct, or interfere with the rights of other tenants, or in
any way, injure or annoy them, or those having business with them, or conflict
with the fire laws or regulations or with any insurance policy upon the Building
or any part thereof, or with any statutes, rules or regulations enacted or
established by the Federal Government or by the State, City or County in which
the Leased Premises is located. If any increase in the rate of fire insurance
or other insurance is stated by any insurance company due to activity or
equipment of Tenant in or about the Leased Premises, such statement shall be
conclusive evidence that the increase in such rate is due to such activity or
equipment and, as a result thereof, Tenant shall be liable for such increase and
shall reimburse Landlord therefor as additional rent.
(d) Tenant shall have only a non-exclusive right to use the common or
public areas of the Building or the parking area on the land and shall not place
or leave any items therein or thereon or in any other place on the land or in
the Building other than within the Leased Premises.
3.2 Tenant Requirements for Space Improvement. See Addendum Paragraphs 4, 5.
Tenant will furnish to Landlord its _________, electric, telephone and all
other requirements by not later than ______, 19_____. Within __________ days
after Landlord's submission of working drawings, the Tenant shall approve them
in writing. In the event Tenant fails to comply with the aforesaid by the date
within the time specified, any delay in completing the Leased Premises shall not
in any manner affect the commencement date of this Lease or the Tenant's
liability for the payment of rent from the commencement date, and under these
circumstances. Landlord agrees to make the Leased Premises ready for Tenant's
occupancy not later than the commencement date of this Lease, plus the number of
days' delay resulting from Tenant's failure to comply with the provisions of
this Section. The premises are to be constructed in accordance with the Outline
Specifications (attached hereto as Exhibit "A") and any costs over and above
these Outline Specifications will be at the expense of the Tenant. At the time
of the signing of this Lease, Tenant agrees to pay an amount equal to one-third
of such excess costs as estimated by Landlord and to pay the balance of such
excess costs within thirty (30) days after it is furnished by Landlord an
analysis of the actual costs.
3.3 Alterations.
(a) Tenant will not make any subsequent alterations, installations,
changes, replacements, additions, or improvements, structural or otherwise, in
or to the Leased Premises or any part thereof, without the prior written consent
of Landlord.
(b) All alterations, installations, changes, replacements, additions to
or improvements upon the Leased Premises (whether with or without Landlord's
consent) shall, at the election of Landlord, remain upon the Leased Premises and
be surrendered with the Leased Premises at the expiration of this Lease without
disturbance, molestation or injury. Should Landlord elect that alterations,
installations, changes, replacements, additions to or improvements upon the
Leased Premises be removed upon termination of this Lease or upon termination of
any renewal period hereof, Tenant hereby agrees to cause them to be removed at
Tenant's sole cost and expense and to repair any damage caused by such removal
and should Tenant fail to remove them then and in such event Landlord shall
cause them to be removed at Tenant's expense and Tenant hereby agrees to
reimburse Landlord for the cost of such removal together with any and all
damages which Landlord may suffer and sustain by reason of Tenant's failure to
remove them.
3.4 Fixtures, Etc.
Tenant covenants, at the expiration or other termination of this Lease, to
remove all goods and effects from the Leased Premises not the property of the
Landlord, and to yield to the Landlord the Leased Premises and all keys, locks
and other fixtures connected therewith (except trade fixtures and other fixtures
belonging to Tenant), in good repair, order and condition in all respects,
reasonable wear and use thereof and damage by fire or other casualty and damage
from any risk with respect to which Tenant is not herein expressly made liable
excepted.
3.5 Signs, Weight, Moving, Etc. See Addendum, Paragraph 6.
(a) Tenant agrees that no sign, advertisement or notice shall be
inscribed, painted or affixed on any part of the outside or inside of the Leased
Premises of the Building, except on the directories and doors of offices, and
then only in such size, color and style as Landlord shall approve.
(b) Tenant agrees that Landlord shall have the right to prescribe the
weight, and method of installation and position of safes or other heavy fixtures
or equipment; that all damage done to the Building by taking in or removing a
safe or other article of Tenant's office equipment, or due to its being in the
Leased Premises, shall be repaired at the expense of the Tenant. No freight,
furniture or other bulky matter of any description, will be received into the
Building or carried in the elevators, except as approved by Landlord. All
moving of furniture, material and equipment shall be under the direct control
and supervision of Landlord, who shall, however, not be responsible for any
damage to or charges for moving same. Tenant agrees promptly to remove from the
public area adjacent to the Building any of Tenant's merchandise there delivered
or deposited.
(c) Tenant agrees not to strip or overload, damage or deface the Leased
Premises or hallways, stairways, elevators, parking facilities or other
approaches thereto, of the Building, or the fixtures therein or used therewith,
nor to permit any hole to be made in any of the same.
3.6 Electrical Equipment.
Tenant will not install or operate in the Leased Premises any electrically
operated equipment or other machinery, other than electric typewriters, or
adding machines, and such other electrically operated office machinery used in
modern
<PAGE>
offices, without first obtaining the prior consent in writing of Landlord,
who may condition such consent upon the payment by Tenant of additional rent
in compensation for such excess consumption of water and/or electricity or
wiring as may be occasioned by the operation of said equipment or machinery;
or shall Tenant install any other equipment whatsoever which will or may
necessitate any changes, replacements or additions or to require the use of
the water system, plumbing system, heating system, air conditioning system or
the electrical system of the Leased Premises without the prior written
consent of Landlord.
3.7 Access.
Tenant agrees that it will allow Landlord, its agents or employees, to
enter the Leased Premises at all reasonable times to examine, inspect or to
protect the Leased Premises or prevent damage or injury to the Leased
Premises, or to make such alterations and repairs as Landlord may deem
necessary, or to exhibit the same to prospective tenants during the last six
(6) months of the term of this Lease.
3.8 Rules and Regulations.
Tenant covenants that the following rules and regulations, and such other
and further rules and regulations as Landlord may make and which in Landlord's
judgment are needful for the general well being, safety, care and cleanliness of
the Leased Premises and Building, together with their appurtenances, shall be
faithfully kept, observed and performed by Tenant, and by its agent, servants,
employees and guests unless waived in writing by Landlord.
(a) Sidewalks, entries, passages, elevators and staircases and other
parts of the Building which are not part of the Leased Premises shall not be
obstructed or used for any other purpose that ingress and egress.
(b) Tenant shall not install or permit the installation of any awnings,
shades and the like other than those approved by Landlord in writing.
(c) No additional locks shall be placed upon any doors of the Leased
Premises; and doors leading to the corridors or main halls shall be kept closed
during business hours except as they may be used for ingress or egress. Tenant
agrees to promptly furnish Landlord a duplicate(s) of any keys for locks Tenant
may place upon any such doors.
(d) Tenant shall not construct, maintain, use or operate within the
Leased Premises or elsewhere in the Building or on the outside of the Building,
any electrical device, wiring or apparatus in connection with a loud speaker
system or other sound system unless Tenant shall have first obtained the prior
written consent of Landlord.
(e) No bicycles or vehicles of any kind shall be brought into or kept in
or about the Leased Premises or the Building, with the exception of those areas,
if any, designated by Landlord.
(f) No cooking shall be done or permitted by Tenant in the Leased
Premises, without the prior written consent of Landlord, provided, however, that
the heating, refrigerating and preparing of beverages and light snacks shall be
permitted if there are appropriate facilities and equipment for such purpose and
subject to the prior written consent of Landlord. Tenant shall not cause or
permit any unusual or objectionable odors to be produced upon or emanate from
the Leased Premises.
(g) No animals of any kind shall be brought into or kept about the
Building by Tenants ______ or its employees, agents or guests.
(h) Landlord will furnish and install fluorescent tubes and light bulbs
for the Building's standard fixtures only. For special fixtures, Tenant will
stock its own bulbs which will be installed by Landlord when so requested by
Tenant.
(i) Landlord does not maintain and repair suite finishes or fixtures
which are non-standard; such as kitchens, bathrooms, wallpaper, special lights,
etc. However, should the need for maintenance or repairs arise, Landlord will,
upon Tenant's request, arrange for the work to be done at Tenant's expense.
(j) No vending machines shall be permitted to be placed or installed in
any part of the Building by any tenant. Landlord reserves the right to place or
install vending machines in any part of the common areas of the Building.
3.9 Subletting and Assignment.
(a) Tenant will not sublet the Leased Premises or any part thereof,
including desk space, or transfer possession or occupancy thereof, to any
person, firm or corporation or transfer, assign, mortgage or encumber this Lease
or any interest in this Lease without the prior written consent of Landlord, nor
shall any subletting, assignment or transfer hereof be effected by operation of
law or otherwise without the prior written consent of Landlord which shall not
be unreasonably withheld.
(b) If Tenant desires to sublet all or a substantial portion of the
Leased Premises, Tenant shall give Landlord (30) days written notice of Tenant's
intention to do so. Within thirty (30) days after receipt of said notice,
Landlord shall have the right to sublet the Leased Premises from Tenant at the
same rental stipulated herein. If Tenant desires to sublet all of the Leased
Premises, Landlord shall have the right to terminate this Lease on a date to be
agreed upon by Landlord and Tenant. If Landlord has not exercised its right to
sublet the Leased Premises or terminate this Lease as heretofore provided,
Tenant may sublet the Leased Premises after first obtaining the written consent
of Landlord.
(c) If Tenant shall receive any consideration for any assignment or the
rent provided under any sublease shall be greater than the rent provided for
herein, Tenant shall pay to Landlord an additional rental equal to one-half of
all such increased amounts on the date which such rentals are due under the
assignment or sublease.
(d) If Landlord consents to the subletting or assignment of the Leased
Premises, Tenant shall remain fully liable and obligated under all the terms,
conditions and provisions of this Lease and any assignee shall assume all of the
obligations of the Tenant under this Lease. The consent by Landlord to any
assignment, transfer, or subletting to any party other than Landlord, shall not
be construed as a waiver or release of Tenant from the terms of any covenants or
obligation under this Lease, nor shall the collection or acceptance of rent from
any such assignee, transferee, subtenant or occupant constitute a waiver of, or
release of Tenant from, any covenant or obligation contained in this Lease, nor
shall any such assignment or subletting be construed to relieve Tenant from
giving Landlord said thirty (30) days notice or from obtaining the consent in
writing of Landlord to any further assignment or subletting. In the event that
Tenant defaults hereunder, Tenant hereby assigns to Landlord the rent due from
any subtenant of Tenant and hereby authorizes each such subtenant to pay said
rent directly to Landlord. A copy of the assignment or sublease will be
furnished to Landlord prior to its approval and will not thereafter be modified
or amended without Landlord's prior consent.
<PAGE>
ARTICLE IV
MAINTENANCE, REPAIRS & SERVICES
4.1 Services. See Addendum, Paragraph 7.
Landlord shall furnish reasonable adequate electric current, water,
lavatory supplies, and automatically operated elevator service during the hours
of 8:00 a.m. until 6:00 p.m. Monday through Friday of each week and 8:00 a.m. to
12:00 p.m. on Saturdays (exclusive of Holidays) and normal and usual cleaning
and char service, without additional cost to Tenant. Landlord further agrees to
furnish heat and air conditioning by means of central air condition system
during such hours during the seasons of the year when such services are normally
and usually furnished in modern office buildings in the area in which the Leased
Premises is located, provided, however, that Landlord shall not be liable for
failure to furnish or for suspension or delay in furnishing any of such services
caused by breakdown, maintenance or repair work or strike, riot, civil
commotion, or any cause or reason whatever beyond control of Landlord. Holidays
are: New Year's Day, Memorial Day, Fourth of July, Labor Day, Thanksgiving and
Christmas.
4.2 Maintenance and Repairs.
(a) Subject to reasons beyond its control, Landlord agrees, at its
expense, to maintain and keep in repair the Leased Premises and replace
fluorescent tubes in the Building's standard lighting fixtures during the term
of this Lease, except for damages caused by Tenant, its agents, employees,
visitors, licensees, contractors or suppliers, and except for items installed
for Tenant not of building standard materials. There shall be no allowance to
Tenant for a diminution of rental value and no liability on the part of Landlord
by reason of inconvenience, annoyance or injury to business arising from the
making of any repairs in or to any portion of the Leased Premises or the
Building (or in or to fixtures, appurtenances or equipment thereof).
(b) Tenant shall take care of the Leased Premises and the fixtures,
appurtenances and equipment therein and, at its sole cost and expense, make such
repairs thereto necessitated by the negligence of Tenant, its agents, employees,
visitors, licensees, contractors or suppliers or by the use of the Leased
Premises in a manner contrary to the purposes for which they are leased to
Tenant, as and when needed to preserve them in good order and condition,
reasonable wear and use excepted. All damage or injury to the Leased Premises
(and to the fixtures, appurtenances and equipment therein) or to the Building
caused by Tenant, its agents, employees, visitors, licensees, contractors or
suppliers, moving, installation or removing furniture, equipment or other
property in, within or out of, the Leased Premises or Building, shall be
repaired, restored or replaced promptly by Tenant at its sole cost and expense,
to the reasonable satisfaction of Landlord. All such repairs, restorations and
replacements shall conform to the standard of the Building and all contracts and
subcontracts, contractors, subcontractors and suppliers involved in such work
shall be subject to the approval of Landlord, whose written approval shall be
obtained prior to the commencement of any such work. If Tenant shall fail to
make such repairs, restorations or replacements, then Landlord shall have the
right to make such necessary repairs, restorations and replacements, structural,
non-structural, or otherwise, and any charge or cost so incurred by Landlord
shall be paid by Tenant to Landlord as additional rent payable within the
installment of rent next becoming due under the terms of this Lease. This
provision shall be construed as an additional remedy granted to Landlord and not
in limitation of any other rights and remedies which Landlord has or may have in
said circumstances.
ARTICLE V
INSURANCE, DAMAGES AND CONDEMNATION
5.1 Insurance and Indemnification. See Addendum, Paragraphs 8 and 9.
(a) Tenant agrees to save Landlord and Agent harmless and indemnified
from all loss, damage, liability or expense incurred, suffered, or claimed by
any person whomsoever by reason of Tenant's neglect or use of the Leased
Premises or of the Building or of anything thereon, or the parking facilities in
or adjacent thereto, or of water, steam, electricity, or other agency, or by
reason of any injury, loss or damage to any person or property upon the Leased
Premises, the Building or parking facilities, and to be answerable for all
nuisances caused or suffered on the Leased Premises, or caused by Tenant in the
Building, or parking facilities, or on the approaches thereto.
(b) Tenant shall at all times during the term hereof keep in force at its
own expense public liability insurance including the contractual liability
endorsement in companies licensed to do business in the State of Maryland
acceptable to Landlord sufficient to cover such indemnification and naming as
insured both Landlord and Tenant, with limits of at least Five Hundred Thousand
Dollars ($500,000.00) ($1,000,000.00) on account of personal injury and One
Hundred Thousand Dollars ($100,000.00) on account of damage to property, and
Tenant will further certify the policy or policies of such insurance
certificates thereof with Landlord upon request. Each policy shall contain a
provision for fifteen (15) days advance written notice to Landlord in the event
the policy in cancelled.
5.2 Damage by Tenant.
All injury to the Leased Premises or the Building, caused by moving
property of Tenant into, in or out of, the Building and all breakage done by
Tenant, or the agents, servants, employees, and visitors of Tenant shall be
repaired by Tenant, at expense of Tenant. If Tenant shall fail to do so, then
Landlord shall have the right to make such necessary repairs, alterations and
replacements, structural, nonstructural or otherwise and any charge or cost so
incurred by Landlord shall be paid by Tenant with the right on the part of
Landlord to elect in its discretion to regard the same as additional rent, in
which event such cost or charge shall become additional rent payable with the
installment of rent next becoming due or thereafter falling due under terms of
this Lease. This provision shall be construed as an additional remedy granted
to Landlord and not in limitation of any rights and remedies which Landlord has
or may have in these circumstances.
5.3 Water Damage, Etc.
Landlord shall not be liable for any damage to any property, or person, at
any time in the Leased Premises, or the Building, from fire, the perils of the
standard extended coverage endorsement, explosion, steam, gases, or electricity,
or from water, rain, or snow, whether they may leak into, issue or flow from,
any part of the Building, or from the pipes, sprinkler system, or heating or air
conditioning apparatus of the Building, or from any other place or from any
other cause of any kind or nature whatsoever. Tenant shall give Landlord prompt
notice of any accident to or defect in the pipes, sprinkler system, heating or
air conditioning apparatus, or electric wires or systems in order that it may be
remedied by Landlord.
5.4 Other Damages.
Landlord assumes no liability or responsibility whatever with respect to
the conduct and operation of the business to be conducted in the Leased Premises
nor for any loss (including theft) or damage of whatsoever kind or by whomsoever
<PAGE>
caused, to personal property, documents, records, monies, or goods of Tenant or
to anyone in or about the Leased Premises, however caused or whether due in
whole or in part to acts of negligence on the part of Landlord, its agents or
servants, whether such acts be active or passive and Tenant agrees to hold
Landlord harmless against all such claims.
5.5 Damage by Fire or Casualty.
(a) If the Leased Premises shall be destroyed or damaged, from whatsoever
cause, so as to render them unfit for the purposes for which leased, and if it
is reasonably possible to repair such destruction or damage within one hundred
eighty (180) days, the Tenant shall not be entitled to surrender possession of
the Leased Premises, without the prior written consent of Landlord, but Landlord
shall proceed to repair the destruction or damage with all reasonable speed and
shall complete the same within one hundred eighty (180) days, unless there shall
be less than one year remaining in the term of this Lease, in which event
Landlord may elect to terminate the Lease.
(b) If the Leased Premises shall be destroyed or damaged, from whatever
cause, so as to render them unfit for the purposes for which leased, and if it
is not reasonably possible to repair such destruction or damage within one
hundred eighty (180) days, then each party shall have the option, by written
notice given to the other within fifteen (15) days after such destruction or
damage, to terminate this Lease as of eight (8) days after the giving of such
notice, in which event Tenant shall be granted a proportionate rebate and
deduction from the rental payments made and to be made hereunder for the period
subsequent to said determination and, if such option is not exercised, Landlord
shall proceed to repair the destruction or damage with all reasonable speed.
(c) In the event of any damage or destruction to which the above
provisions are applicable, Tenant shall be granted a proportionate rebate and
deduction from the rental payments made and to be made hereunder, for the period
from the date of such damage or destruction until the Leased Premises are ready
for occupancy by Tenant or until the termination of the Lease, corresponding to
the portion of the Leased Premises with respect to which Tenant is deprived of
normal occupancy and use.
(d) Tenant shall give immediate notice to Landlord in case of fire or
other damage to the Premises.
5.6 Condemnation.
Tenant agrees that if the Leased Premises, or any part thereof, or the
Building and/or the land on which the Building is located shall be taken or
condemned for public or quasi-public use or purpose by any competent authority,
Tenant shall have no claim against Landlord and shall not have any claim or
rights to any portion of the amount that may be awarded as damages or paid as a
result of any such condemnation; and all rights of Tenant to damages therefor,
if any, are hereby assigned by Tenant to Landlord. Upon such condemnation or
taking, the term of this Lease shall cease and terminate from the date of such
taking or condemnation, and Tenant shall have no claim against Landlord for the
value of any unexpired term of this Lease, provided that if the Leased Premises
are not taken, but the taking involves a portion of the land and/or Building,
then the termination of this Lease shall be the election of Landlord.
ARTICLE VI
SURRENDER OF PREMISES
6.1 Surrender and Restoration.
Tenant agrees to remove from the Leased Premises, at the expiration or
other termination of this Lease, all goods and effects not belonging to
Landlord, and to surrender possession of the Leased Premises and all fixtures
and furnishings connected therewith in good repair, order and condition in all
respects, reasonable wear and use thereof and damage by fire or other
unavoidable casualty only excepted. If Tenant shall fail to perform any of the
foregoing obligations, Landlord is authorized to do so on Tenant's behalf and to
sell such articles and effects left on the Leased Premises as may be saleable.
The proceeds of any such sale shall be applied toward the expenses thus
incurred, and Tenant agrees to pay any balance promptly.
6.2 Tenant Holding Over.
If Tenant shall not immediately surrender possession of the Leased
Premises at the termination of this Lease, Tenant shall become a tenant from
month to month, provided rent shall be paid to and accepted by Landlord, in
advance, at the rate of rent (including Basic Rent and pro-rated additional
rent) payable hereunder just prior to the termination of this Lease or the then
current rental rate being offered by Landlord for other similar space in the
Building, whichever is higher; but unless and until Landlord shall accept such
rental from Tenant, Landlord shall continue to be entitled to retake or recover
possession of the Leased Premises as hereinabove provided in case of default on
the part of Tenant, and Tenant shall be liable to Landlord for any loss or
damage (including both direct and consequential damages) Landlord may sustain by
reason of Tenant's failure to surrender possession of the Leased Premises
immediately upon the expiration of the term of this Lease. Tenant waives any
notice to quit. All rights of Landlord applicable during the term of this Lease
shall be equally applicable during such period of subsequent occupancy by
Tenant, whether or not a month to month tenancy shall have been created as
aforesaid.
6.3 Security Deposit.
Tenant simultaneously with the execution of this Lease shall deposit
with Landlord the sum of ________________ SEE ADDENDUM, PARAGRAPH 14____________
_______________________________________________ ( )
be held as a security deposit to assure the prompt, full and faithful
performance by Tenant of each and every provision of this Lease and of all
obligations of Tenant hereunder. Landlord may apply the security deposit
(which shall not bear interest to Tenant) such portion thereof as is
necessary, to the cost of repairing any damage to the Leased Premises caused
by Tenant or Tenant's customers or employees or to defray any damage, loss or
expense suffered by Landlord on account of any breach by Tenant of any of the
terms or provisions thereof, at any time, including the non-payment of rent,
in the event that Landlord applies all or any portion of the security deposit
to cure such default or to defray any damage, loss or expense on account of
any breach by Tenant, then Tenant shall be obligated to promptly deposit with
Landlord the amount necessary to restore the security deposit to its original
amount. The amount of the security deposit which is not applied as aforesaid
shall be refunded to Tenant after its surrender or occupancy of the Leased
Premises provided Tenant is not in default under any provision hereof. The
security deposit shall not be applied by the Tenant as payment of any rent
whatsoever.
<PAGE>
ARTICLE VII
DEFAULTS
7.1 Defaults and Remedies.
It is agreed that if
(a) Tenant shall fail to pay the rent or any installment thereof as
aforesaid at the time and same shall become due and payable and/or any
additional rent as herein provided although no demand shall have been made for
the same; or
(b) Tenant shall violate or fail or neglect to keep and perform any of
the covenants, conditions and agreements herein contained on the part of Tenant
to be kept and performed; or
(c) the Leased Premises shall become vacant or deserted by Tenant,
whether or not rent is in default; or
(d) there by any attachment, execution or other judicial seizure of all
or a substantial part of the assets of Tenant or Tenant's leasehold;
Then, and in each and every event from thenceforth, and at all times thereafter,
at the option of Landlord, Tenant's right of possession shall thereupon cease
and terminate, and Landlord shall be entitled to possession of the Leased
Premises and to re-enter the same without demand of rent or demand of possession
of the Leased Premises and may forthwith proceed to recover possession of the
Leased Premises by process of law, any notice to quit or of intention to re-
enter the same being hereby expressly waived by Tenant. And, in event of such
re-entry by process of law or otherwise, Tenant nevertheless agrees to remain
answerable for any and all damage, deficiency or loss of rent which Landlord may
sustain by such re-entry whether or not Landlord re-lets the Leased Premises;
and in such case, Landlord shall have full power, which is hereby acceded to by
Tenant, to re-let the Leased Premises for and on Tenant's behalf, and upon such
re-letting Landlord shall have the right each month to sue for and recover any
loss of rents or monthly deficits, with the right reserved by Landlord to bring
any action(s) or proceeding(s) for the recovery of any deficits remaining unpaid
without being obligated to await the end of the term of this Lease for a final
determination of Tenant's account, and the commencement or maintenance of any
one or more actions shall not bar Landlord from bringing other or subsequent
actions for further accruals pursuant to provisions of this Section.
If under the provisions of this Lease, a summons or other applicable
summary process shall be served, pursuant to the law of the State in which the
Leased Premises are located, and a compromise settlement thereof shall be made,
it shall not be constituted as a waiver of any breach of any covenant, condition
or agreement herein contained and no waiver of any breach of any covenant,
condition or agreement herein contained shall operate as a waiver of the
covenant, condition or agreement itself, or of any subsequent breach thereof.
No provision of this Lease shall be deemed to have been waived by Landlord
unless such waiver shall be in writing signed by Landlord. No payment by Tenant
or receipt by Landlord of a lesser amount than the monthly installments of rent
herein stipulated shall be deemed to be other than on account of the earliest
stipulated rent nor shall any endorsement or statement on any check or any
letter accompanying any check or payment as rent be deemed an accord and
satisfaction, and Landlord may accept such check or payment without prejudice to
Landlord's right to recover the balance of such rent or pursue any other remedy
in this Lease provided.
7.2 Bankruptcy.
If at any time during the term of this Lease or any renewal, a petition
shall be filed, either by or against Tenant, in any court pursuant to any
Federal, State or municipal statute, whether in bankruptcy, insolvency, or for
reorganization or for the appointment of a receiver or trustee of all or a
portion of Tenant's property or if Tenant makes an assignment for the benefit of
Tenant's creditors, then immediately upon the happening of any such event, and
without any entry or other act by Landlord, this Lease, at Landlord's option,
shall cease and come to an end with the same force and effect as if the date of
the happening of any such event were the date herein fixed for the expiration of
the term of this Lease.
It is stipulated and agreed that in the event of termination of this Lease
by the happening of any such event, Landlord shall forthwith, upon such
termination, and any other provisions of this Lease to the contrary
notwithstanding, be entitled to recover from Tenant as and for liquidated
damages caused by such breach of the provisions of this Lease an amount equal to
the difference between the then cash value of the rent reserved hereunder for
the unexpired portion of the term and the then cash rental value of the Leased
Premises for the unexpired portion of the term of this Lease, unless the statute
which governs or shall govern the proceeding in which the damages are to be
proved limits or shall limit the amount of the claim capable of being so proved,
in which case Landlord shall be entitled to prove as and for liquidated damages
an amount equal to that allowed by or under any such statute. The provisions of
this Section shall be without prejudice to Landlord's right to prove in full
damages for rent accrued prior to termination of this Lease, but not paid and
shall be without prejudice to any rights given Landlord by any pertinent statute
to prove further any amounts allowed thereby.
In making any such computation, the then cash rental value of the Leased
Premises shall be deemed PRIMA FACIE to be the rental realized upon any re-
letting, if such re-letting can be accomplished by Landlord within a reasonable
time after the termination of this Lease, and the then present cash value of the
future rents hereunder reserved to Landlord for the unexpired portion of the
term hereby demised shall be deemed to be such sum, if invested at eight
percentum (8%) simple interest, as will produce the future rent over the period
of time in question.
7.3 Landlord's Liability.
In no event shall Landlord, including any successor assignee of all or any
portion of Landlord's interest in the Building, be personally liable or
accountable with respect to any provision of this Lease. If Landlord shall be
in breach or default with respect to any obligation hereunder or otherwise,
Tenant agrees to look for satisfaction solely to the equity of Landlord in the
Building. The liability of Landlord, or other entity comprising Landlord, shall
in no event exceed the amount of such equity and no other assets of Landlord (or
any partners, stockholders, or officers of Landlord) shall be subject to levy,
execution or other procedures for the satisfaction of Tenant's remedies. In the
event Landlord transfers this Lease, other than as security for a mortgage or
deed of trust, Landlord (and, in case of any subsequent transfers or conveyance,
the then grantor) shall, upon such transfer and acceptance by the transferee be
relieved from all liability and obligations hereunder arising after such
transfer, including any liability to Tenant for any security deposit under this
Lease.
<PAGE>
ARTICLE VIII
LANDLORD'S MORTGAGE
8.1 Subordination. SEE ADDENDUM, PARAGRAPH 15
This Lease is subject and subordinate to all ground or underlying leases
and to all mortgages and/or deeds of trust which may now or hereafter affect
such leases or the real property of which the Leased Premises form a part, and
to all renewals, modifications, consolidations, replacements and extensions
thereof. This clause shall be self-operative, in confirmation of such
subordination, Tenant shall execute promptly any certificate that Landlord may
request. Notwithstanding the foregoing, the party secured by any such deed of
trust or mortgage shall have the right to recognize this Lease, and in event of
any foreclosure sale under such deed of trust or mortgage, this Lease shall
continue in full force and effect at the option of the party secured by such
deed of trust or mortgage or the purchaser under any such foreclosure sale; and
Tenant covenants and agrees that it will at the written request of any party
secured by any such deed of trust, execute, acknowledge and deliver any
instrument that has for its purpose and effect the subordination to said deed of
trust or mortgage of the lien of this Lease.
8.2 Tenant's Estoppel Certificate.
Tenant covenants and agrees to deliver to the beneficiary under any deed
of trust, or the holder of any mortgage, against the Building or any prospective
purchaser of the Building, upon the written request of Landlord or its designee,
at any time and from time to time, a certificate stating whether (1) this Lease
is still in full force and effect, (2) the Lease has been amended or modified,
(3) all rent has been paid to date and if any rent has been unpaid, (4) Tenant
or Landlord is in default under this Lease (and if any default exists, the
nature of it), (5) Tenant has any claims against Landlord (and if any claim
exists, the nature of it), (6) Tenant knows of any assignment of this Lease by
Landlord, and (7) as to any other fact or condition reasonably requested by the
Landlord or any mortgagee or beneficiary under any deed of trust or prospective
mortgagee or beneficiary under any deed of trust, or purchaser of any or all of
Landlord's interests, or any assignee or prospective assignee of any interest of
Landlord under this Lease.
8.3 Notice to Mortgagee.
Tenant agrees to give any mortgagee and/or deed of trust holder, a copy of
any notice of default served upon the Landlord, provided that prior to such
notice Tenant has been notified in writing (by way of Notice of Assignment of
Rents and Leases, or otherwise) of the addresses of such mortgagee and/or deed
of trust holder. Tenant further agrees that if Landlord shall have failed to
cure such default within the time provided for in this Lease, then the mortgagee
and/or deed of trust holder shall have an additional thirty (30) days within
which to cure such default, or if such default cannot be cured within that time,
then such additional time as may be necessary if within such thirty (30) days
any mortgagee and/or deed of trust holder has commenced and is diligently
pursuing the remedies necessary to cure such default (including but not limited
to commencement of foreclosure proceedings if necessary to effect such cure), in
which event this Lease shall not be terminated while such remedies are being so
diligently pursued.
8.4 Approval by Mortgagee.
This Lease is subject to review and approval of Landlord's mortgagee or
deed of trust holder and will not be effective until such approval is obtained.
ARTICLE IX
MISCELLANEOUS
9.1 Non Constructive Waiver.
The receipt of rent by Landlord, with knowledge of any breach of this
Agreement by Tenant or of any default on the part of Tenant in the observance or
performance of the provisions of this Lease, shall not be deemed to be a waiver
of any provision of this Lease. No failure on the part of Landlord to enforce
any covenant or provision herein contained, nor any waiver of any right
thereunder by Landlord, unless in writing, shall discharge or invalidate such
covenant or provision or affect the right of Landlord to enforce the same in the
event of any subsequent breach or default. Neither acceptance of the keys nor
any other act or thing done by Landlord or any agent or employee during or after
the term herein demised shall be deemed to be an acceptance of a surrender of
the Leased Premises, excepting only an agreement in writing signed by Landlord
accepting or agreeing to accept such a surrender.
9.2 Broker's Commission.
The parties hereto agree that no other broker was involved in procuring or
negotiating this Lease other than C & W Properties, Inc., and the parties hereto
agree to hold each other harmless from any and all claims from any other
brokerage fees.
9.3 Waiver of Trial by Jury. SEE ADDENDUM, PARAGRAPH 16.
Tenant waives trial by jury of any or all issues arising in any action, or
proceedings between the parties hereto, or their successors, arising out of or
in any way connected with this Lease, or any of its provisions, the relationship
of Landlord and Tenant, Tenant's use or occupancy of the Premises and/or any
claim of injury or damage, and any statutory remedy.
9.4 Attorney's Fees.
Tenant agrees to pay, as additional rental, all attorney's fees and
expenses of Landlord incurred in enforcing any of Tenant's obligations under
this Lease, or in any litigation or negotiation in which Landlord shall become
involved, through, or on account of Tenant. In the event Tenant should prevail
in enforcing any of Landlord's obligations under this Lease, then Landlord shall
pay all of Tenant's attorney's fees and expenses.
<PAGE>
9.5 Time of Essence.
Time is of the essence in the performance of all of Tenant's obligations
under this Lease.
9.6 Governing Law.
This Lease shall be construed and governed by the laws of the State in
which the Leased Premises are located. Should any provisions of this Lease
and/or its conditions be illegal or not enforceable under the laws of such
State, it or they shall be considered severable, and the Lease and its
conditions shall remain in force and be binding upon the parties as though the
said provisions had never been included.
9.7 Force Majeure.
The term "default" as used this Lease means default in the performance or
observance of any of the terms, covenants, agreements, or conditions contained
herein, exclusive of any period of grace required to constitute an event of
default. However, if by any reason of FORCE MAJEURE the Landlord is unable in
whole or in part to carry out the agreements on its part contained in this Lease
or any of the other documents, the Landlord shall not be deemed in default
during the continuance of such inability. The term "FORCE MAJEURE" as used
herein shall include, without limitation, the following: acts of God; strikes,
lockouts or other industrial disturbances; acts of public enemies; orders of any
kind of the government of the United States or of the State in which the Leased
Premises are located or of any subdivision thereof or any local government, of
any of their departments, agencies or officials, or any civil or military
authority; insurrections; riots; epidemics; landslides; lightning; earthquakes;
fire; hurricanes; storms; floods; washouts; droughts; arrests; restraint of
government and people; civil disturbances; explosions; breakage or accident to
machinery, transmission pipes or canals; partial or entire failure of utilities;
or any other cause or event not reasonably within the control of Landlord, it
being agreed that the settlement of strikes, lockouts and other industrial
disturbances shall be entirely within the sole discretion of Landlord, and
Landlord shall not be required to make settlement of strike, lockouts and other
industrial disturbances by acceding to the demands of the opposing party or
parties when such course is, in the judgment of the applicable party,
unfavorable to it.
9.8 Notices.
All notices required under this Lease shall be deemed to be properly
served if sent by United States registered or certified mail, postage prepaid
(a) if to Landlord, addressed to Landlord at 7300 Greenway Cntr. Dr., #1600,
Greenbelt, MD 20770, or such other address as Landlord may have from time to
time designated by written notice to Tenant, (b) if to Tenant, addressed to
Tenant at 7300 GREENWAY CENTER DRIVE, GREENBELT, MD 20770 or at such other
address as Tenant may have designated from time to time by written notice to
Landlord and (c) if to any mortgagee or holder of a deed of trust, at such
address as such mortgagee or holder of deed of trust shall have designated
from time to time. The date of service of such notices shall be the date
such notices are postmarked.
9.9 Successors and Assigns.
This Lease and the covenants, agreements, obligations and restrictions
herein contained, shall be binding upon and shall enure to the benefit of the
parties hereto and their respective heirs, personal representatives, successors
and assigns.
9.10 Gender and Number.
Words of any gender used in this Lease shall be deemed to include the
plural when the sense requires.
9.11 Section Headings.
The headings as to contents of particular sections herein are inserted
only for convenience, and they are in no way to be construed as a part of this
Lease or as a limitation on the scope of the particular sections to which they
refer.
9.12 Entire Agreement.
This Lease contains all the agreements and conditions made between the
parties hereto and may not be modified orally or in any other manner than by
agreement in writing, signed by all parties hereto, or their respective
successors and interests.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Lease to be duly
executed, all done the day and year first hereinbefore written.
Attest or Witness: LANDLORD: SECOND TRADE CENTER OFFICE
ASSOCIATES LIMITED PARTNERSHIP
/s/ By /s/ T.C. Coakley (Seal)
- --------------------- ------------------------------------------
Attest or Witness: TENANT: NYMA, INC.
/s/ By /s/ Pamela Thompson (Seal)
- -------------------- --------------------------------------------
Title: Director, Contracts & Administration
--------------------------------------------
Name Printed: Pamela Thompson
------------------
<PAGE>
AGREEMENT OF LEASE
BY AND BETWEEN
SECOND TRADE CENTER OFFICE
ASSOCIATES LIMITED PARTNERSHIP
AND
NYMA, INC.
ADDENDUM
The following provisions are hereby incorporated into the attached printed form
of this Lease, as if they were set forth therein at length:
1. SECTION 1.1 PREMISES. Notwithstanding any other provisions contained in
this Lease to the contrary, the following is a breakdown of the actual
usable and rentable square feet for each floor.
USABLE SQUARE FEET + CORE % = RENTABLE SQUARE FEET
12th Floor - 14,143 + 12% = 15,840
11th Floor - 14,143 + 12% = 15,840
10th Floor - 14,143 + 12% = 15,840
9th Floor - 14,143 + 12% = 15,840
1st Floor - 2,552 + 12% = 2,858
Lower Level - 3,023 + 12% = 3,386
______ ________ _______
62,147 12% 69,604
Total ====== ======== =======
2. SECTION 1.2 TERM. It is mutually agreed that the Tenant shall have the
option to renew this Lease for two (2) additional five (5) year Renewal
Terms, provided no defaults exist during the Initial term or the first
(1st) Renewal Term if so extended and written notice is given to Landlord
of each intention to renew of not less than twelve (12) months prior to the
expiration of each term.
<PAGE>
All terms and conditions of the Lease will remain in full force and effect
during the Renewal Term(s), except that the annual Basic Rent payable
during each Renewal Term will be the prevailing Market Rate for space in
the building at the time of renewal.
3. Section 2.1(a) is hereby deleted and the following provision is inserted in
lieu thereof:
"SECTION 2.1 BASIC RENT. (a) Tenant covenants and agrees to pay to
Landlord during the Term hereof, an annual Basic Rent, hereinafter
called "Basic Rent", in accordance with the following schedule:
Annually Monthly
FIRST LEASE YEAR $1,093,207.50 $ 91,100.62
SECOND LEASE YEAR
(1st Three (3) Months) $1,136,935.80 $ 94,744.65
(Last Nine (9) Months) $1,381,380.00 $115,115.00
THIRD LEASE YEAR $1,436,580.00 $119,715.00
FOURTH LEASE YEAR $1,493,850.00 $124,487.50
FIFTH LEASE YEAR $1,569,060.00 $130,755.00
LEASE YEARS SIX (6) THROUGH TEN (10)
Commencing with the Sixth (6th) Lease Year and continuing through the
Tenth (10th) Lease Year, the Basic Rent for each Lease Year will be
determined by adjusting the previous Lease Year's Basic Rent by the
percentage change in the Consumer Price Index (CPI). Tenant shall pay
to Landlord as Basic Rent such sums as determined by the application of
the following formula:
(a) The Basic Rent payable annually during each current twelve-month
term shall be multiplied by a fraction the numerator of which shall be
the Consumer Price Index (CPI) for Urban Wage Earners and Clerical
Workers, All Items, Washington, D.C. as published in the United States
Department of Labor, Bureau of Labor Statistics Consumer Price Index for
the United States and Selected areas
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(Base 1967=100) for the month which is four months prior to the last
month of the current twelve-month term, and the denominator of which
shall be such CPI for the month which is four months prior to the first
month of such current twelve-month term. The resulting product shall be
the Basic Rent payable during the next twelve-month term.
(b) The resulting new Basic Rent, which in each instance, shall in no
event be less than the Basic Rent payable during the preceding twelve
months, shall be payable in twelve equal monthly installments on the
first day of each month of the applicable year.
(c) In the event the CPI is discontinued, ceases to incorporate a
significant number of the items now incorporated therein, or if a
substantial change is made in such CPI, the parties hereto shall attempt
to agree on an alternative formula and if agreement cannot be reached,
the matter shall be submitted to arbitration under the rules of the
American Arbitration Association then in effect.
(d) Such annual adjustments shall be limited to a maximum increase of
eight percent (8%) per annum and a minimum of two percent (2%) per
annum.
All monthly installments of Basic Rent are payable in advance of the
first of each calendar month during the term hereof. A rent installment
for one full month shall be paid at the time of execution and delivery
of this Lease. If this Lease shall commence on a date other than the
first day of a month, the Rent for such month shall be pro-rated and a
portion of the first rental payment shall be credited to the second
month's rent. The
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<PAGE>
balance of the second month's rent shall be paid by the Tenant on the
first day of the second month. The aforementioned rent includes an
apportionment of the core, or common, areas attributable to the leased
premises. Tenant's applicable share of the common or core areas of the
building has been computed to be twelve percent (12%) of the usable
area."
4. SECTION 3.2 TENANT IMPROVEMENTS. Subsection 3.2 is hereby deleted and the
following provision is inserted in lieu thereof:
"Tenant shall be provided with an allowance of $11.45 per rentable
square foot to be applied toward the Tenant Improvement costs. All
Tenant Improvements are in addition to the finished building shell as
defined in Exhibit B attached hereto.
Tenant shall furnish to Landlord its completed space plan drawings
(which shall be prepared by Landlord's space planner) no later than one
hundred eighty (180) days prior to the commencement date of the Lease.
Said space plan shall be attached as Exhibit C hereto. Within thirty
(30) days after receipt of space plan drawings, Landlord shall furnish
to Tenant completed construction drawings reflecting the details as
shown in the space plan. Tenant shall have fifteen (15) days to approve
the construction drawings. Said construction drawings shall be attached
as Exhibit D hereto.
Should the construction drawings be an accurate reflection of the space
plan and Tenant fails to approve them within fifteen (15) days, or
should Tenant not provide Landlord with the space plan on or before one
hundred eighty (180) days prior to Lease Commencement, any delay in
completing the Leased Premises shall not in
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<PAGE>
any manner affect the commencement date of this Lease or the Tenant's
liability for the payment of rent from the commencement date, and under
these circumstances, Landlord agrees to make the Leased Premises ready
for Tenant's occupancy not later than the commencement date of this
Lease, plus the number of days' delay resulting from Tenant's failure
to comply with the provisions of this Section.
Should the total Tenant Improvement costs exceed the $11.45 per rentable
square foot allowance, then Tenant may elect to:
a) pay in full the cash difference;
b) defer said excess against the additional allowance mentioned in
Paragraph 5 of this Rider; or
c) Amortize the excess in equal monthly payments of principle and
interest over the remainder of the Lease Term at an annual interest rate
of ten percent (10%)."
5. ADDITIONAL ALLOWANCE. In addition to the above stated Tenant Improvement
allowance, Tenant shall have an additional allowance of Two Hundred
Seventy-Six Thousand Dollars ($276,000.00) to be applied toward leasehold
improvements. Tenant shall have the use of this sum over the term of this
Lease and may use the entire amount in full or may use any portions thereof
until the full $276,000.00 has been depleted. All such improvements shall
be subject to the provisions of Section 3.3(b) of this Lease and to the
following provisions:
Should Tenant elect not to have Coakley & Williams Construction Company,
Inc. complete the Tenant Improvement work, Tenant shall use a contractor
or contractors who shall have been approved in writing by Landlord, such
approval not to be unreasonably withheld.
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<PAGE>
Tenant will comply at its own expense with all present and future
governmental requirements arising out of, in connection with, or
necessitated by such improvements.
Prior to commencing such improvements, Tenant shall:
a) PLANS AND SPECIFICATIONS. Submit to Landlord or its agent for
Landlord's written approval (such approval not to be unreasonably
withheld) the plans and specifications for such improvements. No
work shall be commenced thereunder without such written approval
and all work to be done by Tenant shall be performed in strict
accordance with said approved plans and specifications.
b) PERMITS. Obtain the necessary consents and licenses from
applicable governmental authorities having jurisdiction over the
work to be done.
c) CONTRACTS. Enter into a contract with the contractor who will do
the work. The contract will provide, among other things, that the
work shall be done in a good workmanlike manner in accordance with
the plans and specifications previously approved and consents and
licenses previously obtained and the contract shall provide that
the contractor will look solely to Tenant for payment. Landlord
shall have the right within ten (10) days after receipt from Tenant
of the proposed contract to notify Tenant that Landlord elects to
have Coakley & Williams Construction Company, Inc. do the work on
the same terms and conditions as those stated in the contract
submitted by Tenant.
d) COMPLIANCE WITH LAWS. Tenant, at its own cost and expense, shall
properly comply with all applicable
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<PAGE>
laws, ordinances, orders, and rules and regulations and shall
reimburse Landlord for any expenses incurred on account of the
failure by Tenant to comply with any such requirements, and any
expenses so incurred by Landlord as aforesaid shall be deemed
additional rent under this Lease and due and payable by Tenant
to Landlord on the first day of the month immediately following
the payment of the same by Landlord.
e) INSURANCE. The contractor employed by Tenant to do the work shall
be fully covered by workmen's compensation insurance and the
certificate thereof shall be furnished to Landlord before
commencement of any work by any such contractor or persons as
aforesaid. Tenant covenants and agrees to indemnify and hold
Landlord harmless from any and all claims for personal injury,
death, or property damage occasioned during the progress or as a
result of any or all of the work done as aforesaid in, or about the
demised premises.
Tenant shall further furnish to Landlord vouchers, invoices, and
supporting data as Landlord may reasonably require with respect to such
work. Upon completion by Tenant of the improvements, and the submission
to Landlord of satisfactory evidence of the cost thereof, Landlord shall
reimburse Tenant for the cost of such improvements up to the maximum
amount of $276,000.00.
6. SECTION 3.5 SIGNAGE. Notwithstanding any other provisions contained in
Section 3.5 of this Lease to the contrary, Tenant shall be permitted, at
Tenant's sole cost and expense, to install two (2) signs identifying
Tenant's corporate name or logo on the penthouse or top floor facade
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<PAGE>
of the building, subject to approval by Landlord of the size, color,
method of mounting, and all subject to any local, county or state codes.
Any structural modifications made necessary to support such identification
shall be at the Tenant's expense. In the event such identification
requires illumination, any electrical installation required shall be paid
for by Tenant. All maintenance and service required shall be Tenant's
responsibility.
7. SECTION 4.1 UTILITY SERVICES. Notwithstanding any other provisions
contained in Section 4.1 of this Lease to the contrary, Tenant shall be
provided after-hours HVAC and Electrical Service at the hourly rate of
$25.00 per hour, per floor, during the first five (5) lease years. Prior
to the sixth (6th) lease year, Landlord and Tenant shall mutually agree to
the hourly rate for lease years six (6) through ten (10). Factors which
both parties will consider in determining said hourly rates are (a) the
average annual hourly rate for standard building hours for the first five
(5) lease years based on Landlord's energy costs for the Building; and
(b) estimated future energy costs for the Building.
8. SECTION 5.1 POLICY REQUIREMENTS. Notwithstanding any other provisions
contained in Section 5.1(b) of this Lease to the contrary, the company or
companies writing any insurance which Tenant is required to carry and
maintain or cause to be carried or maintained pursuant to Section 5.1(b),
as well as the form of such insurance shall at all times be subject to
Landlord's approval and any such company or companies shall be licensed to
do business in the State of Maryland. All companies must have a
policyholders rating of at least A, with a financial rating of XII. Public
liability and all-risk casualty insurance policies evidencing such
insurance shall name Landlord or its designee as additional
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<PAGE>
insured, shall be primary and non-contributory, and shall also contain a
provision by which the insurer agrees that such policy shall not be
cancelled except after thirty (30) days written notice to Landlord or its
designee. Each such policy, or a certificate thereof, shall be deposited
with Landlord by Tenant or promptly upon commencement of Tenant's obligation
to procure the same. If Tenant shall fail to perform any of its obligations
under Section 5.1, Landlord may perform the same and the cost of same shall
be deemed Additional Rental and shall be payable upon Landlord's demand.
9. WAIVER OF RIGHT OF RECOVERY. Notwithstanding any other provisions
contained in Section 5.1 of this Lease to the contrary, neither Landlord
nor Tenant shall be liable to the other or to any insurance company (by way
of subrogation or otherwise) insuring the other party for any loss or
damage to any building, structure or other tangible property or loss of
income deriving therefrom, or losses under Workmen's Compensation laws and
benefits, even though such losses or damages might have been occasioned by
the negligence of such party, its agents or employees. However, if by
reason of the foregoing waiver, either party shall be unable to obtain any
such insurance, such waiver shall be deemed not to have been made by such
party.
10. RIGHTS TO LEASE ADDITIONAL SPACE. During the initial term of this Lease,
Tenant shall have the right (provided it has not been in default) to lease:
(a) any contiguous space available for rental except on the first floor,
(b) any non-contiguous space consisting of at least one-half floor
(approximately 8,000 rentable square feet), and
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<PAGE>
(c) until July 1, 1988, any space greater than one full floor
(approximately 16,000 rentable square feet) for which Landlord
receives a preliminary expression of interest from another prospective
tenant and for which Landlord intends to proceed with negotiations
with such other tenant.
Landlord agrees to inform Tenant that the space described in (a), (b), or
(c) above is available and the terms upon which the space is available,
except that in the case of (c), the terms shall be the same as those
provided for in this Lease. Tenant shall have five (5) business days after
receipt of Landlord's offer (which may be given either as provided in
Section 9.8 hereof or in person) within which to deliver to Landlord its
acceptance or rejection of Landlord's offer. Tenant acceptance must be all
of any single space offered, and may not be a portion of any such single
space.
The rights under this Section are personal to the Tenant and shall not be
separated from the Lease or transferred by Tenant independently of the
leasehold interest and such rights shall terminate in the event of any
assignment by Tenant of its interest in the Lease, notwithstanding the
provisions of Section 3.9 hereof.
11. MTCII LEASE OBLIGATIONS. Upon occupancy of the premises and Lease
Commencement, the Landlord shall assume all existing Lease obligations that
Tenant has in the Maryland Trade Center II building.
12. ACCESS. Tenant shall have twenty-four (24) hour-a-day access to the
building and the building parking areas every day of the year, with at
least one (1) elevator available at all times. Landlord will provide a
computerized card access monitoring system and security system to the
building.
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<PAGE>
13. PARKING. Tenant shall have the use (at no charge) of 3.5 parking spaces
per 1,000 rentable feet leased. Any future expansion shall be at the same
ratio. In addition, Tenant will be provided with three (3) reserved
parking spaces adjacent to Maryland Trade Center III, and six (6)
additional visitor parking spaces in the lot. It will be the
responsibility of the Tenant to maintain and "police" the above nine (9)
reserved parking spaces.
14. SECTION 6.3 SECURITY DEPOSIT AND ADVANCE RENT. Within thirty (30) days of
the full execution of this Lease Agreement, Tenant will pay to Landlord the
sum of One Hundred Thirty-Five Thousand Dollars and Zero Cents
($135,000.00) payable in the following manner:
(a) Forty-Five Thousand Dollars and Zero Cents ($45,000.00) certified
funds to be credited toward partial payment of the first month's rent.
The balance of the first month's rent ($46,100.62) will be due January
1, 1989.
(b) Ninety Thousand Dollars and Zero Cents ($90,000.00) in the form of an
irrevocable "Letter of Credit" made to the favor of the Landlord,
issued by a local savings and loan or bank (chartered in the state of
Maryland) and available upon demand by Landlord.
Upon occupancy and Lease Commencement, a revised Letter of Credit will
be issued to Landlord, under the same terms and conditions as stated
above, in the amount of Forty-Five Thousand Dollars and Zero Cents
($45,000.00). Said revised Letter of Credit will be held by Landlord
as security deposit during the term of this Lease and in accordance
with Paragraph 6.3 of this Lease Agreement.
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<PAGE>
15. SECTION 8.1 SUBORDINATION; ATTORNMENT AND NON-DISTURBANCE. Section 8.1 is
hereby deleted and the following provision is inserted in lieu thereof:
"SUBORDINATION. This Lease shall be subject and subordinate at all times
to the lien of any first mortgage, first deed of trust, ground lease and/or
other instrument of encumbrance heretofore or hereafter placed by the
Landlord upon any or all of the Premises or the remainder of the Property
and of all renewals, modifications, consolidations, replacements and
extensions thereof (each of which is herein referred to as a "Mortgage"),
all automatically and without the necessity of any further action on the
part of the Tenant to effectuate such subordination.
ATTORNMENT AND NON-DISTURBANCE. The Tenant shall, promptly at the
request of the Landlord or the holder of any Mortgage (herein referred
to as a "Mortgagee"),
(a) execute, enseal, acknowledge and deliver such further instrument or
instruments evidencing such subordination as the Landlord or such
Mortgagee may deem necessary or desirable, and
(b) attorn to such Mortgagee, provided that such Mortgagee agrees with
the Tenant that such Mortgagee will, in the event of a foreclosure of
any such first mortgage or deed of trust (or termination of any such
ground lease) take no action to interfere with the Tenant's rights
hereunder, except upon the occurrence of an Event of Default."
16. SECTION 9.3 WAIVER OF TRIAL BY JURY. Section 9.3 is hereby deleted and the
following provision is inserted in lieu thereof:
-12-
<PAGE>
"Tenant waives trial by jury in any suit solely for possession for non-
payment of rent or additional rent under the lease, but not for other
matters arising under the lease."
IN WITNESS WHEREOF, the parties hereto have set their hands and seals this
2ND day of FEBRUARY, 1988.
WITNESS: LESSOR: SECOND TRADE CENTER OFFICE
ASSOCIATES LIMITED PARTNERSHIP
/s/ BY: /s/ T.C. Coakley
- ----------- -----------------------------------------------
WITNESS: LESSEE: NYMA, INC.
/s/ By: /s/ Pamela Thompson
- ---------- -----------------------------------------------
Title: Director, Contracts and Administration
--------------------------------------------
Name Printed: Pamela Thompson
--------------------------------------
<PAGE>
MARYLAND TRADE CENTER III
OUTLINE SPECIFICATIONS
BUILDING SHELL - Landlord shall deliver the base "building shell" in the
following condition:
- CEILING - 2' x 2' ceiling grid (T-system) - installed at a finished height
of 8'-6".
- DRYWALL - Perimeter Walls and Columns - drywalled - paint ready.
- BASE HVAC SYSTEM - The building core areas and office areas will be
conditioned by a variable air volume (VAV) system - system will consist of
a self-contained air handling unit on each floor which will provide
conditioned air via medium pressure ductwork to fan-powered VAV boxes on
the perimeter and interior zones. The base system will provide adequate
duct work, diffusers and return air grills for normal office use and
building standard configuration.
- ENTRY DOOR - One full height solid core stain grade suite entry door with
lock set.
- WINDOW COVERINGS - 1" horizontal thin slat blinds provided on all exterior
windows.
- BASE SPRINKLER SYSTEM - Wet sprinkler system with standpipe. Base system
to accommodate building standard configuration.
- DESIGN SERVICES - The services of the Landlord's space planner are
available to Tenant. These services will include an initial layout and one
revision.
EXHIBIT "B"
<PAGE>
EXHIBIT 10.7
SUBLEASE
between
DIGITAL EQUIPMENT CORPORATION, Sublandlord
and
SYLVEST MANAGEMENT SYSTEMS CORPORATION, Subtenant
Dated as of October 31, 1995
10001 Derekwood Lane
Lanham, Maryland 20706
<PAGE>
SUBLEASE
BY DIGITAL EQUIPMENT CORPORATION, Sublandlord
TO SYLVEST MANAGEMENT SYSTEMS, CORPORATION, Subtenant
DATED: AS OF OCTOBER 31, 1995
10001 Derekwood Lane
Lanham, Maryland 20706
TABLE OF CONTENTS
Page
----
1. Demise..................................................................4
2. Term....................................................................4
3. Delivery of Sublet Premises.............................................4
4. Rent....................................................................5
a. Base Rent.....................................................5
b. Additional Rent...............................................5
5. Utilities...............................................................6
6. Use.....................................................................6
7. Assignment and Subletting...............................................7
8. Insurance...............................................................8
9. Indemnification.........................................................8
10. Maintenance and Services................................................9
11. Prime Lease.............................................................9
a. Incorporation of Prime Lease..................................9
b. Performance of Prime Lease....................................10
c. Consents......................................................10
d. No Sublandlord Obligation.....................................10
e. Termination...................................................10
12. No Alterations..........................................................10
13. Defaults and Remedies...................................................11
14. Surrender...............................................................13
15. Notices.................................................................13
16. Effect..................................................................13
<PAGE>
17. Applicable Law..........................................................13
18. Modification............................................................14
19. Severability............................................................14
20. No Waiver...............................................................14
21. Broker..................................................................14
22. Mechanics Liens.........................................................14
23. Confidentiality.........................................................14
24. Security Deposit........................................................14
25. Consent of Landlord.....................................................14
EXHIBIT A - PRIME LEASE......................................................15
EXHIBIT B - AMENDMENT TO PRIME LEASE.........................................16
EXHIBIT D - CONSENT OF LANDLORD..............................................19
EXHIBIT E - CONSENT OF LANDLORD'S MORTGAGEES.................................20
EXHIBIT F - OFFICE SYSTEMS FURNITURE.........................................21
<PAGE>
SUBLEASE
THIS SUBLEASE is made as of the 31st day of October, 1995, by and
between Digital Equipment Corporation, a Massachusetts corporation, with an
address at 111 Powder Mill Road, Maynard, Massachusetts 01754, ("Sublandlord")
and Sylvest Management Systems, Corp., a Maryland corporation, with an address
at, Lanham, Maryland ("Subtenant").
WITNESSETH
WHEREAS, Sublandlord is the tenant under a certain lease from Liberty
Property Trust, as successor in interest to Rouse & Associates - Metro East
Executive Terrace Limited Partnership, ("Landlord") dated May 31, 1985, a copy
of which is attached as Exhibit A, as amended by Reinstatement and Amendment of
Agreement of Lease dated July 22, 1992 and attached as Exhibit B, (such lease,
as amended, is hereinafter referred to as the "Prime Lease"). The premises
leased to Sublandlord under the Prime Lease are a portion of the building (the
"Building") at 8400 Corporate Drive, Landover, Maryland, which premises are more
particularly described in Exhibit C attached hereto (the "Land"), and on Page 1
of the Prime Lease (the "Leased Premises"); and
WHEREAS, Subtenant wishes to sublease from Sublandlord the Leased
Premises shown on the plan attached hereto as Exhibit D, containing
approximately 23,777 square feet of floor area, as such term is defined in the
Prime Lease, (the "Sublet Premises"), and Sublandlord is willing to sublet the
Sublet Premises to Subtenant;
NOW, THEREFORE, the parties hereto agree as follows:
1. Demise. Sublandlord hereby subleases the Sublet Premises to Subtenant and
Subtenant hereby sublets the Sublet Premises from Sublandlord subject to
the terms and conditions hereinafter stated.
2 Term. The term of this Sublease (the "Sublease Term") shall be one (1)
year and ten (10) months, beginning with the first day of November, 1995,
(the "Commencement Date") and ending with the last day of August, 1997.
3. Delivery of Sublet Premises. Subtenant expressly acknowledges that it has
inspected the Sublet Premises and is fully familiar with the physical
condition thereof, and agrees to accept possession of the Sublet Premises
in its "as is" condition. Subtenant acknowledges that Sublandlord has made
no representations or warranties regarding the Sublet Premises, and that it
has relied on no such representations or warranties in accepting the Sublet
Premises. Subtenant acknowledges that Sublandlord shall have no obligation
to do any work in or to the Sublet Premises, or to incur any expense in
connection therewith, in order to make them suitable and ready for
occupancy and use by Subtenant.
Sublandlord acknowledges that Subtenant intends to make certain
improvements to the Sublet Premises ("Subtenant's Work") so as to adapt
them for Subtenant's intended uses.
<PAGE>
Prior to commencing the Subtenant's Work, Subtenant shall submit plans and
specifications therefor to Sublandlord and obtain Sublandlord's written
approval thereof, which approval shall not be unreasonably withheld or
delayed but which may be conditioned by Sublandlord in its reasonable
discretion. If the terms of the Prime Lease require Sublandlord to obtain
Landlord's consent for Subtenant's Work, Sublandlord shall use reasonable
efforts (not involving the payment of money, unless Subtenant pays any such
money) to obtain approval therefor from Landlord. All Subtenant's Work
shall be done in accordance with the terms and conditions of the Prime
Lease. Without limiting the foregoing, Subtenant shall obtain all necessary
licenses and permits, shall perform Subtenant's Work in accordance with all
laws, by-laws, rules, regulations, licenses and permits. All of Subtenant's
Work shall remain on the Sublet Premises upon the expiration or termination
of this Sublease unless Sublandlord otherwise notifies Subtenant at the
time of approval by Sublandlord of Subtenant's plans and specifications.
4 Rent
a. Base Rent. Subtenant shall pay to Sublandlord base rent ("Base Rent")
without offset, deduction or demand in the amount of $10.00 per square
foot of rentable area per year, or $237,770 per year for each Lease
Year, payable in advance in equal monthly installments of $19,814.17
commencing on the Commencement Date and continuing on the first day of
every month thereafter.
Base Rent shall be apportioned for any partial calendar month
occurring at the beginning or end of the Sublease Term.
All payments hereunder shall be made at the following address:
Digital Equipment Corporation
305 Rockrimmon Blvd., South
CX03/D1 2
Colorado Springs, CO 80919-2398
Attention: Lease Administrator
or at such other address as Sublandlord may from time to time
designate by written notice to Subtenant
b. Additional Rent.
In the event that Sublandlord believes that Subtenant is consuming
electricity in an amount above and beyond normal office usage then
Sublandlord shall be entitled, at its expense, to conduct a "connected
load study" and a "use survey" to estimate the electrical usage by
Subtenant in the Leased Premises. In the event that such study and
survey determine that Subtenant is consuming an amount of electricity
beyond normal office usage, then Sublandlord may, from and after its
2
<PAGE>
receipt of such study, notify Subtenant of the excessive consumption
and bill Subtenant for that amount above normal office usage.
All sums which Subtenant agrees to pay under this Sublease other than
Base Rent, or which Sublandlord pays or incurs as a result of a
default by Subtenant, including without limitation interest at the
Default Rate of Interest as defined in Section 13, shall be included
within the term "Additional Rent" whether or not expressly so
identified. As used in this Sublease, the term "Rent" shall mean
collectively Base Rent and Additional Rent.
5. Utilities. No interruption in any utility service to the Sublet Premises
shall give Subtenant any right to terminate this Sublease or shall give
rise to any claim for set-off or any abatement of Rent or of any of
Subtenant's obligations under this Sublease when such interruption results
from any cause other than the negligence or willful misconduct of
Sublandlord or Sublandlord's agents or employees.
Subtenant shall not connect to the Building's electrical system any
equipment which operates in excess of the current capacity of such system
without Sublandlord's prior written consent.
6. Use. Subtenant shall continuously use and occupy the Sublet Premises, to
the extent permitted by law, for the purposes of general offices and such
uses must be in accordance with the Prime Lease and for no other use or
purpose. Sublandlord makes no representation or warranty as to the
necessity of obtaining any license, permit or approval from any federal,
state or municipal governmental authority for such uses.
Subtenant shall not conduct any activity on the Sublet Premises, the
Building or the Land which is improper or offensive, which is not permitted
under Exhibit C of the Prime Lease, or which causes any noise, odor or
vibration to be emitted from the Sublet Premises, the Building or the Land.
Subtenant shall comply with the reasonable rules and regulations of the
Building and Land as the same may be promulgated and modified by Landlord
from time to time. Subtenant shall comply with all laws, statutes,
ordinances, by-laws, regulations, restrictions, and with the requirements
of all governmental approvals, licenses and permits, relating to the Land,
the Building or the Sublet Premises (collectively, "Legal Requirements"),
and with the provisions of all insurance policies from time to time in
effect with respect to the Building, the Land or the Sublet Premises. In
addition, Subtenant shall obtain, keep in force, and comply with all
requirements of all governmental approvals, licenses and permits required
for Subtenant's specific use of the Sublet Premises.
Subtenant shall not use, generate, treat, store, or dispose of "Hazardous
Substances" (as hereinafter defined) on the Sublet Premises or anywhere in
the Building or on the Land without giving prior written notification to
Sublandlord, including the identity and amounts of the Hazardous Substances
which Subtenant proposes to use, and receiving
3
<PAGE>
prior written consent from Sublandlord, which may be withheld or
conditioned in Sublandlord's sole discretion. In all events, Subtenant's
use of Hazardous Substances must be in full and complete accordance with
all Legal Requirements applicable thereto. Subtenant shall indemnify, save
harmless, and defend (with counsel reasonably satisfactory to Sublandlord)
Sublandlord, its officers, directors, employees, contractors, servants and
agents, from and against all loss, costs, damages, claims, proceedings,
demands, liabilities, penalties, fines and expenses, including without
limitation reasonable attorneys' fees, consultants' fees, litigation costs,
and cleanup costs, asserted against or incurred by Sublandlord, its
officers, directors, employees, contractors, servants and agents at any
time and from time to time resulting from the presence of any Hazardous
Substances in the Building or on the Land during the Sublease Term arising
after Subtenant's taking possession of the Sublet Premises and resulting
from (a) the action or inaction of Subtenant, its officers, directors,
employees, contractors, servants and agents, or (b) Subtenant's generation,
storage, treatment, handling, transportation, disposal or release of any
Hazardous Substances at or near the Building or the Land, or (c) the
violation of any applicable law governing Hazardous Substances by
Subtenant, its officers, directors, employees, contractors, servants or
agents. The indemnities and duties to defend set forth in this Section
shall survive the expiration or earlier termination of this Sublease. As
used in this Sublease, "Hazardous Substances" shall mean any chemical,
substance, waste, material, gas or emission which is deemed hazardous,
toxic, a pollutant, or a contaminant under federal, state or local statute,
law, ordinance, rule or regulation, now or hereafter in effect. "Hazardous
Substances" include but are not limited to petroleum, petroleum products,
asbestos, chloroflourocarbons (CFCs), radon gas and polychlorinated
biphenyles (PCBs). Upon request by Sublandlord from time to time,
Subtenant shall certify in writing to Sublandlord that no portion of the
Sublet Premises, Land or Building has been or is then being used by
Subtenant or by anyone claiming under Subtenant for the use, generation,
treatment, storage, or disposal of Hazardous Substances and that no such
Hazardous Substances are present in or on the Sublet Premises except those
set forth in such certification.
7. Assignment and Subletting. Subtenant shall not assign, transfer, mortgage
or pledge this Sublease, nor sublet all or any part of the Sublet Premises,
or enter into any other license or occupancy arrangement, whether voluntary
or involuntary or by operation of law (collectively a "Transfer"), without
Sublandlord's prior written consent, which consent may be withheld by
Sublandlord in its sole and absolute discretion.
No Transfer, nor any collection of rent by Sublandlord from any person or
entity other than Subtenant, shall relieve Subtenant of its obligations to
fully observe and perform the terms, covenants, and conditions hereof. No
consent by Sublandlord in a particular instance shall be deemed a waiver of
the obligation to obtain Sublandlord's consent in another instance.
Subtenant shall pay to Sublandlord as received any excess of amounts
received pursuant to an assignment, subletting, license or other occupancy
arrangement in excess of the Rent due hereunder. For the purposes of this
Sublease, the transfer of a majority ownership interest in Subtenant shall
be deemed a Transfer.
4
<PAGE>
8. Insurance. Subtenant shall maintain in full force and effect during the
Sublease Term a comprehensive general liability insurance policy with a
combined single limit not less than $2,000,000 for personal injury/bodily
injury and property damage, under which Subtenant, Sublandlord,
Sublandlord's first mortgagee and Landlord are named as insureds. Such
policy shall include a broad form comprehensive liability endorsement which
shall specifically include contractual liability coverage insuring
Subtenant's obligations under this Sublease. Such policy shall be issued by
a responsible insurance company with an A. M. Best rating of B+ or better
and which is authorized to do business in the state in which the Sublet
Premises are located.
Subtenant shall deliver certificates of such insurance to Sublandlord
before the Commencement Date and thereafter within thirty (30) days after a
request by Sublandlord. Subtenant shall use reasonable efforts to obtain
insurance policies which shall not be canceled, non-renewed, or materially
changed without thirty (30) days' prior written notice to Sublandlord and
Sublandlord's first mortgagee. Sublandlord and Subtenant each waive all
claims and rights against the other and their respective officers,
directors, employees, contractors, servants and agents, for any damage to
or destruction of real or personal property of Sublandlord or Subtenant,
regardless of cause or origin and regardless of any proceeds or recoveries
from any insurance policies, and all insurance policies carried by
Subtenant shall include a waiver of its right of subrogation against
Sublandlord. All such insurance shall be obtained at Subtenant's sole cost
and expense. Sublandlord shall have no responsibility or liability for any
loss of or damage to personal property or trade fixtures of Subtenant,
damage to all such property and fixtures being Subtenant's sole risk.
In the event that Sublandlord receives a notice of cancellation of such
insurance policy, Sublandlord may, in addition to and without thereby
waiving any other remedies therefor, either (i) pay the premiums necessary
to prevent such cancellation or (ii) obtain substitute insurance and bill
Subtenant therefor. Subtenant shall reimburse Sublandlord therefor by
paying such amount to Sublandlord, as Additional Rent, within ten (10) days
after demand by Sublandlord.
9. Indemnification. To the maximum extent that this agreement may be made
effective according to law, but subject to the waiver of subrogation in
section 8 above, Subtenant agrees that it will defend and indemnify
Sublandlord and save Sublandlord harmless from and against all liabilities,
obligations, claims, damages, penalties, causes of action, costs and
expenses (including, without limitation, attorneys' fees and expenses)
imposed upon or incurred by or asserted against Sublandlord by reason of
(a) any accident, injury to, or death of persons, or damage to or loss of
property other than that of Sublandlord and Subtenant, in or about the
Sublet Premises, the Building or the Land, or (b) any failure on the part
of Subtenant to perform, fulfill or observe any of Subtenant's
representations, warrantees or agreements set forth in this Sublease. This
indemnification shall survive expiration or earlier termination of this
Sublease. In case any action, suit or proceeding is brought against
Sublandlord by reason of any such occurrence, Subtenant, upon
5
<PAGE>
Sublandlord's request, shall at Subtenant's expense, cause such action,
suit or proceeding to be resisted and defended by counsel reasonably
satisfactory to Sublandlord.
10. Maintenance and Services.
Subtenant hereby agrees that it is relying directly on Landlord's
obligations under the Prime Lease for all maintenance, services and repairs
to the Sublet Premises, including without limitation the Riders. If
Landlord shall default in any of its obligations to Sublandlord under the
Prime Lease, Sublandlord shall cooperate with Subtenant, upon request by
Subtenant and at Subtenant's sole cost and expense, in enforcing
Sublandlord's rights against Landlord under the Prime Lease.
In addition to all other obligations relating to repair and maintenance of
Sublandlord under the Prime Lease, Subtenant shall, at its expense,
maintain the interior non-structural portions of the Building in good order
and condition, except for reasonable wear and tear and damage caused by
fire or other casualty, Taking, default by Sublandlord hereunder, or by any
negligent act or omission or willful act or omission by Sublandlord, its
officers, directors, employees, contractors, servants or agents.
11. Prime Lease.
a. Incorporation of Prime Lease. Except as otherwise expressly provided
herein, Sublandlord grants to Subtenant, to share in common with
Sublandlord, all of Sublandlord's rights, benefits, and interests with
respect to the Sublet Premises, and Subtenant agrees to accept from
Sublandlord and hereby assumes all of Sublandlord's obligations and
burdens under the Prime Lease with respect to the Sublet Premises, as
if all of such rights and obligations were set forth herein in their
entirety, provided that the terms and conditions hereof shall be
controlling whenever the terms and conditions of the Prime Lease are
contradictory to or inconsistent with terms and conditions hereof, and
provided further that those provisions of the Prime Lease which are
protective and for the benefit of the Landlord shall in this Sublease
be deemed to be protective and for the benefit of the Landlord and
Sublandlord. Notwithstanding the foregoing sentence, the terms,
covenants and conditions of the following Sections of the Prime Lease
are expressly modified as follows:
Section 4: Assignment & Subletting - delete in its entirety;
Section 9: Holding Over- delete in its entirety;
Section 1.2: Renewal Term - delete in its entirety;
Subtenant represents that it has read and is familiar with the terms
of the Prime Lease.
6
<PAGE>
b. Performance of Prime Lease. Subtenant covenants and agrees faithfully
to observe and perform all of the terms, covenants and conditions of
the Prime Lease on the part of Sublandlord to be performed with
respect to [the portion of the Leased Premises thereunder comprising]
the Sublet Premises, and neither to do nor cause to be done, nor
suffer, nor permit any act or thing to be done which would or might
cause the Prime Lease to be canceled, terminated, forfeited or
surrendered, or which would or might make Sublandlord liable for any
damages, claims or penalties.
c. Consents. Sublandlord shall not be required to give any consent
required or permitted under the terms of this Sublease with respect to
any matter on which the Prime Lease requires the consent of Landlord
until it has first obtained the written consent of the Landlord with
respect to such matter. Upon written request by Subtenant, Sublandlord
agrees to use reasonable efforts (not involving the payment of money,
unless Subtenant pays such money) to obtain such consent of the
Landlord in a timely manner.
d. No Sublandlord Obligation. Except as otherwise specifically provided
herein, Sublandlord shall not have any obligation to construct,
maintain, alter, restore or repair the Sublet Premises, the Building,
or any parking area or other facility or improvement appurtenant
thereto or to provide Subtenant with any service of any kind or
description whatsoever, nor shall Sublandlord be responsible for the
performance of Landlord's obligations under the Prime Lease or be
liable in damages or otherwise for any negligence of Landlord or for
any damage or injury suffered by Subtenant as a result of any act or
failure to act by Landlord or any default by Landlord in fulfilling
its obligations under the Prime Lease. Upon written request by
Subtenant, Sublandlord agrees to use reasonable efforts (not involving
the payment of money, unless Subtenant pays such money) to cause
Landlord to perform its obligations under the Prime Lease in a timely
manner. Subtenant hereby waives all claims for consequential damages
against Sublandlord arising out of any breach or failure by
Sublandlord to perform or observe the requirements and obligations
created by this sublease.
e. Termination. If the Prime Lease is terminated pursuant to any
provision of the Prime Lease or otherwise, (i) this Sublease shall
terminate simultaneously therewith, and (ii) any unearned rent paid in
advance shall be refunded to Subtenant unless such termination was the
result of a breach by Subtenant of any term, covenant or condition of
this Sublease. Notwithstanding the preceding sentence, in the event
that Sublandlord or an affiliate thereof acquires title to the
Building, this Sublease shall remain in full force and effect.
12. No Alterations. After completion of Subtenant's Work, Subtenant shall make
no alterations, additions or improvements to the Sublet Premises or to any
portion of the Building without on each occasion first obtaining (i) the
prior written consent of Sublandlord, which consent may be withheld in
Sublandlord's sole discretion or granted
7
<PAGE>
upon such conditions as Sublandlord may deem appropriate, and (ii) when
required by the terms of the Prime Lease, the prior written consent of the
Landlord. Upon written request by Subtenant, Sublandlord agrees to use
reasonable efforts (not involving the payment of money, unless Subtenant
pays such money) to obtain such consent of the Landlord, when required
under the Prime Lease, in a timely manner. All work shall be done in
accordance with the terms and conditions of the Prime Lease and all laws,
by-laws, rules, regulations, licenses and permits.
13. Defaults and Remedies. The occurrence of any of the following shall
constitute an "Event of Default" hereunder: (i) if Subtenant fails to pay
any Rent when due and such failure continues for 10 days after written
notice of such failure, [provided, however, that Subtenant shall not be
entitled to such notice if Sublandlord has given notice to Subtenant of 1
or more previous such failures within a 12-month period, in which event
such failure shall constitute a default hereunder upon the expiration of 10
days after such payment was due,] or (ii) if Subtenant fails to perform or
observe any of the terms of this Sublease other than those requiring the
payment of Rent and such failure continues for 15 days after Sublandlord
gives written notice of said failure; provided, however, that if the grace
period for such default provided to Sublandlord under the Prime Lease is
shorter than 15 days, the length of Subtenant's grace period shall be
one-half of Sublandlord's grace period; or (iii) if the subleasehold hereby
created shall be taken on execution, or by other process of law, or if any
assignment shall be made of Subtenant's property for the benefit of
creditors, or if a receiver, guardian, conservator, trustee in bankruptcy
or similar officer shall be appointed to take charge of all or any part of
Subtenant's property by a court of competent jurisdiction, or if a petition
is filed by Subtenant under any bankruptcy or insolvency law, or if a
petition is filed against Subtenant under any bankruptcy law and the same
shall not be dismissed within 30 days from the date upon which it is filed.
If an Event of Default occurs, Sublandlord may at its option immediately or
at any time thereafter exercise any one or more of the remedies provided in
the Prime Lease with respect to a default thereunder by Sublandlord.
Notwithstanding the fore-going, and in addition thereto, Sublandlord may at
its option immediately or at any time thereafter exercise one or more of
the following remedies, consecutively or simultaneously, without notice or
demand:
a. Sublandlord may bring suit for damages or specific performance for the
collection of unpaid Rent or the performance of any of Subtenant's
obligations, all either with or without entering into possession or
terminating this Sublease.
b. Sublandlord may, at its option, give Subtenant a notice terminating
this Sublease on a date not less than 3 business days after
Sublandlord gives such notice, and upon such date this Sublease shall
terminate and all rights of Subtenant shall cease without further
notice or lapse of time, Subtenant hereby waiving all statutory
rights, including rights of redemption, if any. Upon termination of
this Sublease, Subtenant shall surrender the Sublet Premises to
Sublandlord in accordance with the terms of this Sublease. Subtenant's
liability hereunder shall survive such
8
<PAGE>
termination and Subtenant shall indemnify and hold Sublandlord
harmless from all claims, losses, costs, expenses, damages or
liabilities arising out of or in connection with such termination.
c. If, after such termination, Sublandlord elects to relet all or any
part of the Sublet Premises, such reletting may be on such terms and
conditions as Sublandlord in its reasonable discretion may determine.
Sublandlord may retain for itself all rents from reletting, and
Sublandlord shall not be liable for any failure to relet all or any
part of the Sublet Premises. The rent obtained from such reletting
shall be, for purposes of subsection 13(d)(2), prima facie evidence of
the fair rental value for the part of the Sublet Premises so relet
during the term of the reletting. The proceeds of reletting shall be
applied first to pay all Sublandlord's reletting expenses, including,
without limitation, all repossession costs, alteration costs,
brokerage commissions, advertising expenses and reasonable attorneys'
fees ("Reletting Expenses"), then to pay any cost to Sublandlord of
curing Subtenant's defaults, then to pay Rent, any balance then to be
kept by Sublandlord.
d. After such termination, Subtenant shall:
1. pay Sublandlord monthly on the days on which Base Rent would have
been payable, as damages for Subtenant's default, the difference
between: (i) the amount of Rent which would be payable under this
Sublease by Subtenant if this Sublease were still in effect, less
(ii) the net proceeds of any reletting, after deducting
Sublandlord's Reletting Expenses and Sublandlord's costs incurred
in curing Subtenant's defaults; or
2. at Sublandlord's election, whether or not Sublandlord shall have
collected any payments under the preceding paragraph (1), pay
Sublandlord, on demand, an amount equal to: (i) the present
value, discounted at the discount rate at which one-year Treasury
bills have then most recently sold, of the difference between (a)
all Rent which would have been payable from the date of such
termination until the last day of the term of this Sublease, and
(b) the fair rental value of the Sublet Premises for the same
period; plus (ii) Sublandlord's reasonable estimate of Reletting
Expenses.
e. If an Event of Default occurs, Sublandlord shall have the right, but
not the obligation, without the necessity of terminating this
Sublease, to enter the Sublet Premises and perform any of Subtenant's
obligations notwithstanding that no specific provision for such
substituted performance by Sublandlord is made in this Sublease. All
sums so paid by Sublandlord, and all costs and expenses incurred by
Sublandlord in connection with the performance of Subtenant's
obligations, plus interest thereon at the rate of 18% per annum (or,
if less, the maximum rate of interest permitted at such time by law),
shall be deemed Additional Rent and shall be payable to Sublandlord
immediately upon demand.
9
<PAGE>
The rights and remedies granted to Sublandlord herein are cumulative
and in addition to any others Sublandlord may be entitled to at law or
in equity.
Subtenant shall pay on demand all of Sublandlord's costs and expenses
incurred in connection with enforcement of this Sublease, including
without limitation, reasonable attorneys' fees and court costs.
All sums not paid by Subtenant when due hereunder (regardless of
whether or not the applicable grace period has expired) shall bear
interest at a rate equal to the lesser of (i) 1-1/2% per month or (ii)
the highest rate permitted by law (the "Default Rate of Interest"),
which interest shall be payable to Sublandlord as Additional Rent
hereunder immediately upon demand.
14. Surrender. Upon the expiration or earlier termination of the Sublease
Term, Subtenant shall surrender the Sublet Premises free and clear of all
tenants and occupants, and in good order and condition, reasonable wear and
tear and damage by casualty or taking only excepted. Subtenant's Work shall
be removed if required pursuant to Section 3 hereof, and all other
alterations, additions and improvements shall remain part of the Sublet
Premises and shall not be removed unless Sublandlord so requests such
removal by notice to Subtenant at least thirty (30) days prior to the
expiration or earlier termination date. Subtenant shall repair any damage
to the Sublet Premises caused by the removal of its property. Any property
of Subtenant not removed at or prior to the expiration or earlier
termination of the Sublease Term may be removed and stored or disposed of
by Sublandlord as it deems appropriate in its sole discretion. Subtenant
agrees to reimburse Sublandlord for all of Sublandlord's costs resulting
from such removal and storage or disposition.
15. Notices. All notices relating to this Sublease or the Sublet Premises shall
be in writing and addressed, if to Subtenant, to the Sublet Premises, or to
such other address as Subtenant shall designate in writing; and if to
Sublandlord, to the address stated in the preamble above, or to such other
address as Sublandlord shall designate in writing. No notice from Subtenant
to Landlord shall be effective as to Sublandlord unless Subtenant delivers
a copy of such notice in the manner set forth in this section to
Sublandlord simultaneously with delivery of such notice to Landlord. Any
notice shall be deemed duly given (i) when delivered by hand, if so
delivered and a receipt obtained, or (ii) four (4) days after being
deposited with the U.S. Postal Service addressed to such address, postage
prepaid, registered or certified mail, return receipt requested, or (iii)
the next business day after being delivered to an overnight courier with
acceptance signature required.
16. Effect. This Sublease shall be binding upon the parties hereto and their
respective successors and assigns.
17. Applicable Law. This Sublease shall be governed by and construed in
accordance with the laws of the state in which the Sublet Premises are
located.
10
<PAGE>
18. Modification, etc. Neither this Sublease nor any provision hereof may be
waived, modified, amended, discharged or terminated, except by an
instrument in writing signed by both parties. This Sublease constitutes the
entire agreement of the parties hereto with respect to the Sublet Premises.
19. Severability. If any term or provision of this Sublease or the application
thereof to any person or circumstance shall to any extent be held invalid
or unenforceable, the remainder of this Sublease or the application of such
term or provision to other persons or circumstances shall not be affected
thereby, and each term and provision of this Sublease shall be valid and
enforceable to the fullest extent permitted by law.
20 No Waiver. No failure by Sublandlord or Subtenant to insist upon the
strict performance of any term hereof or to exercise any right, power or
remedy consequent upon a breach thereof, and no acceptance of full or
partial Rent by Sublandlord during the continuance of such breach, shall
constitute a waiver of any such breach or of any such term. Sublandlord's
consent in one instance hereunder shall not relieve Subtenant of the
requirement of obtaining Sublandlord's consent in any other instance.
21. Broker. Sublandlord shall be responsible for paying the brokerage
commission due to Spaulding & Slye (the "Subtenant's Broker") and Koll
Management Services, Inc. (the Sublandlord's Broker) in connection with
this Sublease. Subtenant and Sublandlord each represents and warrants to
the other that it has not dealt with any broker or agent in connection with
this Sublease other than the Subtenant's Broker and Sublandlord's Broker,
and it shall indemnify, defend (with counsel reasonably satisfactory to the
indemnified party) and hold the other party hereto harmless from and
against all claims, liabilities, leases, damages, costs and expenses
arising from a breach of such representation and warranty.
22. Mechanics Liens. Subtenant shall not cause or permit any liens for labor
or materials to attach to the Sublet Premises, the Building or the Land as
a result of any work performed by or on behalf of Subtenant, and shall
immediately discharge any such liens which may so attach.
23. Confidentiality. All terms and conditions of this Sublease shall be kept
confidential by all parties and shall not be disclosed without the consent
of the other parties.
24. Security Deposit. None.
25. Consent of Landlord. The effectiveness of this Sublease shall be
conditioned upon the receipt of written consent of the Landlord to this
Sublease substantially in the form of Exhibit E attached hereto.
11
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Sublease to be
executed under seal by their duly authorized officers as of date first above
written.
Sublandlord: Digital Equipment Corporation
By: /s/ Mark A. Coffey
-----------------------------------
Name: Mark A. Coffey
Title: Manager, Real Estate Acquisitions & Dispositions
Subtenant: Sylvest Management Systems Corporation
By: /s/ Gary Murray
-----------------------------------
Name: Gary Murray
Title: President
Accepted and Approved
Prime Landlord: Liberty Property Trust
By: See Consent to Sublease dated November 17, 1995
-----------------------------------------------
Name:
Title:
12
<PAGE>
EXHIBIT A TO SUBLEASE
PRIME LEASE
[Copy attached]
13
<PAGE>
1-8-85
29,600 square feet
ROUSE & ASSOCIATES
AGREEMENT OF LEASE
THIS AGREEMENT OF LEASE (hereinafter referred to as "this Lease") made this
31 day of May 1985, by and between ROUSE & ASSOCIATES-METRO EAST EXECUTIVE,
LIMITED PARTNERSHIP, TERRACE LIMITED PARTNERSHIP organized and existing under
the law of Pennsylvania having an address at 8181 PROFESSIONAL PLACE, LANDOVER,
MARYLAND 20780 (hereinafter referred to as "the Landlord"), and DIGITAL
EQUIPMENT CORPORATION, A CORPORATION organized and existing under the law of
Massachusetts, having an address at 5900 PRINCESS GARDEN PARKWAY, LANHAM,
MARYLAND 20706 (hereinafter referred to as "the Tenant").
WITNESSETH, THAT FOR AND IN CONSIDERATION of the mutual entry into this
Lease by the parties hereto, and for other good and valuable consideration, the
receipt and adequacy of which are hereby acknowledged by each party hereto, the
Landlord hereby leases to the Tenant, and the Tenant hereby leases from the
Landlord, all of that real property, situate and lying in PRINCE GEORGE'S
County, Maryland, which consists of the space (containing approximately 29,600
square feet of floor area) shown outlined in red on a plat attached hereto as
Exhibit A (hereinafter referred to as "the Premises") and located in a building
to be located at 8400 CORPORATE DRIVE (hereinafter referred to as "the
Building") at LANDOVER, MARYLAND, on a tract of land designated as "Lot 10" on a
plat entitled "Minor Subdivision, Lots 9 and 10, Block B," and recorded among
the Land Records of the said County in Plat Book NLP120 at folio 10 (the
Premises, the remainder of the Building, such tract of land and any other
buildings or improvements thereon being hereinafter referred to collectively as
"the Property"). [SEE PARAGRAPH 1 OF RIDER]
SUBJECT TO THE OPERATION AND EFFECT of any and all instruments and matters
of record or in fact, UPON THE TERMS AND SUBJECT TO THE CONDITIONS which
are hereinafter set forth:
Section 1. [SEE PARAGRAPH 2 OF RIDER]
Section 2. Use.
2.1 [SEE PARAGRAPH 3 OF RIDER]
2.2 In its use of the Premises and the remainder of the Property, the
Tenant shall not violate any applicable law, ordinances or regulation. [SEE
PARAGRAPH 4 OF RIDER]
2.3 Except for the parking of automobiles in the ordinary course of
business, the Tenant shall not place or permit its agents or employees to place
any trash or other objects anywhere within the Building or the rest of the
Property (other than within the Premises) without first obtaining Landlord's
express written consent thereto. [SEE PARAGRAPH 5 OF RIDER]
Section 3. Rent
3.1 Amount. As rent for the Premises (all of which is hereinafter
referred to collectively as "Rent"), the Tenant shall pay to the Landlord all of
the following:
(a) Base Rent. An annual rent (hereinafter referred to as "the
Base Rent") comprised of the aggregate of the following components:
(i) Net Component. A net component (hereinafter referred to as
"the Net Component") which
(A) [SEE PARAGRAPH 6 OF RIDER]
(B) for each Lease Year thereafter during the original Term,
is in a sum equaling the greater of (1) the Net Component for the immediately
preceding Lease Year or (2) the product obtained by multiplying (I) the said sum
of Three Hundred Eighty-Four Thousand Eight Hundred Dollars ($384,800) by (II) a
fraction, the numerator of which is the total of (x) the Consumer Price Index
for Urban Wage Earners and Clerical Workers-Revised (1967=100), Metropolitan
Washington, D.C. Index, published by the Bureau of Labor Statistics of the
United States Department of Labor (hereinafter referred to as "the Consumer
Price Index") for the calendar month containing the Commencement Date, plus (y)
twenty-five percent (25%) of the amount by which the Consumer Price Index for
the calendar month immediately preceding that during which such Lease Year
commences exceeds the Consumer Price Index for the calendar month containing the
Commencement Date, and the denominator of which is the Consumer Price Index so
published for the calendar month containing the Commencement Date (in each case,
if the Consumer Price Index is not so published for such calendar month, then
the Consumer Price Index for the most recent calendar month or other period for
which it is so published) (provided, that (a) if the Consumer Price Index for
the calendar month immediately preceding that during which such Lease Year
commences, as aforesaid, has not been published by the date on which the first
installment of the Base Rent accrues for such Lease Year, then until such
Consumer Price Index is published for such calendar month, the Tenant shall pay
on account of the Net Component of each installment of the Base Rent falling due
during such Lease Year before such Consumer Price Index is published, as
aforesaid, an amount equaling the installment of the Net Component which accrued
for the calendar month immediately preceding that during which such Lease Year
commenced, and shall thereafter pay to the Landlord, promptly upon written
demand by the Landlord after such Consumer Price Index is so published, the
amount, if any, by which the installments of the Base Rent for such Lease Year,
when calculated by reference to such published Consumer Price Index, exceeds the
aggregate amount of such installments theretofore paid during such Lease Year;
and (b) if the Consumer Price Index hereafter uses a different standard
reference base or is otherwise revised, an adjustment shall be made therein for
purposes of the provisions of this Lease, using such conversion factor, formula
or table for making such adjustment as is published by such Bureau, or if such
Bureau does not publish the same, then as is published by Prentice-Hall, Inc.,
the Bureau of National Affairs, Commerce Clearing House or any other nationally
recognized publisher of similar statistical information, as mutually agreed to
by both Landlord and Tenant; and [SEE PARAGRAPH 7 OF RIDER]
(ii) [SEE PARAGRAPH 8 OF RIDER]
1
<PAGE>
(b) Additional Rent. Additional rent (hereinafter referred to as
"Additional Rent") in the amount of any payment referred to as such in any
provision of this Lease which accrues while this Lease is in effect.
(c) Lease Year. [SEE PARAGRAPH 9 OF RIDER]
3.2 Annual Operating Costs.
(a) Definition. As used herein, the term "Annual Operating Costs"
means the actual costs incurred by the Landlord in operating and maintaining the
Property during each calendar year of the Term. Such costs shall include, by
way of example rather than of limitation, (i) real property, front-foot benefit,
other metropolitan district and other similar taxes or assessments (whether
regular or special) levied against any or all of the Property; (ii) charges or
fees for, and taxes on, the furnishing of water, sewer service, gas, fuel, or
other utility services to the Property; (iii) costs of providing elevator,
janitorial and trash removal service, and of maintaining grounds, common areas
and mechanical systems of buildings; (iv) all other costs of maintaining,
repairing or replacing any or all of the Building or the rest of the Property;
(v) charges or fees for any necessary government permits; (vi) [crossed out];
(vii) premiums for hazard, liability, workmen's compensation or similar
insurance upon any or all of the Property; (viii) costs arising under service
contracts with independent contractors; (ix) costs of any services not provided
by the Landlord to the Property on the date hereof but hereafter provided by the
Landlord in its prudent management of the Property; and (x) the cost of any
other items which, under generally accepted accounting principles consistently
applied from year to year with respect to the Property, constitute operating or
maintenance costs attributable to any or all of the Property. Such costs shall
not include (i) the expense of principal and interest payments made by the
Landlord pursuant to the provisions of any mortgage or deed of trust covering
the Property; [SEE PARAGRAPHS 10 AND 11 OF RIDER]
(b) Portion covered by Costs Component. The Costs Component of the
Base Rent represents the Landlord's estimate on the date hereof of the cost to
the Landlord per calendar year of providing to or for the benefit of the
Premises all of the services or other items, the costs of which are included in
the Annual Operating Costs, excluding any of such services or other items to be
provided at the Tenant's direct expense under the provisions of Section 7.
(c) Computation. After the end of each calendar year during the
Term, the Landlord shall compute the total of the Annual Operating Costs
Incurred for all of the Property during such calendar year, and shall allocate
them to the net rentable space within the Property by dividing such Annual
Operating Costs by the aggregate square footage of all of the net rentable space
within the Property, thereby deriving the cost of such categories of services
and items per square foot of such net rentable space; provided, that anything
contained in the foregoing provisions of this subsection 3.2 to the contrary
notwithstanding, wherever the Tenant and/or any other tenant of space within the
Property has agreed in its lease or otherwise to provide any item of such
services partially or entirely at its own expense, or wherever in the Landlord's
reasonable sole judgment any such significant item of expense is not incurred
with respect to or for the benefit of all of the net rentable space within the
Property in allocating the Annual Operating Costs pursuant to the foregoing
provisions of this subsection the Landlord shall make an appropriate adjustment,
using generally accepted accounting principles, as aforesaid, so as to avoid
allocating to the Tenant or to such other tenant (as the case may be) those
Annual Operating Costs covering such services already being provided by the
Tenant or by such other tenant at its own expense, or to avoid allocating to all
of the net rentable space within the Property those Annual Operating Costs
incurred only with respect to a portion thereof, as aforesaid.
(d) Payment as Additional Rent. The Tenant shall, within fifteen
(15) days after demand therefor by the Landlord (with respect to each calendar
year during the Term),(*) pay to the Landlord as Additional Rent the amount
obtained by multiplying (i) the number of square feet of space within the
Premises (as set forth hereinabove) by (ii) the amount by which (A) the Annual
Operating Costs for such calendar year (as derived under the provisions of
paragraph 3.2(c)) exceeds (B) the Costs Component.
(e) Proration. If only part of any calendar year falls within the
Term,(**) the amount computed as Additional Rent with respect to such calendar
year under the foregoing provisions of this subsection shall be prorated in
proportion to the portion of such calendar year falling within such portion of
the Term before the end of any calendar year shall not impair the Tenant's
obligation hereunder to pay such pro-rated portion of such Additional Rent with
respect to that portion of such year falling within the Term, which shall be
paid on demand, as aforesaid).
(f) Landlord's right to estimate. Anything contained in the
foregoing provisions of this subsection to the contrary notwithstanding, the
Landlord may, at its discretion, make from time to time during the Term a
reasonable estimate of the Additional Rent which may become due under such
provisions with respect to any calendar year, and may require the Tenant to pay
to the Landlord with respect to each calendar month during such year one-twelfth
(1/12) of such Additional Rent, at the time and in the manner that the Tenant is
required hereunder to pay the monthly installment of the Base Rent for such
month. In such event, the Landlord shall cause the actual amount such
Additional Rent to be computed and certified to the Tenant within 120 days after
the end of such calendar year, and the Tenant or the Landlord, as the case may
be, shall promptly thereafter pay to the other the amount of any deficiency or
overpayment therein, as the case may be. [SEE PARAGRAPH 12 OF RIDER]
3.3 When due and payable.
(a) The Base Rent for any Lease Year shall be due and payable in
twelve (12) consecutive, equal monthly installments, in advance, on the first
(1st) day of each calendar month during such lease Year; provided, that the
installment of the Base Rent payable for the first full calendar month of the
Term (and, if the Term commences on a day other than the first (1st) day of a
calendar month, that portion of the Base Rent which is payable for such month)
shall be due and payable on the full execution and delivery of this Lease.
[SEE PARAGRAPH 13 OF RIDER]
(b) Any Additional Rent accruing to the Landlord under any provision
of this Lease shall, except as is otherwise set forth herein, be due and payable
when the installment of the Base Rent next falling due after such Additional
Rent accrues becomes due and payable. [SEE PARAGRAPHS 14 AND 15 OF RIDER]
3.4 Where and how payable. The Tenant shall pay the Rent, in lawful
currency of the United States of America, to the Landlord by delivering or
mailing it (postage prepaid) to the Landlord's address which is set forth
hereinabove, or to such other address as the Landlord
- -------------------------------
* which ends after the first (1st) Lease Year during the Original Term
** that portion of the Term which remains after the first (1st) Lease Year
during the Original Term,
2
<PAGE>
from time to time specifies by written notice to the Tenant. Any payment made
by the Tenant to the Landlord on account of Rent may be credited by the Landlord
to the payment of any Rent then past due before being credited to Rent currently
falling due. Any such payment which is less than the amount of Rent then due
shall constitute a payment made on account thereof, the parties hereto hereby
agreeing that the Landlord's acceptance of such payment (whether or not with or
accompanied by an endorsement or statement that such lesser amount or the
Landlord's acceptance thereof constitutes payment in full of the amount of Rent
due) shall not alter or impair the Landlord's rights hereunder to be paid all of
such amount then due, or in any other respect.
3.5 [Crossed out]
3.6 Tax on Lease. If federal, state or local law now or hereafter imposes
any tax, assessment, levy or other charge (other than any income tax) directly
or indirectly upon (a) the Landlord with respect to this Lease or the Value
thereof, (b) the Tenant's use or occupancy of the Premises, (c) the Base Rent,
Additional Rent or any other sum payable under this Lease, or (d) this
transaction, except if and to the extent that such tax, assessment, levy or
other charge is included in the Annual Operating Costs the Tenant shall pay the
amount thereof as Additional Rent to the Landlord. [SEE PARAGRAPH 16 OF RIDER]
Section 4. Assignment and Subletting.
4.1. The Tenant shall not mortgage, pledge or encumber this Lease.
4.2. [SEE PARAGRAPH 17 OF RIDER]
Section 5. [SEE PARAGRAPH 18 OF RIDER HERETO]
Section 6. Fire and other casualty. [SEE PARAGRAPH 19 OF RIDER]
Section 7. Maintenance and Services.
7.1. Extraordinary services. [SEE PARAGRAPH 20 OF RIDER]
7.2. Extraordinary services. If the Tenant
(a) [Crossed out]
(b) intends to use the Premises in such a manner that the services to
be furnished by the Landlord hereunder would be required during periods other
than or in addition to the business hours set forth herein, then in either case
the Tenant shall not do so without first obtaining the Landlord's written
approval thereof, and shall pay periodically as Additional Rent the additional
direct expense resulting therefrom, including that resulting from any
installation of such equipment. [SEE PARAGRAPH 21 OF RIDER]
7.3 Maintenance and alterations by Tenant.
(a) The Tenant shall maintain the nonstructural parts of the interior
of the Premises in good repair and condition, damages by causes reasonably
beyond the Tenant's control and ordinary wear and tear excepted.
(b) The Tenant shall not make or permit to be made any alteration,
addition or improvement to the Premises without first obtaining the Landlord's
written consent thereto (which, in the case of non-structural alterations,
additions and improvements only, shall not be unreasonably withheld). If the
Landlord consents to any such proposed alteration, addition or improvements, it
shall be made at the Tenant's sole expense (and the Tenant shall hold the
Landlord harmless from any costs incurred on account thereof), and at such time
and in such manner as not unreasonably to interfere with the use and enjoyment
of the remainder of the Property by any tenant thereof or any other person.
[SEE PARAGRAPH 22 OF RIDER]
7.4 Maintenance by Landlord. [SEE PARAGRAPH 23 OF RIDER]
Section 8. Defaults by the Tenant.
8.1 Definition: As used in the provisions of this Lease, each of the
following events shall constitute, and is hereinafter referred to as, an "Event
of Default":
(a) If the Tenant (i) fails to pay the Rent or any other sum which
the Tenant is obligated to pay by any provision of this Lease, when and as it is
due and payable hereunder and without demand therefore, or (ii) in any respect
violates any of the terms, conditions or covenants set forth in the provisions
of this Lease; or
(b) If the Tenant (i) applies for or consents to the appointment of a
receiver, trustee or liquidator of the Tenant or of all or a substantial part of
its assets, (ii) files a voluntary petition in bankruptcy or admits in writing
its inability to pay its debts as they come due, (iii) makes an assignment for
the benefit of its creditors, (iv) files a petition or an answer seeking a
reorganization or an arrangement with creditors, or seeks to take advantage of
any insolvency law, (v) performs any other act of bankruptcy, or (vi) files an
answer admitting the material allegations of a petition filed against the Tenant
in any bankruptcy, reorganization or insolvency proceeding; or
(c) if (i) an order, judgment or decree is entered by any court of
competent jurisdiction adjudicating the Tenant bankrupt or an insolvent,
approving a petition seeking such a reorganization, or appointing a receiver,
trustee or liquidator of the Tenant or of all or a substantial part of its
assets, or (ii) there otherwise commences with respect to the Tenant or any of
its assets any proceeding under any bankruptcy, reorganization, arrangement,
insolvency, readjustment, receivership or similar law, and if such order,
judgment, decree or proceeding continues unstayed for more than sixty (60)
consecutive days after the expiration of any stay thereof.
8.2 Notice to Tenant; grace period. Anything contained in the provisions
of this Section to the contrary notwithstanding, upon the occurrence of an Event
of Default the Landlord shall not exercise any right or remedy which it holds
under any provision of this Lease or under applicable law unless and until
(a) the Landlord has given written notice thereof to the Tenant, and
(b) the Tenant has failed, (i) if such Event of Default consists of
the failure to pay money, within ten (10) days thereafter to pay all of such
money, or (ii) if such Event of Default consists of something other than the
failure to pay money, within thirty (30) days thereafter actively, diligently
and in good faith to proceed to cure such Event of Default and to continue to do
so until it is fully cured; provided, that [SEE PARAGRAPH 24 OF RIDER]
(c) no such notice shall be required, and the Tenant shall be
entitled to no such grace period, (i) more than twice during any twelve (12)
month period, or (ii) if the Tenant has substantially terminated or is in the
process of substantially terminating its continuous occupancy and use of the
Premises for the purpose set forth in the provisions of Section 2, or (iii) if
any Event of Default enumerated in the provisions of paragraphs 8.1 (b) or 8.1
(c) has occurred.
8.3 Landlord's rights upon Event of Default. Upon the occurrence of any
Event of Default, the Landlord may
(a) re-enter and repossess the Premises and any and all improvements
thereon and additions thereto;
(b) [Crossed out]
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(c) relet any or all of the Premises for the Tenant's account for any
or all of the remainder of the Term as herein above defined, or for a period
exceeding such remainder, in which event the Tenant shall pay to the Landlord
any deficiency in the Base Rent and any Additional Rent resulting, with respect
to such remainder, from such reletting, as well as the cost to the Landlord of
any attorneys' fees or of any repairs or other action (including those taken in
exercising the Landlord's rights under any provision of this Lease) taken by the
Landlord on account of such Event of Default; and/or
(d) pursue any combination of such remedies and/or any other remedy
available to the Landlord on account of such Event of Default under applicable
law.
8.4 Landlord's right to cure. Upon the occurrence of an Event of Default,
the Landlord shall be entitled (but shall not be obligated), in addition to any
other rights which it may have hereunder or under applicable law as a result
thereof, and after giving the Tenant written notice of the Landlord's intention
to do so except in the case of emergency, to cure such event of Default, and the
Tenant shall reimburse the Landlord for all expenses incurred by the Landlord in
doing so, plus interest thereon at a lesser of the rate of twenty percent (20%)
per annum or the highest rate then permitted on account thereof by applicable
law, which expenses and interest shall be Additional Rent and shall be payable
by the Tenant immediately upon demand therefor by the Landlord. [SEE
PARAGRAPHS 25 AND 26 OF RIDER]
Section 9. Holding over. The Tenant shall not continue to occupy the
Premises after the expiration or earlier termination of the Term or any renewal
thereof, unless the Landlord consents in writing to such continuation of
occupancy, in which event
9.1. such occupancy shall (unless the parties hereto otherwise agree in
writing) be deemed to be under a month-to-month tenancy, which shall continue
until either party hereto notifies the other in writing, by at least sixty (60)
days before the end of any calendar month, that the party giving such notice
elects to terminate such tenancy at the end of such calendar month, in which
event such tenancy shall so terminate;
9.2 anything contained in the foregoing provisions of this Section to the
contrary notwithstanding, the rental payable with respect to each such monthly
period shall equal one-twelfth (1/12) of the Base Rent and the Additional Rent
payable under the provisions of Section 3 (calculated in accordance with such
provisions of Section 3 as if this Lease had been renewed for a period of twelve
(12) full calendar months after such expiration or earlier termination of the
Term or such renewal); and
9.3. such month-to-month tenancy shall be upon the same terms and subject
to the same conditions as those set forth in the provisions of this Lease;
provided, that if the Landlord gives to the Tenant, by at least sixty (60) days
before the end of any calendar month during such month-to-month tenancy, written
notice that such terms and conditions (including any thereof relating to the
amount and payment of Rent) shall, after such month, be modified in any manner
specified in such notice, then such tenancy shall, after such month, be upon the
said terms and subject to the said conditions, as so modified.
Section 10. Landlord's right of entry. The Landlord and its agents shall
be entitled to enter the Premises at any reasonable time [SEE PARAGRAPH 27 OF
RIDER]
10.1. to inspect the Premises,
10.2. to exhibit the Premises to any existing or prospective purchaser or
Mortgagee thereof or any prospective tenant thereof,
10.3. to make any alteration, improvement or repair to the Building or the
Premises, or
10.4. for any other purpose relating to the operation or maintenance of
the Property; provided, that the Landlord shall (a) (unless doing so is
impractical or unreasonable because of emergency) give the Tenant at least
twenty-four (24) hours' prior notice of its intention to enter the Premises, and
(b) use reasonable efforts to avoid thereby interfering any more than is
reasonably necessary with the Tenant's use and enjoyment thereof.
Section 11. Insurance and Indemnification.
11.1 Increase in risk. The Tenant
(a) shall not do or permit to be done any act or thing as a result of
which either (i) any policy of insurance of any kind covering any or all of the
Property or any liability of the Landlord in connection therewith may become
void or suspended, or (ii) the insurance risk under any such policy would (in
the opinion of the insurer thereunder) be made greater; and
(b) shall pay as Additional Rent the amount of any increase in any
premium for such insurance resulting from any breach of such covenant. [SEE
PARAGRAPH 28 OF RIDER]
11.2 Insurance to be maintained by Tenant. The Tenant shall maintain at
its expense, throughout the Term, insurance against loss or liability in
connection with bodily injury, death, property damage and destruction, occurring
within the Premises or arising out of the use thereof by the Tenant or its
agents, employees, officers or invitees, visitors and guests under one or more
policies of general public liability insurance having such limits as to each as
are reasonably required by the Landlord from time to time (but in any event of
not less than (a) One Million Dollars ($1,000,000.00) for injury to or death of
any one or more persons during any one occurrence, and (b) Five Hundred Thousand
Dollars ($500,000.00) for property damage or destruction during any one
occurrence. Such policies shall provide that they shall not be cancelable
without at least thirty (30) days' prior written notice to the Landlord (and, at
the Landlord's request, any such Mortgagee), and shall be issued by insurers of
recognized responsibility licensed to do business in Maryland. [SEE PARAGRAPH
29 OF RIDER]
11.3. Insurance to be maintained by Landlord. The Landlord shall maintain
throughout the Term all-risk or fire and extended coverage insurance upon the
Building, in such minimum amounts and having such forms of coverage as are
required from time to time by the Landlord's lender. The cost of the premiums
for such insurance and of each endorsement thereto shall be deemed, for purposes
of Section 3, to be part of the costs of operating and maintaining the property.
[SEE PARAGRAPH 30 OF RIDER]
11.4 [Crossed out]
11.5 Liability of parties. Except if and to the extent that such party is
released from liability to the other party hereto pursuant to the provisions of
subsection 11.4,
(a) the Landlord (i) shall be responsible for, and shall indemnify
and hold harmless the Tenant against and from any and all liability arising out
of, any injury to or death of any person or damage to any property, occurring
anywhere upon the Property, if, only if and to the extent that such injury,
death or damage is proximately caused by the negligent or intentional act or
omission of the Landlord or its agents, officers or employees, but (ii) shall
not be responsible for or be obligated to indemnify or hold harmless the Tenant
against or from any liability for any such injury, death or damage occurring
anywhere upon the Property (including the Premises), by reason of the Tenant's
occupancy or use of the Premises or any other portion of the Property, or
because of fire, windstorm, act of God or other cause unless proximately caused
by such negligent or intentionally tortious act or omission, as aforesaid; and
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(b) subject to the operation and effect of the foregoing provisions
of this subsection, the Tenant shall be responsible for, and shall indemnify and
hold harmless the Landlord against and from any and all liability arising out of
any injury to or death of any person or damage to any property, occurring within
the Premises. [SEE PARAGRAPH 31 OF RIDER]
Section 12. Eminent domain.
12.1 Right to award.
(a) If any or all of the Premises are taken by the exercise of any
power of eminent domain or are conveyed to or at the direction of any
governmental entity under a threat of any such taking (each of which is
hereinafter referred to as a "Condemnation"), the Landlord shall be entitled to
collect from the condemning authority thereunder the entire amount of any award
made in any such proceeding or as consideration for such deed, without deduction
therefrom for any leasehold or other estate held by the Tenant by virtue of this
Lease [SEE PARAGRAPH 32 OF RIDER]
(b) The Tenant hereby (i) assigns to the Landlord all of the Tenant's
right, title and interest, if any, in and to any such award, (ii) waives any
right which it may otherwise have in connection with such Condemnation, against
the Landlord or such condemning authority, to any payment for (A) the value of
the then unexpired portion of the Term, (B) leasehold damages and (C) any damage
to or diminution of the value of the Tenant's leasehold interest hereunder or
any portion of the Premises not covered by such Condemnation; and (iii) agrees
to execute any and all further documents which may be required in order to
facilitate the Landlord's collection of any and all such awards
(c) [Crossed out]
12.2 Effect of Condemnation [SEE PARAGRAPH 33 OF RIDER]
12.3 If there is a Condemnation, the Landlord shall have no liability to
the Tenant on account of any (a) interruption of the Tenant's business upon the
Premises, (b) diminution in the Tenant's ability to use the Premises, or (c)
other injury or damage sustained by the Tenant as a result of such Condemnation.
12.4 Except for any separate proceeding brought by the Tenant under the
provisions of paragraph 12.1(c) the Landlord shall be entitled to conduct any
such condemnation proceeding and any settlement thereof free of interference
from the Tenant, and the Tenant hereby waives any right which it might otherwise
have to participate therein.
Section 13. Mechanics' and materialmen's liens. The Tenant shall
13.1 bond, remove or have removed any mechanics', materialmen's or other
lien filed or claimed against any or all of the Premises, the Property, or any
other property owned or leased by the Landlord, by reason of labor or materials
provided for or at the request of the Tenant or any of its contractors or
subcontractors (other than labor or materials provided by the Landlord pursuant
to this Lease, or otherwise arising out of the Tenant's use or occupancy of the
Premises or any other portion of the Property, and
13.2 Indemnify and hold harmless the Landlord against and from any and all
liability or expense (including, by way of example rather than of limitation,
that of reasonable attorneys' fees) incurred by the Landlord on account of any
such lien or claim.
Section 14. Quiet enjoyment; surrender.
14.1 Quiet enjoyment. The Landlord hereby covenants that the Tenant, on
paying the Rent and performing the covenants set forth herein, shall peaceably
and quietly hold and enjoy, throughout the Term, (a) the Premises, and (b) such
rights as the Tenant may hold hereunder with respect to the remainder of the
Property (including, by way of example rather than of limitation, any such right
to use any parking lot within the Property).
14.2 Surrender.
(a) Upon the expiration or earlier termination of the Term, the
Tenant shall surrender the Premises to the Landlord in good order and repair
(damages reasonably beyond the Tenant's control and ordinary wear and tear
excepted), and broom clean. [SEE PARAGRAPH 34 OF RIDER]
(b) Any and all improvements, repairs, alterations and all other
property attached to, used in connection with or otherwise installed upon the
Premises (i) shall immediately upon the completion of the installation thereof,
be and become the Landlord's property without payment therefor by the Landlord,
and (ii) shall be surrendered to the Landlord upon the expiration or earlier
termination of the Term, except that any machinery, equipment or fixtures
installed by the Tenant and used in the conduct of the Tenant's trade or
business (rather than to service the Premises or any of the remainder of the
Building or the property generally) shall remain the Tenant's property and shall
be removed by the Tenant within five (5) days after the expiration or earlier
termination of the Term, and the Tenant shall promptly thereafter fully restore
any of the Premises or the Building damaged by such installation or removal
thereof. [SEE PARAGRAPH 35 OF RIDER]
Section 15. Rules and Regulations. The Landlord hereby reserves the right
to prescribe, at its sole discretion, reasonable rules and regulations
(hereinafter referred to as the "Rules and Regulations"), having uniform
applicability to all tenants of the Building and governing the use and enjoyment
of the Building and the remainder of the Property; provided, that the Rules and
Regulations shall not materially interfere with the Tenant's use and enjoyment
of the Premises, in accordance with the provisions of this Lease. The Tenant
shall adhere to the Rules and Regulations and shall cause its agents, employees,
invitees, visitors and guests to do so. A copy of the Rules and Regulations in
effect on the date hereof is attached hereto as Exhibit C.
Section 16. Subordination; attornment and non-disturbance.
16.1 Subordination. This Lease shall be subject and subordinate at all
times to the lien of any first mortgage, first deed of trust, ground lease
heretofore or hereafter placed by the Landlord upon any or all of the Premises
or the remainder of the Property and of all renewals, modifications,
consolidations, replacements and extensions thereof (each of which is herein
referred to as a "Mortgage"), all automatically and without the necessity of any
further action on the part of the Tenant to effectuate such subordination. [SEE
PARAGRAPH 36 OF RIDER]
16.2 Attornment and non-disturbance. The Tenant shall, promptly at the
request of the Landlord or the holder of any Mortgage (herein referred to as a
"Mortgagee"),
(a) execute, enseal, acknowledge and deliver such further instrument
or instruments evidencing such subordination as the Landlord or such Mortgagee
may deem necessary or desirable, and
(b) attorn to such Mortgagee, provided that such Mortgagee agrees
with the Tenant that such Mortgagee will, in the event of a foreclosure of any
such first mortgage or deed of trust (or termination of any such ground lease)
take no action to interfere with the Tenant's rights hereunder, except upon the
occurrence of an Event of Default.
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16.3 Anything contained in the provisions of this Section to the contrary
notwithstanding, any Mortgagee may at any time subordinate the lien of its
Mortgage to the operation and effect of this Lease without the necessity of
obtaining the Tenant's consent thereto, by giving the Tenant written notice
thereof, in which event this Lease shall be deemed to be senior to such Mortgage
without regard to their respective dates of execution, delivery and/or
recordation among the Land Records of the said County, and thereafter such
Mortgagee shall have the same rights with respect to this Lease as though this
Lease had been executed and recorded among the said Land Records before the
execution and delivery of such Mortgage.
Section 17. Estoppel certificate. The Tenant shall from time to time,
after being requested to do so by the Landlord or any first Mortgagee, execute,
enseal, acknowledge and deliver to the Landlord an instrument in recordable
form, [SEE PARAGRAPH 37 OF RIDER]
17.1 certifying
(a) that this Lease is unmodified and in full force and effect (or,
if there has been any modification thereof, that it is in full force and effect
as so modified, stating therein the nature of such modification);
(b) as to the dates to which the Base Rent and any Additional Rent
and other charges arising hereunder have been paid in advance of the dates on
which payment thereof is due hereunder, if any;
(c) as to the amount of any prepaid Rent or any credit due to the
Tenant hereunder;
(d) that the Tenant has accepted possession of the Premises, and the
date on which the Term commenced;
(e) as to whether, to the best knowledge, information and belief of
the signer of such certificate, the Landlord is then in default in the
performance of any of its obligations hereunder (and, if so, specifying the
nature of each such default); and
(f) as to any other fact or condition reasonably requested by the
Landlord, any first Mortgagee or prospective first Mortgagee or purchaser of any
or all of the Premises, the Property or any interest therein, or any assignee or
prospective assignee of any interest of the Landlord under this Lease; and
17.2 acknowledging and agreeing that any statement contained in any such
certificate may be relied upon by the Landlord and any such other person.
Section 18 Notices.
(a) and (b) [SEE PARAGRAPH 38 OF RIDER]
18.1. [Crossed out]
18.2. [Crossed out]
Section 19. General.
19.1 Effectiveness. This Lease shall become effective upon and only upon
the execution and delivery hereof by each party hereto.
19.2 Complete understanding. This Lease represents the complete
understanding between the parties hereto as to the subject matter hereof, and
supersedes all prior negotiations, representations, warranties, statements or
agreements, either written or oral, between the parties hereto as to the same.
19.3 Amendment. This Lease may be amended by and only by an instrument
executed and delivered by each party hereto.
19.4 Applicable law. This Lease shall be given effect and construed by
application of the law of Maryland, and any action or proceeding arising
hereunder shall be brought in the course of Maryland; provided, that if any such
action or proceeding arises under the Constitution, laws or treaties of the
United States of America, or if there is a diversity of citizenship between the
parties thereto, so that it is to be brought in a United States District Court,
it shall be brought in the United States District Court for the District of
Maryland.
19.5 Waiver. The Landlord shall not be deemed to have waived the exercise
of any right which it holds hereunder unless such waiver is made expressly and
in writing (and no delay or omission by the Landlord in exercising any such
right shall be deemed to be a waiver of the future exercise thereof). No such
waiver made with respect to any instance involving the exercise of any such
right shall be deemed to be a waiver with respect to any other such instance, or
any other such right.
19.6 Time of essence. Time shall be of the essence of this Lease.
19.7 Headings. The headings of the Sections, subsections, paragraphs and
subparagraphs hereof are provided herein for and only for convenience of
reference, and shall not be considered in construing their contents.
19.8 Construction. As used herein,
(a) the term "person" means a natural person; a trustee, a
corporation, a partnership and any other form of legal entity; and
(b) all references made (i) in the neuter, masculine or feminine
gender shall be deemed to have been made in all such genders, (ii) in the
singular or plural number shall be deemed to have been made, respectively, in
the plural or singular number as well, and (iii) to any Section, subsection,
paragraph or subparagraph shall, unless therein expressly indicated to the
contrary, be deemed to have been made to such Section, subsection, paragraph or
subparagraph of this Lease.
19.9 Exhibits. Each writing or plat referred to herein as being attached
hereto as an exhibit or otherwise designated herein as an exhibit hereto is
hereby made a part hereof.
19.10 Severability. No determination by any court, governmental body or
otherwise that any provision of this Lease or any amendment hereof is invalid or
unenforceable in any instance shall affect the validity or enforceability of (a)
any other provision thereof, or (b) such provision in any circumstance not
controlled by such determination. Each such provision shall be valid and
enforceable to the fullest extent allowed by, and shall be construed wherever
possible as being consistent with, applicable law, and enforceable to the
fullest extent allowed by, and shall be construed wherever possible as being
consistent with, applicable law.
19.11. Definition of "the Landlord".
19.11.1 As used herein, the term "the Landlord" means the entity
hereinabove named as such, and its heirs, personal representatives, successors
and assigns (each of whom shall have the same rights, remedies, powers,
authorities and privileges as it would have had, had it originally signed this
Lease as the Landlord).
19.11.2 No person holding the Landlord's interest hereunder (whether
or not such person is named as "the Landlord" herein) shall have any liability
hereunder after such person ceases to hold such interest, except for any such
liability accruing while such person holds such interest.
19.11.3 Neither the Landlord nor any principal of the Landlord,
whether disclosed or undisclosed, shall have any personal liability under any
provision of this Lease. If the Landlord defaults in the performance of any of
its obligations hereunder or
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otherwise, the Tenant shall look solely to the Landlord's equity, interest and
rights in the Property for satisfaction of the Tenant's remedies on account
thereof.
19.12 Definition of "the Tenant". As used herein, the term "the Tenant"
means each person hereinabove named as such and such person's heirs, personal
representatives, successors and assigns, each of whom shall have the same
obligations, liabilities, rights and privileges as it would have possessed had
it originally executed this Lease as the Tenant; provided, that no such right or
privilege shall inure to the benefit of any assignee of the Tenant, immediate or
remote, unless the assignment to such assignee is made in accordance with the
provisions of this Lease. Whenever two or more persons constitute the Tenant,
all such persons shall be jointly and severally liable for the performance of
the Tenant's obligations hereunder. [SEE PARAGRAPHS 39 THROUGH 43.2. OF RIDER]
IN WITNESS WHEREOF, each party hereto has executed and ensealed this Lease,
or has caused it to be executed and ensealed on its behalf by its duly
authorized representatives, the day and year first above written.
WITNESS; ROUSE & ASSOCIATES - METRO EAST
EXECUTIVE TERRACE LIMITED
/s/ PARTNERSHIP
- --------------------
by /s/ Claiborn M. Carr, III (SEAL)
----------------------------
The Landlord (General Partner)
WITNESS or ATTEST: DIGITAL EQUIPMENT CORPORATION
by /s/ Neal D. Hannon (SEAL)
- -------------------- ----------------------------
Neal D. Hannon, Manager
Corporate Real Estate Acquisition
7
<PAGE>
METRO EXECUTIVE TERRACE
AGREEMENT OF LEASE
by and between
ROUSE & ASSOCIATES-METRO EAST EXECUTIVE
TERRACE LIMITED PARTNERSHIP
and
DIGITAL EQUIPMENT CORPORATION
(covering 29,600 square feet)
RIDER
The following provisions form part of this Lease, as if set forth at
length in the attached printed form:
l. The following is added at the end of the "WITNESSETH" paragraph
on page l of the Lease:
"This demise is given together with rights of ingress and egress
thereto, and with the right in common with others to use the elevators
and common passageways, stairways, vestibules and to pass over and to
park on that portion of the Property as set forth elsewhere in this
Lease. The Premises consist of 29,600 net rentable square feet and
the Building consists of 148,000 net rentable square feet."
2. The following is hereby added as Section l of the Lease:
1.1. ORIGINAL TERM. This Lease shall be for an original term
(hereinafter referred to as "the Original Term") (a) commencing on the
date (hereinafter referred to as "the Commencement Date") on which the
Improvements are "substantially completed" (as that term is defined by
the provisions of subsection 5.7) and (b) terminating on the last day
of the calendar month containing the date which is the fifth (5th)
anniversary of the one hundred eightieth (180th) day after the
Commencement Date (hereinafter referred to as "the Termination Date").
1.2. RENEWAL TERM. The Tenant shall be entitled to renew this
Lease for an additional term (hereinafter referred to as "the Renewal
Term") of five (5) years, commencing at the expiration of the Original
Term and terminating on the fifth (5th) anniversary of such expiration
(which anniversary shall, if this Lease is so renewed, thereafter be
the Termination Date for all purposes of the provisions of this Lease
as applicable thereafter), by and only by giving to the Landlord
express, written notice of such renewal by not less than one hundred
eighty (180) days before the date on which the Renewal Term is to
commence (the Original Term and, if this Lease is renewed
<PAGE>
for the Renewal Term or otherwise; the period of any such renewal
being herein referred to collectively as "the Term").
3. The following is hereby added as subsection 2.1 of the Lease:
"Tenant may use the Premises (i) for general and executive
offices; (ii) for retail sales to the public of computers and
computer-related supplies and accessories; (iii) to service computers
and associated equipment; (iv) to take in computers and associated
equipment from the public for servicing at the Premises; (v) to have
the public pick up serviced items at the Premises; (vi) to ship such
lets in need of servicing from the Premises; and (vii) for education
and training of Tenant's employees, customers, and any other person
designated by Tenant.
Landlord will procure all certificates of occupancy or other
licenses and permits which may be required for the Tenant legally to
occupy the Premises, prior to the time Tenant occupies the Premises
for the aforesaid purposes, provided that any special business
permits or licenses which may be required of Tenant to conduct its
business at the Premises are the responsibility of Tenant. Tenant
agrees that it will aid the Landlord in the obtaining of such licenses
and permits if its assistance is required by the issuing authority or
authorities, but such assistance shall be given at no cost to Tenant
therefor."
4. The following provisions are hereby inserted at the end of
subsection 2.2:
"The Landlord hereby certifies that, as of the date of this
Lease, the Landlord has no actual knowledge of the noncompliance of
the Premises with any relevant laws, codes, ordinances or regulations
and the Landlord represents that the zoning classification of the
Premises, as of the date of this Lease, permits the use of the
Premises for the purposes set forth in section 2."
5. In subsection 2.3, after the words "within the Building", add
"except in areas designated by the Landlord for such purpose".
6. The provisions of clause (A) of subparagraph 3.1(a)(i) are hereby
deleted, and the following provisions are hereby inserted therein in their
place:
"(A) for the first Lease Year during the Original Term, is in the
sum of zero dollars ($0.00), and for the second Lease Year during the
Original Term, is in the sum of Three Hundred Eighty-Four Thousand
Eight Hundred Dollars ($384,800) plus (if the second Lease Year
commences on a day other than the first (lst) day of a calendar
month), $1,054.24 for each day of such calendar month falling within
the second Lease Year; and"
7. The following clauses (C) and (D) are hereby inserted in
subparagraph 3.1(a)(i), immediately after clause (B) thereof:
"(C) for the first Lease Year during the Renewal Term, is in a
sum equaling the greater of (l) the Net Component for the
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immediately preceding Lease Year, or (2) the product obtained by
multiplying (I) the said sum of Three Hundred Eighty-Four Thousand
Eight Hundred Dollars ($384,800) by (II) a fraction, the numerator of
which is the Consumer Price Index for the calendar month immediately
preceding that during which the Renewal Term commences, and the
denominator of which is the Consumer Price Index for the calendar
month containing the Commencement Date; and
(D) for each Lease Year thereafter during the Renewal Term, is in
a sum equaling the greater of (l) the Net Component for the
immediately preceding Lease Year, or (2) the product obtained by
multiplying (I) the Net Component for the first Lease Year during the
Renewal Term by (II) a fraction, the numerator of which is the total
of (x) the Consumer Price Index for the calendar month during which
the Renewal Term commences, plus (y) twenty-five percent (25%) of the
amount by which the Consumer Price Index for the calendar month
immediately preceding that during which such Lease Year commences
exceeds the Consumer Price Index for the calendar month during which
the Renewal Term commences, and the denominator of which is the
Consumer Price Index for the calendar month during which the Renewal
Term commences (the parties hereto hereby agreeing that those
provisions of clause (B) of this subparagraph 3.1(a)(i) which are set
forth in the parentheticals beginning on the ninth line of such clause
and continuing through the end thereof shall be applicable to the
provisions of clause (C) and this clause (D) as well); and"
8. The provisions of subparagraph 3.1(a)(ii) are hereby deleted, and
the following provisions are hereby inserted therein in their place:
"(ii) COSTS COMPONENT. An initial operating costs component
(hereinafter referred to as the 'Costs Component') which, (A) for the
first Lease Year during the Original Term, is in the sum of Zero
Dollars ($0.00), and (B) for the second Lease Year during the Original
Term, is in the sum of One Hundred Thirteen Thousand Nine Hundred
Sixty and 00/100 Dollars ($l13,960.00) plus (if the second Lease Year
commences on a day other than the first (lst) day of a calendar
month), $312.12 for each day of such calendar month falling within the
second Lease Year, and (C) for each Lease Year during the Original
Term after the second Lease Year, is in the sum of One Hundred
Thirteen Thousand Nine Hundred Sixty and 00/100 Dollars ($113,960.00),
and (D) for each Lease Year during the Renewal Term, is in a sum
equaling the total of One Hundred Thirteen Thousand Nine Hundred Sixty
and 00/100 Dollars ($113,960.00) plus the amount of the Additional
Rent payable under the provisions of subSection 3.2 for the
calendar year immediately preceding that during which the Renewal Term
begins, all without impairing the Tenant's liability for any
Additional Rent accruing under the provisions of subsection 3.2."
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<PAGE>
9. The provisions of paragraph 3.1(c) are hereby deleted, and the
following provisions are hereby inserted therein in their place:
"(c) LEASE YEAR. As used in the provisions of this Lease, the
term 'Lease Year' means (i) the period commencing on the Commencement
Date and terminating on the one hundred eightieth (180th) day after
the Commencement Date (which period shall constitute the first Lease
Year for purposes of the provisions of this Lease), and (ii) the
period commencing on the one hundred eighty-first (181st) day after
the Commencement Date and terminating on the last day of the calendar
month containing the date which is the first (lst) anniversary of the
said one hundred eightieth (180th) day (which period shall constitute
the second Lease Year for purposes of the provisions of this Lease),
and (iii) each successive period of twelve (12) calendar months
thereafter during the Term."
l0. In paragraph 3.2(a),
(A) add on the fourth line after the words "(whether regular or
special)" the words "except for penalties" and after "(ii) charges or
fees", add the words "except for penalties."
(B) add a clause (vi) as follows: "(vi) reasonable and competitive
management fees and overhead expenses for the Landover, Maryland area."
ll. The following specific items shall not be included in the
computation of Annual Operating Costs pursuant to paragraph 3.2(a) of the
Lease, to the extent set forth below:
a. Wages of all employees of Landlord over a building manager level
or employees whose time is not directly allocated to the management of the
Building;
b. Bonuses to employees of Landlord;
c. The costs of finishing rented space for tenants other than
Tenant;
d. Capital improvements;
e. Depreciation;
f. The cost of work or services of a type provided exclusively to or
for other tenants but not to the Tenant, excluding from this exclusion the
costs of building standard utilities (other than electricity) and building
standard janitorial and trash removal service, provided to other tenants;
g. Expenses directly payable by other tenants or occupants of the
Building (other than in the form of additional rent);
h. Brokers' commissions;
i. Debt service;
j. Legal expenses, but excluding from this exclusion legal expenses
incurred by Landlord in connection with its maintenance and operation of
the Premises, the Building or the Property;
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<PAGE>
k. Audit expenses incurred for income tax purposes, but excluding
from this exclusion expenses of audits done for purposes of rental
allocation;
l. Marketing expenses;
m. Expenses recovered under warranties and guarantees (the Landlord
hereby agreeing to use reasonable efforts to recover any such expenses
where recoverable thereunder); and
n. Rent paid under ground or prime leases.
12. Notwithstanding anything to the contrary contained in paragraph
3.2(f), (a) Landlord may make a reasonable estimate of Additional Rent
thereunder not more than once with respect to each calendar year during the
Term, and (b) the amount of such estimated Additional Rent shall not exceed
one hundred ten percent (ll0%) of the actual amount of the Additional Rent
payable under the provisions of subsection 3.2 for the immediately
preceding calendar year; provided, that such limitation shall not alter or
impair the Tenant's obligation to pay to the Landlord the actual amount of
such Additional Rent when computed and certified to the Tenant as
aforesaid, regardless of the amount: thereof.
13. Add the following parenthetical after the words "twelve (12)" in
paragraph 3.3(a): "(six (6), in the case of the first Lease Year)".
14. Paragraph 3.3(c) shall read as follows:
"(c) Each such payment shall be made promptly, when due, without
deduction or setoff whatsoever except as otherwise provided herein,
and without demand, failing which the Tenant shall pay to the Landlord
(after any notice and any applicable cure period to which the Tenant
may be entitled by the provisions of this Lease), as additional rent
for each day thereafter on which such payment is due but unpaid, a
late charge at a rate per annum which is two percentage points above
the prime rate of interest per annum then quoted by The Riggs National
Bank of Washington, D.C."
15. Add the following as paragraphs 3.3(d) and (e):
"(d) Tenant, or its accountants, shall have the right to inspect
Landlord's books and records to verify any increase in Annual
Operating Costs. Appropriate adjustments thereto shall be made if any
error is discovered in the computation of Annual Operating Costs.
(f) In the event Landlord contests any tax for which Tenant is
obligated to reimburse Landlord hereunder Tenant shall be entitled to
receive its proportionate share of any refund derived therefrom by the
Landlord. Such refund shall be reduced by the amount of actual
attorney's fees, actual appraisal fees and other related expenses paid
by Landlord as part of the contest. If the Tenant desires that the
Landlord contest any such taxes, the Tenant shall request the Landlord
to do so in writing, and the parties hereto shall discuss with each
other whether doing so would be a sound business decision (including
as one of the factors to be considered the possibility that the taxing
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<PAGE>
authorities could be entitled as a result of such contest to increase
the taxes levied against the Property).
16. Subsection 3.6 of the Lease shall be modified by adding on the
sixth line thereof after the words "Tenant shall pay the amount thereof as
Additional Rent the words "within thirty (30) days after demand therefor,
unless the Tenant is prohibited by law from doing so; in which event the
Landlord shall pay same in the first instance and Tenant shall reimburse
Landlord within thirty (30) days after demand therefor."
17. Add a new subsection 4.2 as follows:
"Landlord hereby grants to Tenant the right to assign this Lease
or to sublet all or any portion of the Premises throughout the Term
provided Tenant first obtains Landlord's consent to such assignment or
subletting in writing, which consent shall not be unreasonably
withheld or delayed. It is hereby agreed by Landlord and Tenant that
the financial condition of any subtenant shall not be considered by
Landlord in granting or withholding the consent herein required. In
the event Landlord does not respond to the written request for such
consent within thirty (30) days after the date of such request from
Tenant, Landlord's consent shall hereby be deemed given. Landlord's
consent or refusal of consent shall be in writing and, if Landlord
refuses consent, the reasons for such refusal are to be stated with
particularity. No such action taken with or without the Landlord's
consent shall in any way relieve or release the Tenant from liability
for the timely performance of all of the Tenant's obligations
hereunder.
Notwithstanding anything to the contrary herein contained, Tenant
may assign or sublet all or any portion(s) of the Premises at any time
to a subsidiary of Tenant, to the entity with which or into which
Tenant may merge, whether or not Tenant is the survivor of such
merger, or to any entity with which Tenant is affiliated, without the
need for Landlord's consent to such assignment or subletting.
Landlord shall be entitled to receive and retain, and the Tenant
shall promptly remit to the Landlord, fifty percent (50%) of any
profit which may inure to the Tenant's benefit as a result of any such
assignment, subletting or underletting, whether or not consented to by
the Landlord. In computing the amount of profit, if any, which may
inure to the Tenant's benefit, the sums received by the Tenant as a
result of any such assignment, subletting or underletting shall be
reduced by the amount of any brokerage commissions or tenant
improvement costs which have been paid by the Tenant as a necessary
part of the Tenant's subletting the Premises or assigning this Lease.
18. The following is hereby inserted as Section 5:
"Section 5. IMPROVEMENTS TO THE PREMISES.
5.1. The Tenant shall at its expense cause to be prepared and
submitted to the Landlord on or before January 15, 1985, full and
complete plans and specifications for the tenant finish
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work and other improvements (hereinafter referred to as "the
Improvements") which are to be made to the Premises, for review and,
if satisfactory to the Landlord in its reasonable discretion, approval
by the Landlord (which approval shall not unreasonably be withheld or
delayed). Once the said plans and specifications are in a form
satisfactory to each party hereto, the parties hereto shall agree in
writing on a schedule identifying such plans and specifications as so
approved (hereinafter referred to as "the Approved Plans and
Specifications"), and identifying such schedule as Exhibit B to this
Lease. The date on which the parties do so is hereinafter referred to
as "the Plan Approval Date". If the Plan Approval Date has not
occurred within fourteen (14) days after the Tenant has delivered full
and complete plans and specifications to the Landlord, as aforesaid,
then either party hereto may, at any time thereafter and before the
Plan Approval Date occurs, by giving express, written notice thereof
to the other, terminate this Lease as of a date specified in such
notice which shall be at least ten (l0) days after the date on which
such notice is given, in which event this Lease shall terminate on the
date so specified unless prior thereto the said plans and
specifications shall have been approved in writing by each party
hereto. The parties hereto hereby acknowledge. and agree (a) that the
Landlord shall provide at its sole expense, as part of the shell of
the Building, the bathrooms; lobby; stairwells; electrical, mechanical
and janitor's rooms; ceiling grid; window blinds; and building
perimeter walls with a prime coat of paint, all as shown in the
Landlord's basic floor plan of the Building as attached hereto as
Exhibit A; (b) that the Tenant shall be entitled to show and include
in the said plans and specifications as submitted to the Landlord for
the Landlord's review and approval a sign consisting of the words
"Digital Equipment Corporation" to be placed at the Tenant's expense
on the exterior of the Building, in which event, on approval by the
Landlord (which shall not as to such sign be unreasonably withheld),
the size, form and location of such sign will be set forth in the
Approved Plans and Specifications; (c) that the Tenant shall be
entitled from time to time during the Term to alter or replace such
sign with the Landlord's prior, written approval (which shall not
unreasonably be withheld), provided that such sign, as so altered or
replaced, is of substantially the same size as that shown in the
Approved Plans and Specifications, contains no flashing or other
moving light, and is to be constructed of materials similar to those
of the sign shown on the Approved Plans and Specifications and (d) the
Landlord shall not allow any other sign (other than directional and
similar signs at street level) to be placed on the Building during the
Term without obtaining the Tenant's prior written consent thereto
(which shall not unreasonably be withheld).
5.2. Notwithstanding anything to the contrary contained herein,
Tenant's consent to the Approved Plans and Specifications shall not
(i) constitute an opinion or agreement by Tenant that the work shown
therein is structurally sufficient or that said plans or the work are
in compliance with all laws (it
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being agreed that such compliance is solely Landlord's
responsibility); (ii) impose any present or future liability on
Tenant; (iii) constitute a waiver of any of Tenant's rights hereunder
to require the Improvements to be constructed in accordance with
applicable law or (iv) impose additional obligations on Tenant (it
being agreed by the parties hereto that total responsibility for the
design and construction of the Improvements, other than the Tenant
Equipment, is the Landlord's).
5.3. The Approved Plans and Specification shall be final and shall
not be changed by Landlord without the prior consent of Tenant which shall
not be unreasonably withheld.
5.4. CONSTRUCTION.
5.4.1. Within fourteen (14) days after the Plan Approval Date,
Landlord covenants and agrees that it shall commence construction of
and diligently proceed to complete all of the Improvements shown in
the Approved Plans and Specifications, (other than the purchase and
delivery to the Premises, in a condition ready for installation, of
those items of equipment listed in a schedule attached hereto as
Exhibit D (hereinafter referred to as "the Tenant Equipment"), for
which purchase and delivery the parties hereto hereby agree the
Landlord shall not be responsible).
5.4.2. Within seven (7) days after the Plan Approval Date, the
Landlord shall enter into a contract (hereinafter referred to as "the
Norwood Contract") with Norwood Industrial Construction Company
(hereinafter referred to as "Norwood") calling for Norwood's
construction of the Improvements in accordance with the Approved Plans
and Specifications for a fixed contract price (hereinafter referred to
as "the Total Base Contract Price"), not exceeding an amount to be
stipulated by written agreement of the parties hereto on or before the
Plan Approval Date. Of the Total Base Contract Price, the Landlord
shall bear the first $210,160.00 thereof, and the Tenant shall bear
the remainder thereof (hereinafter referred to as "the Tenant
Contribution"). The Tenant shall pay the Tenant Contribution, if any,
to the Landlord in monthly installments on the date on which the
Landlord has first paid the aggregate sum of $210,160 to Norwood under
the Norwood Contract and continuing on the first (1st) day of each
calendar month thereafter until the Improvements have been completed
and the Tenant has paid the entire said sum to the Landlord. Each such
installment to be paid by the Tenant. shall be in the amount to which
Norwood is entitled as of such date to be paid by the Landlord under
the said contract (after crediting the said $2l0,160 paid by the
Landlord), but only for work in place (net of a ten percent (l0%)
"holdback" to be retained by the Tenant until Norwood has
substantially completed the Improvements, at which point such
"holdback" shall immediately be paid by the Tenant to the Landlord,
and by the Landlord to Norwood). Tenant's obligation to make each such
payment shall be conditioned upon (a) Landlord's having furnished to
Tenant a
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copy of the requisition for payment provided by Norwood to Landlord
and covering the labor and materials constituting the work in place
for which such payment to Norwood is to be made, and (b) the Tenant's
architect for the Improvements having approved the work covered by
such requisition as being work in place and substantially in
accordance with the Approved Plans and Specifications, subject to the
correction of minor, punch list items to be agreed upon by the parties
hereto at the time such determination by Tenant's architect is made.
If Tenant's architect refuses to approve such work it shall state to
the Landlord within ten (10) days after its receipt thereof in writing
and with particularity each portion of the work covered by such
requisition which it believes is not work in place or does not
substantially conform to the Approved Plans and Specifications and the
manner in which it fails to conform, in which event the requisition
shall be deemed to have been approved as to the remainder of the work
covered thereby, and the Tenant shall pay to the Landlord the amount
which it would otherwise have been required to pay to Landlord were
such work approved by Tenant's architect in full, less Tenant's said
percentage of an amount reasonable adequate to pay the cost of causing
the said portions of the work to conform to the Approved Plans and
Specifications. The construction shall be performed in a good and
workmanlike manner, and in compliance with all applicable laws, orders
and regulations of federal, state, county and municipal authorities,
with any direction by any public officer pursuant to law and with all
regulations of any Board of Fire Underwriters having jurisdiction.
Landlord, at its sole cost and expense, shall obtain or cause to be
obtained all building permits, licenses, temporary and permanent
certificates of occupancy and other governmental approvals which may
be required to permit the construction of any of the work contained in
the Approved Plans and Specifications and the occupancy thereof by
Tenant.
5.5. From time to time hereafter, Tenant may require Landlord to
make changes to the work shown in the Approved Plans and
Specifications prior to substantial completion thereof (as herein
defined). If Tenant requests a change, Landlord shall notify Tenant,
in writing, before executing the change, of the cost thereof and/or
the savings to Landlord and the delay, if any, in substantial
completion caused by such change. If the parties cannot agree on the
cost of change it shall be determined with reference to the unit
prices previously furnished by Landlord hereunder and if no unit price
has been agreed upon, then the cost of same shall be determined by
reference to an Independent Arbiter (as herein defined) whose decision
shall be binding and final in such regard. In addition, if the parties
cannot agree on the delay in substantial completion as a result of
such change, same shall be decided by the Independent Arbiter.
Notwithstanding the decision of the Independent Arbiter, if in
Tenant's opinion the cost or delay is unacceptable to Tenant, Tenant
may thereafter withdraw its change order and thereupon Landlord shall
have no obligation to perform any work in
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connection therewith. The costs of the Independent Arbiter shall be
borne equally by both parties hereto. Tenant hereby designates its
employee, Carol Carrington, to act on its behalf in initiating and
approving change orders for purposes of this Section.
5.6. Any payment for change order work done pursuant to
subsection 5.5 shall be made by Tenant to Landlord within thirty (30)
days after the work which is the subject of the change order is
substantially completed and approved by the Tenant's architect as set
forth in subsection 5.4.
5.7. At any time during the course of construction as herein set
forth, Tenant may enter upon the Premises for purposes of inspecting
the work, taking measurements, making plans, installing trade
fixtures, erecting temporary or permanent signs and doing such other
work as may be appropriate or desirable without being deemed thereby
to have taken possession. Tenant shall use reasonable efforts to
minimize any interference with Landlord's construction work in the
Premises in exercising Tenant's rights under this section.
5.8. "Substantial completion" (or any variation of this phrase
such, as "substantially complete" or "substantially completed", as
used anywhere in this Lease with respect to the Improvements) shall be
deemed to have occurred when the Premises are first available for
uninterrupted use and occupancy by Tenant with a minimum of
interference by Landlord (but regardless of whether any of the Tenant
Equipment not purchased by the Tenant and delivered to the Premises in
a condition ready for installation on or before May 1, 1985
(hereinafter referred to as "Delayed Tenant Equipment") has been
installed or is operable) and the following have occurred:
(i) Construction of the Improvements (other than the Delayed
Tenant Equipment) is completed except for minor punch list items;
(ii) Plumbing, heating, air-conditioning, electrical facilities,
and sprinkler system (installed and tested per specifications) (other
than those items, if any, which are part of the Delayed Tenant
Equipment) shall have been completed to such extent that the
appropriate services to be rendered through such facilities can be and
are being supplied;
(iii) The entrance of the Building shall have been completed
and the means of ingress and egress is in no manner interfered with by
any scaffolding, building materials or other articles;
(iv) A permanent certificate of occupancy for the Premises (as
constructed in accordance with the Approved Plans and Specifications),
or such other written governmental authorization as will allow the
Tenant legally to occupy the Premises, shall have been issued and
delivered to Tenant; and
(v) The parking areas and access roads have been completed
except for minor punch list items.
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If the parties cannot agree on whether the Landlord's construction of
the Improvements is substantially complete, either party may give written
notice to the other that such party desires that the parties agree on an
independent third party (hereinafter referred to as "the Independent
Arbiter"), who upon his selection shall visit the Premises, evaluate the
work and render a written decision on: (i) the state of completeness of the
Improvements and (ii) the date on which substantial completion occurred. In
such event the parties hereto shall agree in writing on the identity of an
Independent Arbiter within five (5) business days after such notice is
given. The party who is found to be in error by the Independent Arbiter
shall pay the Independent Arbiter's expenses.
5.9. Landlord shall complete all punch list items and any other
uncompleted portions of its work as expeditiously as possible after
substantial completion of the construction of the Improvements, but in any
event within thirty (30) days thereafter unless such item cannot be
completed within said thirty (30) day period, in which event Landlord shall
commence the work for such item with all due diligence within said thirty
(30) days and shall complete same within the sixty (60) day period
thereafter.
5.10. If the Improvements (other than the Delayed Tenant
Equipment) are not substantially completed on or before June l, 1985, then
(anything contained in the provisions of Section l to the contrary
notwithstanding) the Commencement Date shall be the earlier to occur of (a)
the date on which the Tenant takes possession of the Premises or (b) the
forty-fifth (45th) day after the date on which the Landlord substantially
completes the Improvements (other than the Delayed Tenant Equipment);
provided, that if the Improvements (other than the Delayed Tenant
Equipment) have not been substantially completed by January 1, 1986, then
Tenant shall have the right to cancel and terminate this Lease upon ten
(l0) days' written notice to Landlord, provided that the Improvements
(other than the Delayed Tenant Equipment) are not substantially completed
by the end of the said ten (l0) day period. In such event, this Lease and
the Term shall at the end of the said ten (l0) day period cease and expire
and thereafter neither party shall have any further rights or obligations
hereunder. Tenant shall have no liability to Landlord for a termination of
this Lease pursuant to this subsection 5.l0.
5.11. Landlord and/or its general contractor shall procure and
maintain in effect during the term of construction, the following insurance
coverages with an insurance company or companies authorized to do business
in Maryland:
l. WORKMEN'S COMPENSATION - Statutory Limits for Maryland,
together with "ALL STATES" and "VOLUNTARY COMPENSATION" and "FOREIGN
COMPENSATION" coverage endorsements.
2. EMPLOYER'S LIABILITY INSURANCE with a limit of $100,000.
3. COMPREHENSIVE LIABILITY - $3,000,000 Combined Single Limit,
including Personal Injury, Contractual and Products/Completed
Operations Liability.
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Coverage must include the following:
A. Premises - Operations
B. Elevators and Hoists
C. Independent Contractor
D. Contractual Liability assumed under this contract
E. Completed Operations - Products
F. Explosion, Underground and Collapse (XCU) Coverage
4. Automobile Liability-Including Owned, Hired and Non-owned
vehicles:
$l,000,000 each person Bodily Injury
$3,000,000 each occurrence Bodily Injury
$250,000 each occurrence Property Injury
Coverage must include the following:
A. Owned vehicles
B. Leased vehicles
C. Hired vehicles
D. Non-owned vehicles
Landlord shall furnish the Tenant with certificates of insurance
evidencing such coverage prior to commencement of any construction
work done under this Lease. The following statement shall appear in
each certificate of insurance provided to Tenant by Landlord
hereunder:
It is agreed that in the event of any material change in,
cancellation, or non-renewal of this policy, thirty (30) days prior
notice will be given to:
DIGITAL EQUIPMENT CORPORATION
5900 Princess Garden Parkway
Lanham, Maryland 20706
Attn: Regional Real Estate Manager
5.12. Landlord shall give prompt notice to Tenant of all losses,
damages, or injuries to any person or to property of Tenant, Landlord, or
third parties which may in any way be related to the Lease or for which a
claim may be made against Tenant. Landlord shall promptly report to Tenant
all such claims of which Landlord has notice, whether related to matters
insured or uninsured. No settlement or payment for any claim, loss, injury,
damage, or other matter as to which Tenant may be charged with an
obligation to make any payment or reimbursement shall be made by Landlord
without the written consent of Tenant, which shall not unreasonably be
withheld or delayed.
The carrying of any of the insurance required hereunder shall not be
interpreted as relieving Landlord of any responsibility to Tenant. Landlord
shall assist and cooperate with any insurance company in the adjustment or
litigation of all claims arising under the terms of this Section.
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Landlord shall procure and maintain Landlord installation floater
insurance to protect its interests and that of its subcontractors during
the course of the construction work.
Tenant does not and will not waive any rights which it may have
against Landlord and/or its representatives for any loss, expense and
damage to persons and property (tangible and intangible) from any cause
whatsoever.
5.13. ACCEPTANCE OF POSSESSION. Except for (a) latent defects or
incomplete work which would not reasonably have been revealed by an
inspection of the Premises made for the purpose of discovering the same
when the Landlord delivers possession of the Premises to the Tenant, and
(b) any other item of incomplete work set forth on a "punch list" prepared
by the Tenant and approved in writing by the Landlord before such delivery
of possession, by its assumption of possession of the Premises the Tenant
shall for all purposes of the provisions of this Lease be deemed to have
accepted the Premises and the Improvements and to have acknowledged them to
be in the condition called for hereunder.
19. The following is substituted as Section 6:
"FIRE AND OTHER CASUALTY
6.1. In the event that the Premises or the Building of which they
form a part should be damaged or destroyed by fire or other casualty
to an extent of fifty percent (50%) or more, or if as a result of fire
or other casualty Tenant's access to the Premises should be
substantially interfered with or become unavailable, then, in such
event, Landlord or Tenant may terminate this Lease by the giving of
written notice to the other within thirty (30) days after the date of
the damage or destruction, in which event this Lease shall terminate
on the one hundred fiftieth (150th) day after the date of such notice
as if that date were the date set forth in this Lease for the
expiration of the Term, unless such restoration is substantially
completed, and such access is restored, within such one hundred fifty
(150) day period.
If this Lease is not terminated as aforesaid, Landlord shall
proceed diligently to repair and restore the Premises and Building
forthwith, to substantially the same condition they were in at the
time immediately preceding the damage or destruction provided,
however, that Landlord shall not be obligated to restore the Tenant
Equipment or Tenant's leasehold improvements or any alterations in the
Premises made by Tenant except to the extent Landlord is reimbursed
for same under its insurance policies. If Landlord has not
substantially completed its restoration within the one hundred fifty
(150) day period after the date of the damage or destruction, Tenant
may terminate this Lease by giving Landlord written notice of
termination within five (5) days after the expiration of one hundred
fifty (150) day period, and on the date set forth in such notice the
Term hereof shall cease and determine as if such date were the date
set forth herein for the expiration of the Term, unless such
restoration is substantially completed within such five (5) day
period.
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6.2. In the event the Premises or the Building of which they form
a part shall be damaged or destroyed by fire or other casualty to an
extent of less than fifty percent (50%), then, and in such event,
Landlord shall proceed diligently to repair and restore the Premises
or the Building, forthwith, to substantially the same condition they
were in at the time immediately preceding the damage or destruction,
but Landlord shall not be obligated to repair and restore the Tenant
Equipment or leasehold improvements made by Tenant nor any alterations
to the Premises made by Tenant (except to the extent Landlord is
reimbursed for same under its insurance policies) provided, however,
that if Landlord shall not have completed substantially its repair and
restoration within the one hundred twenty (120) day period after the
date of the fire or other casualty, then Tenant shall have the right
to terminate this Lease by the giving of written notice to Landlord
within five (5) days after the expiration of such one hundred twenty
(120) day period and on the date set for the termination of the Term,
this Lease shall cease and expire, unless such restoration is
substantially completed within the said five (5) day period.
6.3. From the date of such damage to or destruction by fire or
other casualty of the Premises or Building or part thereof or
substantial interference with the access to the Premises, a
proportionate part of the Base Rent and Additional Rent accruing,
under Section 3, according to the nature and extent of the Premises
rendered unusable by Tenant thereby, shall be abated until the
Premises and such access have been restored, as aforesaid. In the
event this Lease is terminated as hereunder provided, Tenant shall pay
the Base Rent and Additional Rent apportioned to the date of such
termination and thereafter Tenant shall be relieved of all further
liability for the payment thereof.
6.4. Notwithstanding anything to the contrary contained herein,
Landlord's obligation to restore the Premises (except for the Tenant
equipment and Tenant's leasehold improvements and alterations as set
forth in this Section 6) shall not be contingent on Landlord's receipt
of sufficient insurance proceeds and shall not be conditioned upon the
release of such proceeds by the holder of any mortgage covering the
Premises, the Building and/or the Property."
20. The following is substituted as subsection 7.1:
"Landlord covenants that it shall supply or cause to be supplied
to the Premises gas, hot and cold running water for lavatory (and
cooking) and drinking purposes, electricity and sewer service, at no
cost to Tenant (except as set forth hereinbelow, and without impairing
Tenant's obligation to pay Additional Rent under the provisions of
subsection 3.2), during the hours hereinafter set forth. The Landlord
further agrees that the heating system of the Premises is adequate to
heat all areas of the Premises to an inside temperature of
seventy-five (75) degrees Fahrenheit when the outside temperature is
zero (0) degrees Fahrenheit and that the air-conditioning system is
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adequate to cool all areas of the Premises to an inside temperature of
seventy-five (75) degrees Fahrenheit plus or minus two (2) degrees
when relative humidity is fifty percent (50%) plus or minus five
percent (5%) and the outside temperature is ninety-five (95) degrees
dry bulb, seventy-three (73) degrees wet bulb. Unless prevented by
causes beyond Landlord's control, the services to be rendered by
Landlord set forth in this-section shall be provided between the hours
of 8 AM and 5 PM Monday through Friday, and between 9AM and 1 PM on
Saturday, except holidays. Landlord shall also provide five (5) days a
week those cleaning services shown on Exhibit E attached hereto and
made a part hereof.
In the event that the utilities or services which Landlord is
obligated hereunder to provide to the Premises are interrupted such
that they are provided only intermittently or such utilities or
services altogether cease to be provided to the Premises for any
reason whatsoever for a period (hereinafter referred to as "the
Non-Service Period") of ten consecutive (10) days or more, then (a)
after the first ten (10) days of the Non-Service Period the Base Rent
shall be Abated, until such service is again belong provided in
accordance with the provisions of this Lease, in proportion to the
floor area of so much of the Premises as to which such service is not
being provided in accordance with the provisions of this Lease, and
(b) if such service is not restored, so that it is being provided in
accordance with the provisions of this Lease, within forty-five (45)
days after the commencement of the Non-Service Period, the Tenant
shall have the right to cancel and terminate this Lease by giving
written notice to the Landlord at least fifteen (15 days before the
date of such termination set forth in such notice, in which event this
lease shall be canceled and terminated on the date set forth in such
notice, unless such service is restored, as aforesaid, before the end
of such fifteen (15) day period.
21. Section 7.2 of the Lease is modified by adding on line 3 of
subsection (b) after "written approval thereof", the words "which
shall not be unreasonably withheld or delayed."
22. At the end of subsection 7.3(b) add the following:
"All additions made to the Premises shall belong to the Landlord
and shall become part of the Premises, without compensation to Tenant.
The Landlord, without expense to itself, shall cooperate with Tenant
in securing building and other permits, licenses and authorizations
necessary from time to time for work permitted under this Lease."
23. The following shall be added as subsection 7.4:
"7.4 (a) Subject to the provisions of subsection 5.13, Landlord
shall at all times throughout the Term hereof be responsible for and
make all repairs, replacements and perform all maintenance which may
be necessitated by defective design or construction of the Premises
and/or Building, and/or the Improvements (other than the Tenant
Equipment), or which may be necessitated by latent defects in any of
the foregoing.
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(b) In performing its obligations, covenants and agreements under
this Lease, landlord shall not unreasonably interfere with Tenant's
business operations in the Premises.
(c) Landlord, at its sole cost and expense, shall throughout the
Term perform all maintenance and make all repairs and replacements
within and to the structural portions of the Premises, and the
structural and non-structural portions of the common areas and the
remainder of the Building outside of the Premises, and to any and all
electrical, mechanical, plumbing, heating, ventilating, and
air-conditioning systems within the Building (other than the Tenant
Equipment), needed to keep them or it in good working order and
condition and operating to design capacity, whether or not serving or
located in the Premises, and whether ordinary or extraordinary or
foreseen or unforeseen. This provision is not intended to release or
relieve Tenant from payment for any such repair or replacement
necessitated by the negligence or willful acts of Tenant, its agents,
servants, employees or business invitees within the Premises.
(d) Whenever throughout the Term, maintenance, repairs and/or
replacements are required to relieve an emergency situation affecting
the Premises and/or Building and Landlord is obligated to perform such
maintenance or make such repair or replacements under this Lease,
Landlord shall within three (3) hours after notification (which may be
oral) of the need of such maintenance, repairs and/or replacement by
Tenant, provided qualified personnel on the scene to evaluated the
situation and to commence maintenance, repairs and/or replacements and
pursue same to completion with the utmost diligence. In the event the
maintenance, repairs and/or replacements cannot be accomplished within
twenty-four (24) hours after notification of the need therefor as
aforesaid, Landlord, within such twenty-four (24) hour period, shall
provide to Tenant a schedule setting forth the steps to be taken to
effect the maintenance, repairs, and/or replacements and the times
when such work shall be done. In the event of such emergency
situation, Landlord shall do whatever is necessary including requiring
its employees, and/or its contractors to work overtime, weekends, and
holidays in order to accomplish the maintenance, repairs, and/or
replacements in the shortest possible time.
In the event of a non-emergency situation which affects the
Premises and/or Building, and requires maintenance, repairs and/or
replacements for which the Landlord is responsible under this Lease,
the work shall be completed by Landlord within ten (10) days after
notification of the need therefor by Tenant.
"Emergency situation" as herein used is hereby defined to mean a
situation which threatens the physical well-being of persons in the
Premises and/or the Building, or which substantially disrupts the
Tenant's use and/or occupancy of the Premises or any portion thereof
or Tenant's use of parking."
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24. In paragraph 8.2(b) add after the word "ten (10)" in line l
thereof the word "business".
25. In subsection 8.4 add in the first line after "Event of Default"
the phrase "and the expiration of any applicable cure period".
26. Add as a new subsection 8.5 the following:
"Notwithstanding anything to the contrary herein contained, in
order to mitigate the damages which may be incurred because of
Tenant's default, Landlord shall use its reasonable efforts to relet
the Premises by actively offering same for rent."
27. Section 10 of the Lease shall be modified by inserting in
subsection 10. 2 after the words "thereof or" the words "(within the six
(6) month period prior to the expiration of the Term) to".
28. And at the end of subsection 11.1 the following:
"Landlord hereby agrees that the use of the Premises by Tenant in
accordance with the provisions of Section 2 shall no make Landlord's
polices of insurance covering the Property or any liability of
Landlord in connection therewith void or suspended or increase the
insurance risk thereunder or increase the premiums payable therefor."
29. In subsection 11.2 add the following sentence:
"The Tenant shall provide to the Landlord, promptly upon written
demand by the Landlord, certificates of the insurer evidencing the
existence of the insurance coverage required by the foregoing
provisions of this subsection".
30. In subsection 11.3, add the following after the word "lender":
", but in any event in an amount which is not less than the full
replacement cost of the Building, as well as general liability
insurance covering the landlord and having limits of not less than
$l,000,000 per person for injury or death sustained in any one
occurrence, $1,000,000 for injury or death sustained by all persons in
any one occurrence, and $250,000 for property damage in any one
occurrence, with an endorsement having the effect of including in such
coverage contractual liability insurance for the Landlord."
31. In subsection 11.5 add at the end of paragraph (b) after the word
"Premises" the following:
", if, only if and to the extent that such injury, death or
damage is proximately caused by the negligent or intentional act or
omission of the Tenant or its agents, officers or employees. In the
event the Landlord is notified of a claim, action or proceeding, or
becomes aware of an occurrence, which may result in indemnification by
Tenant of Landlord as provided above, the Landlord shall give
immediate written notice to Tenant and provide complete particulars
known by the Landlord. The Landlord shall immediately forward to the
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<PAGE>
Tenant every demand, notice, summons or other process received by
Landlord or his representatives.
Tenant (a) has the right to participate with the Landlord in the
defense of any claim, action or proceeding wherein Landlord is
entitled to indemnification under the provisions of this Section and
(b) has the sole right to defend any action, claim or proceeding in
which the Tenant but not the Landlord is named as a defendant.
The parties hereto will fully cooperate with each other in the
defense or settlement of any claim, action, or proceeding."
32. Add at the end of paragraph 12.1(a):
"except that Tenant may prove the value of its equipment and
trade fixtures, its relocation expenses, and the value of any
leasehold improvements (including the Tenant Equipment, but excluding
any other Improvements) paid for by Tenant in any hearing, proceeding
or other method to establish the award to be paid by the condemning
authority and Tenant shall receive the portion of such award
representing the aforestated value."
33. Add a new subsection 12.2 as follows:
"12.2. CONDEMNATION.
(a) If during the Term the whole or a substantial portion of the
Premises or of the Building is taken under the power of eminent
domain, the Term shall terminate as of the time when Landlord shall be
divested of title to the Premises or the Building or substantial
portion thereof, as if such date were the date set forth herein for
the expiration of this Lease, and the Base Rent and Additional Rent
payable hereunder shall abate and be apportioned to the time of such
termination. Substantial portion as used in this Section shall mean a
portion of the Premises and/or the Building in excess of fifty percent
(50%).
(b) If less than a substantial portion of the Premises and/or the
Building shall be taken as contemplated in paragraph 12.2(a) above,
Landlord shall restore the remainder of the Premises and/or the
Building to the condition they were in prior to such taking, and such
restoration shall result in the Building being a complete and
integrated architectural unit; provided however that such repair and
restoration shall be substantially completed within one hundred twenty
(120) days of the date Landlord is divested of title; otherwise Tenant
may terminate the Lease by notice given in writing to Landlord, in
which event this Lease shall terminate on the date set forth in such
notice (which date shall in no event be less than forty-five (45) days
from the date of the notice), unless by such date such repair and
restoration have been substantially completed, all as of such date
were the date set forth herein for the expiration of this Lease.
"Substantial completion" as used herein shall have the meaning set
forth in the provisions of subsection 5.7 of this Lease.
(c) In the event of a taking of less than a substantial portion
of the premises and/or the Building such that the Lease
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<PAGE>
shall continue in force and effect for the remainder of the Premises,
this Lease shall terminate as to any portion of the premises so taken,
and the Base Rent and Additional rent payable hereunder shall be
reduced for the remainder of the Term, in proportion to the portion
(if any) of the Premises which is taken, such termination and
reduction to be effective as of the date Landlord is divested of
title.
(d) In the event of a taking of any or all of the parking lot
serving the Building, the Landlord shall (unless such taking is also
of any or all of the Premises or the remainder of the Building and
this Lease is terminated under the foregoing provisions of this
subsection 12.2) provide for the use, by and only by the Tenant and
the other tenants of the Building and their agents, employees and
business invitees, that number, of any, of parking spaces in the
immediate vicinity of the Building as may be necessary for there to be
available (when added to the spaces remaining in the said parking lot
after such taking) at least three and six-tenths (3.6) parking spaces
for each one thousand (1,000) square feet of net rentable floor area
in the Building."
34. Add in subsection 14.2 after "ordinary wear and tear", "fire,
casualty and damage for which Tenant is not responsible under this Lease."
35. Add in paragraph 14.2(b) after "except that" the words "all of
Tenant's personal property and"
36. Add at the end of subsection 16.1 the following:
"provided, however, that the holder of any such Mortgage shall
enter into an agreement with the Tenant that, in the event of
foreclosure by the holder thereof, this Lease and the rights of the
Tenant hereunder shall continue in full force and effect and shall not
be terminated or disturbed except in accordance with the provisions of
this Lease. The Tenant agrees that it will, upon the request of the
Landlord, execute, acknowledge and deliver any and all instruments
deemed by the Landlord necessary or desirable to give effect to or
notice of such subordination. No such instrument shall alter any of
the term, covenants or conditions of this Lease. In the event of the
existence of any Mortgage at the time this Lease is executed and to
which this Lease would be subordinate, Landlord shall obtain the type
of agreement mentioned in this Section in favor of Tenant within
thirty (30) days after the date of Tenant's execution of this Lease."
37. In the first line of Section 17, the words "five (5) days" are
deleted and the words "ten (10) business days" are substituted in its place
and stead.
38. A new Section 18 is inserted as follows:
"Section 18. NOTICES
(a) All notices, demands, requests and other instruments which
may or are required to be given by either party to the
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<PAGE>
other under this Lease shall be given in writing. All notices,
demands, requests and other instruments from the Landlord to the
Tenant shall be deemed to have been properly given if sent by United
States Registered or Certified Mail, postage prepaid, return receipt
requested, addressed to the Tenant at Regional Real Estate Manager,
5900 Princess Garden Parkway, Lanham, Maryland 20706, with a copy to
Law Department, Digital Equipment Corporation, 111 Powder Mill Road,
Maynard, Massachusetts 01754.
(b) All notices, demands, requests and other instruments from the
Tenant to the Landlord shall be deemed properly given if sent by
United States Registered or Certified Mail, postage prepaid, return
receipt requested, addressed to the Landlord at: Rouse &
Associates-Metro East Executive Terrace Limited Partnership, 8181
Professional Place, Landover, Maryland 20785 or at such other address
as the Landlord from time to time shall have designated by written
notice to the Tenant."
39. A new Section 20 is hereby added to the Lease as follows:
"Section 20. PARKING
Landlord shall cause all snow and ice to be removed from the
parking area and from the means of ingress and egress thereto on a
timely basis. Tenant may also use the parking area shown on Exhibit A
attached hereto and made a part hereof. Landlord represents and
warrants that the Parking ratio for the Building is 3.6 spaces per
1,000 square feet of rentable area, and that at all times one hundred
forty spaces will be available for use by the Tenant and its employees
and invitees."
40. A new Section 21 is hereby added to the Lease as follows:
"Section 21. DISPUTES
(a) It is agreed that if at any time a dispute shall arise as to
any amount or sum of money to be paid by one party to the other under
the provisions of this Lease, the party against whom the obligation to
pay the money is asserted shall have the right to make payment "under
protest" and such payment shall not be regarded as a voluntary payment
and there shall survive the right on the part of said party to
institute suit for the recovery of such sum, and if it shall be
adjudged that there was no legal obligation on the part of said party
to pay such sum or any part thereof, said party shall be entitled to
recover such sum or as much thereof as it was not legally required to
pay under the provisions of this Lease; and if at any time a dispute
shall arise between the parties hereto as to any work to be performed
by either of them under the provisions of this Lease, the party
against whom the work is asserted may perform such work and pay the
cost thereof "under protest" and the performance of such work shall in
no event be regarded as a voluntary performance and there shall
survive the right on the part of said party to institute suit for the
recovery of the costs of such work, and if it shall be adjudged that
there waS no legal obligation on the part of said party to perform the
same or any part thereof,
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<PAGE>
said party shall be entitled to recover the cost of such work or the
cost of so much thereof as said party was not legally required to
perform under the provisions of this Lease."
41. The Landlord agrees for purposes of this Lease, that it shall, at
Tenant's sole expense, cooperate with Tenant in securing building and other
permits, licenses and authorizations necessary from time to time for any
work permitted to be performed by Tenant under this Lease.
42. OPTION TO LEASE ADDITIONAL SPACE. Anything contained in the
provisions of this Lease to the contrary notwithstanding, and provided that
this Lease has been renewed for the Renewal Term, the Tenant shall be
entitled at any time during the period of three (3) years beginning on the
Commencement Date (hereinafter referred to as "the 3-Year Period")
following the Landlord's having notified the Tenant in writing during such
period that such Additional Space is available (and provided that the
Tenant is not then in default in performing its obligations under the
provisions of this Lease), to Lease from the Landlord additional space
containing 6,500 square feet of floor area (hereinafter referred to as "the
Additional Space") on the floor above or the floor below the Premises, in
the Building. The Landlord hereby affirmatively agrees to cause Additional
Spaces containing in the aggregate at least 6,500 square feet of floor area
on one or the other of such floors of the Building to, become available
during the 3-Year Period for lease by the Tenant, as aforesaid. Such
Additional Space having such minimum aggregate floor area may become
available for lease under not more than two (2) Additional Space Leases
(which may consist of amendments of this Lease) commencing at different
times during the 3-Year Period, and/or may be offered at differing times
during the 3-Year Period by the Landlord to the Tenant. The Additional
Space leased under any Additional Space Lease shall be contiguous to that
leased under any other Additional Space Lease. Any such lease of the
Additional Space shall be on the terms hereinafter set forth;
42.1. The Tenant shall be entitled to exercise such right to lease
the Additional Space by giving the Landlord written notice of its exercise
of such right within fifteen (15) business days after the Landlord notifies
the Tenant in writing that the Additional Space is available. If the Tenant
either fails to notify the Landlord in writing of its intent to lease the
Additional Space within the said period of fifteen (15) days, or fails to
execute and return to the Landlord the Additional Space Lease covering such
Additional Space within thirty (30) days (as such period may be extended by
written agreement of the parties hereto) after such Additional Space Lease
is prepared and delivered by the Landlord to the Tenant for such purpose,
the Landlord shall be entitled thereafter to lease any or all such
Additional Space to any person or persons whatsoever, free and clear of the
Tenant's rights under the provisions of this Lease. Any Additional Space
Lease entered into by the parties hereto shall not be inconsistent with the
provisions of this Section 20. No failure by the Tenant to lease any
Additional Space becoming available shall be construed in any manner as a
waiver of the Tenant's rights hereunder to lease any other Additional Space
which may subsequently become available during the 3-Year Period, as
aforesaid, until the Tenant has leased Additional Space having an aggregate
floor area of at least 6,500 square feet.
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<PAGE>
42.2. The Tenant's use and occupancy of the Additional Space (a)
shall be for a term which is co-extensive with that portion of the Term of
this Lease (including the Renewal Term) remaining at the entry into such
Additional Space Lease, and (b) shall be set forth in a separate lease
(hereinafter referred to as an "Additional Space Lease") to be entered into
upon the same terms and subject to the same conditions as those set forth
in this Lease; provided, that anything contained in the provisions of this
Lease to the contrary notwithstanding, (a) for purposes of the provisions
of subsection 2.1 of this Lease, as applied to the Additional Space, the
Base Rent for the Additional Space for the Initial Lease Year under such
Additional Space Lease shall equal the result obtained by multiplying the
number of square feet of floor area of the Additional Space covered thereby
by that sum per square foot which the Landlord is then quoting to
prospective tenants of space within the Building (which sum shall be
calculated by the Landlord and a satisfactory explanation thereof provided
to the Tenant); (b) the Additional Space covered thereby shall be delivered
by the Landlord to the Tenant "as is", the Landlord having no obligation to
make any improvements to, or remove any improvements from, or otherwise
alter, such Additional Space; and (c) such Additional Space Lease shall, at
the Landlord's option, provide for the delivery of utility services and the
payment of Taxes in the same manner and using the same procedure as is set
forth in this Lease.
43. RIGHT OF FIRST REFUSAL.
43.1. The Landlord shall not during the Term grant to any person other
than the Tenant the right to purchase any or all of the Property unless the
Landlord has first offered in writing to sell the Property to the Tenant
for a price which is not more than the price at which the Landlord intends
to sell the Property to such other person, as aforesaid, and unless either
(a) Tenant has not, within five (5) days after the Landlord's delivery of
such written offer to the Tenant, accepted such offer in writing and on
terms and subject to conditions which are acceptable to each party hereto,
or (b) if the Tenant does accept such offer within the said period of five
(5) days, the parties hereto have not entered into a written agreement of
sale covering the Tenant's purchase of so much of the Property as is the
subject of such offer, within twenty-one (21) days after the date of such
acceptance. In the event that such written acceptance is not given or such
written agreement not entered into within the respective periods referred
to hereinabove, then the Landlord shall be entitled at any time thereafter
to sell any or all of the Property to any person whatsoever, and the
Tenant's rights under the provisions of this Section 43 shall thereafter be
of no further force or effect.
43.2. In addition, the Landlord shall not during the Term initiate
negotiations with any person for the sale of any or all of the Property
without first notifying the Tenant in writing of the Landlord's intention
to do so and allowing the Tenant a period of ten (10) days after such
notice is given within which to advise the Landlord in writing that the
Tenant desires to purchase the Property (in which event, unless the parties
hereto enter into a written agreement of sale covering such purchase within
twenty-one (21) days after the Tenant gives such notice to the Landlord,
the Landlord shall be entitled at any time thereafter to sell any or all of
the Property to any person whatsoever, and the Tenant's
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<PAGE>
rights under the provisions of this Section 43 shall thereafter be of no
further force or effect).
WITNESS: ROUSE & ASSOCIATES-METRO
EAST EXECUTIVE TERRACE
LIMITED PARTNERSHIP, Landlord
/s/ Francis M. Tana by /s/ Claiborn M. Carr, III (SEAL)
------------------------- ---------------------------
Claiborn M. Carr, III,
General Partner
ATTEST: DIGITAL EQUIPMENT CORPORATION,
Tenant
------------------------- by /s/ Neal D. Hannon, (SEAL)
-----------------------
Neal D. Hannon, Manager
Date: March, 1985 Corporate Real Estate Acquisition
------------------
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<PAGE>
METRO EXECUTIVE TERRACE
AGREEMENT OF LEASE
by and between
ROUSE & ASSOCIATES-METRO EAST EXECUTIVE TERRACE
LIMITED PARTNERSHIP
and
DIGITAL EQUIPMENT CORPORATION
(covering 29,600 square feet)
EXHIBIT A
PLAT SHOWING THE PREMISES
<PAGE>
METRO EXECUTIVE TERRACE
AGREEMENT OF LEASE
by and between
ROUSE & ASSOCIATES-METRO EAST EXECUTIVE TERRACE
LIMITED PARTNERSHIP
and
DIGITAL EQUIPMENT CORPORATION
(covering 29,600 square feet)
EXHIBIT B
SCHEDULE OF APPROVED PLANS AND SPECIFICATIONS
<PAGE>
METRO EXECUTIVE TERRACE
AGREEMENT OF LEASE
by and between
ROUSE & ASSOCIATES-METRO EAST EXECUTIVE TERRACE
LIMITED PARTNERSHIP
and
DIGITAL EQUIPMENT CORPORATION
(covering 29,600 square feet)
EXHIBIT C
CURRENT RULES AND REGULATIONS
<PAGE>
EXHIBIT C
Current Rules and Regulations
1. The sidewalks, lobbies, passages, elevators and stairways shall not be
obstructed by the Tenant or used by the Tenant for any purpose other than
ingress and egress from and to the Tenant's offices. The Landlord shall in all
cases retain the right to control or prevent access thereto by any person whose
presence, in the Landlord's judgment, would be prejudicial to the safety, peace,
character or reputation of the Building or of any tenant of the Property.
2. The toilet rooms, water closets, sinks, faucets, plumbing and other
service apparatus of any kind shall not be used by the Tenant for any purpose
other than those for which they were installed, and no sweepings, rubbish, rags,
ashes, chemicals or other refuse or injurious substances shall be placed therein
or used in connection therewith by the Tenant, or left by the Tenant in the
lobbies, passages, elevators or stairways of the Building.
3. No skylight, window, door or transom of the Building shall be covered
or obstructed by the Tenant, and no window shade, blind, curtain, screen, storm
window, awning or other material shall be installed or placed on any window or
in any window space, except ask approved in writing by the Landlord. If the
Landlord has installed or hereafter installs any shade, blind or curtain in the
Premises, the Tenant shall not remove it without first obtaining the Landlord's
written consent thereto.
4. No sign, lettering, insignia, advertisement, notice or other thing
shall be inscribed, painted, installed, erected or placed in any portion of the
Premises which may be seen from outside the Building, or on any window, window
space or other part of the exterior or interior of the Building, unless first
approved in writing by the Landlord. Names on suite entrances shall be provided
by and only by the Landlord and at the Tenant's expense, using in each instance
lettering of a design and in a form consistent with the other lettering in the
Building, and first approved in writing by the Landlord. The Tenant shall not
erect any stand, booth or showcase or other article or matter in or upon the
Premises and/or the Building without first obtaining the Landlord's written
consent thereto.
5. The Tenant shall not place any additional lock upon any door within the
Premises or elsewhere upon the Property, and shall surrender all keys for all
such locks at the end of the Term. The Landlord shall provide the Tenant with
one set of keys to the Premises when the Tenant assumes possession thereof.
6. The delivery of towels, ice, water, food, beverages, newspapers and
other supplies, equipment and furniture will be permitted only under the
Landlord's direction and control.
7. The Tenant shall not do or permit to be done anything which obstructs
or interferes with the rights of any other tenant of the Property. The Tenant
shall not keep anywhere within the Property any matter having an offensive odor,
or any kerosene, gasoline, benzene, camphene, fuel or other explosive or highly
flammable material. No bird, fish or other animal shall be brought into or kept
in or about the Premises.
8. So that the Premises may be kept in a good state of preservation and
cleanliness, the Tenant shall, while in possession of the Premises, permit only
the Landlord's employees and contractors to clean the Premises unless prior
thereto the Landlord otherwise consents in writing. The Tenant shall see each
day that the windows are closed and the doors securely locked before leaving the
Premises, and that all lights and standard office equipment within the Premises
are turned off.
9. If the Tenant desires to install signaling, telegraphic, telephonic,
protective alarm or other wires, apparatus or devices within the Premises, the
Landlord shall direct where and how they are to be installed and, except as so
directed, no installation, boring or cutting shall be permitted without
Landlord's reasonable approval. The Landlord shall have the right (a) to
prevent or interrupt the transmission of excessive, dangerous or annoying
current of electricity or otherwise into or through the Building or the
Premises, (b) [crossed out], (c) to require compliance with such reasonable
rules as the Landlord may establish relating thereto that do not adversely
affect Tenant's use and occupancy of the Premises, and (d) in the event of
noncompliance with such requirements or rules, immediately to cut wiring or do
whatever else it considers necessary to remove the danger, annoyance or
electrical interference with apparatus in any part of the Building. Each wire
installed by the Tenant must be clearly tagged at each distributing board and
junction box and elsewhere where required by the Landlord, with the number of
the office to which such wire leads and the purpose for which it is used,
together with the name of the Tenant or other concern, if any, operating or
using it.
10. A directory will be provided by the Landlord on the ground floor of
the Building, on which the Tenant's name may be placed.
11. No furniture, package, equipment, supplies or merchandise may be
received in the Building, or carried up or down in the elevators or stairways,
except during such hours as are designated for such purpose by the Landlord, and
only after the Tenant gives notice thereof to the Landlord. The Landlord shall
have the exclusive right to prescribe the method and manner in which any of the
same is brought into or taken out of the Building, and the right to exclude from
the Building any heavy furniture, safe or other article which may create a
hazard and to require it to be located at a designated place in the Premises.
The Tenant shall not place any weight anywhere beyond the safe carrying capacity
of the Building. The cost of repairing any damage to the Building or any other
part of the Property caused by taking any of the same in or out of the Premises,
or any damage caused while it is in the Premises or the rest of the Building,
shall be borne by the Tenant.
12. [crossed out]
13. The Tenant shall have access to the Premises at all times. The
Landlord shall in no event be responsible for admitting or excluding any person
from the Premises. In case of invasion, hostile attack, insurrection, mob
violence, riot, explosion, fire or any casualty, the Landlord shall have the
right to bar or limit access to the Building to protect the safety of occupants
of the Property, or any property within he Property.
14. The Landlord shall have the right to rescind, suspend or modify the
Rules and Regulations and to promulgate such other Rules or Regulations as, in
the Landlord's reasonable judgment, are from time to time needed for the safety,
care, maintenance, operation and cleanliness of the Building, or for the
preservation of good order therein. Upon the Tenant's having been given notice
of the taking of any such action, the Rules and Regulations as so rescinded,
suspended, modified or promulgated shall become effective (except that nothing
in the Rules and Regulations shall be deemed in any way to alter or impair any
provision of such lease).
15. The use of any room within the Building as sleeping quarters is
strictly prohibited at all times.
16. The Tenant shall keep the windows and doors of the Premises (including
those opening on corridors and all doors between rooms entitled to receive
heating or air conditioning service and rooms not entitled to receive such
service), closed while the heating or air conditioning system is operating, in
order to minimize the energy used by, and to conserve the effectiveness of such
systems. The Tenant shall
<PAGE>
comply with all reasonable Rules and Regulations from time to time promulgated
by the Landlord with respect to such systems or their use that do not adversely
affect Tenant's use and [document cut off]
17. [crossed out]
18. Nothing in these Rules and Regulations shall give any Tenant any right
or claim against the Landlord or any other person if the Landlord does not
enforce any of them unless any other tenant or person [indecipherable] or not
the Landlord has the person if the Landlord does not enforce any of them AGAINST
any other persons or person whether or not the Landlord has the right to enforce
them AGAINST such tenant or person and no such non-enforcement will convey
[illegible]
<PAGE>
METRO EXECUTIVE TERRACE
AGREEMENT OF LEASE
by and between
ROUSE & ASSOCIATES-METRO EAST EXECUTIVE TERRACE
LIMITED PARTNERSHIP
and
DIGITAL EQUIPMENT CORPORATION
(covering 29,600 square feet)
EXHIBIT D
SCHEDULE OF TENANT EQUIPMENT
[to be supplied by amendment]
<PAGE>
EXHIBIT B TO SUBLEASE
REINSTATEMENT AND AMENDMENT OF AGREEMENT
REINSTATEMENT AND AMENDMENT OF
AGREEMENT OF LEASE
THIS REINSTATEMENT AND AMENDMENT OF AGREEMENT OF LEASE (hereinafter
referred to as "this Amendment") made this 22 day of July, 1992, by and between
ROUSE & ASSOCIATES-METRO EAST EXECUTIVE TERRACE LIMITED PARTNERSHIP, a
Pennsylvania limited Partnership having an address at Suite 150, 5950 Symphony
Woods Road, Columbia, Maryland 21044 (hereinafter referred to as "the Landlord")
and DIGITAL EQUIPMENT CORPORATION, a Massachusetts corporation having an address
at 6406 Ivy Lane, Greenbelt, Maryland 20770 (hereinafter referred to as "the
Tenant"),
W I T N E S S E T H T H A T:
WHEREAS, the Landlord and the Tenant were the respective parties to that
certain Agreement of Lease, dated May 31, 1985 (such Agreement, together with
the Rider and all Exhibits attached thereto, being hereinafter referred to as
"the Lease") for the lease of approximately 29,600 square feet of floor area
located in a building at 8400 Corporate Drive, Landover, Maryland; and
WHEREAS, the Landlord and the Tenant effectively terminated the Lease as of
April 30, 1992 by Letter Agreement, dated February 27, 1992 (the "Termination
Letter"); and
WHEREAS, the Landlord and the Tenant desire to revoke the Termination
Letter, reinstate the Lease and amend the Lease as hereinafter set forth.
NOW THEREFORE, FOR GOOD AND VALUABLE CONSIDERATION, the receipt and
adequacy of which are hereby acknowledged, the parties hereto hereby agree as
follows:
Section l. REINSTATEMENT OF LEASE.
The Termination Letter is hereby revoked and declared void AB INITIO. The
Lease is hereby reinstated and adopted and agreed to in its entirety by the
Landlord and the Tenant as if fully set forth herein; subject, however, to the
hereinafter set forth amendments.
Section 2. AMENDMENTS TO LEASE.
2.1 The number "29,600" (identifying the number of square feet of floor
area and net rentable square feet of the Premises) is hereby deleted from the
"WITNESSETH" paragraph on page l of the Lease and each other provision of the
Lease in which it appears and the number "26,000" is hereby inserted in lieu
thereof in each instance.
2.2 Exhibit A to the Lease is hereby deleted and Exhibit A attached hereto
is hereby substituted in lieu thereof. The Premises are shown outlined in red on
Exhibit A.
2.3 Section l (consisting of subsections 1.1 and 1.2) is hereby deleted and
the following shall be inserted in lieu thereof:
Section l. TERM. This Lease shall be for a term (hereinafter referred to
as "the Term") commencing on September l, 1992 (hereinafter referred to as "the
Commencement Date"), and terminating at 11:59 p.m., local time, on August 31,
1997 (hereinafter referred to as "the Termination Date").
2.4 The provisions of clause (A) of subparagraph 3.1(a)(i) are hereby
deleted and the following provisions are hereby inserted in lieu thereof:
"(A) for the first Lease Year during the Term, is in the sum of Three
Hundred Forty-four Thousand Five Hundred and 00/100 Dollars ($344,500.00), plus
(if the Term commences on a day other than the first (1st) day of a
<PAGE>
calendar month), one three hundred sixty-fifth (1/365) of the Net Component for
each day of such calendar month falling within the Term; and"
2.5 The phrase "Original Term" is hereby deleted from the first line of
clause (B) of subparagraph 3.1(a)(i) and each other provision of the Lease in
which it appears and the word "Term" is hereby inserted in lieu thereof in each
instance.
2.6 The phrase "Three Hundred Eighty-four Thousand Eight Hundred Dollars
($384,800)" is hereby deleted from the second and third lines of clause (B) of
subparagraph 3.1(a)(i) and the phrase Three Hundred Forty-four Thousand Five
Hundred Dollars ($344,500.00) is hereby inserted in lieu thereof.
2.7 Clauses (C) and (D) of subparagraph 3.1(a)(i) are hereby deleted.
2.8 The provisions of subparagraph 3.1(a)(ii) are hereby deleted and the
following provisions are hereby inserted in lieu thereof:
(ii) COSTS COMPONENT. An initial operating costs component (hereinafter
referred to as "the Costs Component") which, for each Lease Year during the
Term, is in the sum of One Hundred Sixty-two Thousand Five Hundred and 00/100
Dollars ($162,500.00), plus (if the Term commences on a day other than the first
(1st) day of a calendar month), one three hundred sixty-fifth (1/365) of the
Costs Component for each day of such calendar month falling within the Term (but
without impairing the Tenant's liability for any Additional Rent accruing under
the provisions of subsection 3.2).
2.9 The provisions of paragraph 3.1(c) are hereby deleted and the
following provisions are hereby inserted in lieu thereof:
"(c) LEASE YEAR. As used in the provisions of this Lease, the term "Lease
Year" means (i) the period commencing on the Commencement Date and terminating
on the first (1st) anniversary of the last day of the calendar month containing
the Commencement Date, and (ii) each successive period of twelve (12) calendar
months thereafter during the Term."
2.10 The phrase "*which ends after the first (1st) Lease Year during the
Original Term" on the second line of paragraph 3.2(d) is hereby deleted.
2.11 The phrase "**that portion of the Term which remains after the first
(1st) Lease Year during the Original Term" on the first line of paragraph 3.2(e)
is hereby deleted.
2.12 The phrase "such portion of" on the third line of paragraph 3.2(e) is
hereby deleted.
2.13 The phrase "(six (6), in the case of the first Lease Year)" on the
first line of paragraph 3.3(a) is hereby deleted.
2.14 Section 5 and Exhibit B to the Lease are hereby deleted. Exhibit B
attached hereto is hereby substituted for Exhibit B to the Lease and the
following is hereby inserted as new Section 5:
5.1 Attached hereto as, or identified on, Exhibit B are full and
complete plans and specifications (hereinafter referred to as "the Approved
Plans and Specifications") for the Tenant finish work and other
improvements (hereinafter referred to as "the Improvements") which are to
be made to the Premises. The Landlord and the Tenant each hereby consent to
the Approved Plans and Specifications.
5.2 Notwithstanding anything to the contrary contained herein, the
Landlord's consent to the Approved Plans and Specifications shall not (i)
constitute an opinion or agreement by the Landlord that the work shown
therein is structurally sufficient or that said plans or the work are in
compliance with all laws (it being agreed that such compliance is solely
the Tenant's responsibility); (ii) impose any present or
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future liability on the Landlord; (iii) constitute a waiver of any of the
Landlord's rights hereunder to require the Improvements to be constructed
in accordance with applicable law; or (iv) impose additional obligations on
the Landlord (it being agreed by the parties hereto that total
responsibility for the design and construction of the Improvements is the
Tenant's).
5.3 The Approved Plans and Specifications shall be final and shall
not be changed by the Tenant without the prior consent of the Landlord,
which consent shall not be reasonably withheld.
5.4 CONSTRUCTION.
5.4.1. The Tenant covenants and agrees to commence construction
of the Improvements within fourteen (14) days after the date hereof and to
thereafter diligently proceed to complete all of the Improvements in
substantial accordance with the Approved Plans and Specifications.
5.4.2. The Tenant hereby represents that it has or will enter
into a contract (hereinafter referred to as "the Construction Contract")
with a general contractor approved by the Landlord (which approval shall
not be unreasonably withheld) (hereinafter referred to as "the Contractor")
calling for the Contractor's construction of the Improvements in accordance
with the Approved Plans and Specifications. The Landlord hereby agrees to
contribute towards the price of the construction of the Improvements the
sum of $390,000.00 (hereinafter referred to as "the Landlord
Contribution"). The Landlord shall pay the Landlord Contribution to the
Tenant in monthly installments on the first (1st) day of each calendar
month after commencement of construction until the Improvements have been
completed or the Landlord has paid the entire said sum to the Tenant,
whichever shall first occur. Each such installment to be paid by the
Landlord shall be in the amount to which the Contractor is entitled as of
such date to be paid by the Tenant under the Construction Contract, but
only for work in place (net of a ten percent (10%) "holdback" to be
retained by the Landlord until the Contractor has substantially completed
the Improvements, at which point such "holdback" shall immediately be paid
by the Landlord to the Tenant, and by the Tenant to the Contractor). The
Landlord's obligation to make each such payment shall be conditioned upon
(a) the Tenant's having furnished to the Landlord a copy of the requisition
for payment provided by the Contractor to the Tenant and covering the labor
and materials constituting the work in place for which such payment to the
Contractor is to be made, and (b) the Landlord's architect for the
Improvements having approved the work covered by such requisition as being
work in place and substantially in accordance with the Approved Plans and
Specifications, subject to the correction of minor, punch list items to be
agreed upon by the parties hereto at the time such determination by the
Landlord's architect is made. If the Landlord's architect refuses to
approve such work it shall state to the Tenant within ten (10) days after
its receipt thereof in writing and with particularity each portion of the
work covered by such requisition which it believes is not work in place or
does not substantially conform to the Approved Plans and Specifications and
the manner in which it fails to conform, in which event the requisition
shall be deemed to have been approved as to the remainder of the work
covered thereby, and the Landlord shall pay to the Tenant the amount which
it would otherwise have been required to pay to the Tenant were such work
approved by the Landlord's architect in full, less an amount reasonably
adequate to pay the cost of causing the said portions of the work to
conform to the Approved Plans and Specifications. The construction shall be
performed in a good and workmanlike manner, and in compliance with all
applicable laws, orders and regulations of federal, state, county and
municipal authorities, with any direction by any public officer pursuant to
law and with all regulations of any Board of Fire Underwriters having
jurisdiction. The Tenant, at its sole cost and expense, shall obtain or
cause to be obtained all building permits, licenses, temporary and
permanent certificates of occupancy and other governmental approvals which
may be required to permit the construction of any of the work contained in
the Approved Plans and Specifications and the occupancy of the Premises by
the Tenant.
5.5 At any time during the course of construction as herein set
forth, the Landlord may enter upon the Premises for purposes of inspecting
the work or otherwise managing or operating the Building. The Landlord
shall use reasonable efforts to minimize any interference with the Tenant's
construction work in the Premises in exercising the Landlord's rights under
this Section.
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5.6 "Substantial completion" (or any variation of this phrase such as
"substantially complete" or "substantially completed", as used anywhere in
this Lease with respect to the Improvements) shall be deemed to have
occurred when the Premises are first available for uninterrupted use and
occupancy by the Tenant and the following have occurred:
(i) Construction of the Improvements is completed except for
minor punch list items;
(ii) Plumbing, heating, air-conditioning, electrical facilities,
and sprinkler system (installed and tested per specifications) shall have
been completed to such extent that the appropriate services to be rendered
through such facilities can be and are being supplied; and
(iii) A permanent certificate of occupancy for the Premises (as
constructed in accordance with the Approved Plans and Specifications), or
such other written governmental authorization as will allow the Tenant
legally to occupy the Premises, shall have been issued and delivered to the
Tenant.
If the parties cannot agree on whether the Tenant's construction of
the Improvements is substantially complete, either party may give written
notice to the other that such party desires that the parties agree on an
independent third party (hereinafter referred to as "the Independent
Arbiter"), who upon his selection shall visit the Premises, evaluate the
work and render a written decision on: (i) the state of completeness of the
Improvements and (ii) the date on which substantial completion occurred. In
such event the parties hereto shall agree in writing on the identity of an
Independent Arbiter within five (5) business days after such notice is
given. The party who is found to be in error by the Independent Arbiter
shall pay the Independent Arbiter's expenses.
5.7 Upon substantial completion of the Improvements, the Tenant and
the Landlord shall jointly inspect the Premises for the purpose of
discovering any incomplete work and shall itemize such incomplete work in a
written "punch list". The Tenant shall complete all punch list items and
any other uncompleted portions of its work as expeditiously as possible
after substantial completion of the construction of the Improvements, but
in any event within thirty (30) days thereafter unless such item cannot be
completed within said thirty (30) day period, in which event the Tenant
shall commence the work for such item with all due diligence within said
thirty (30) days and shall complete the same within the sixty (60) day
period thereafter.
5.8 The Tenant and/or the Contractor shall procure and maintain in
effect during the term of construction, the following insurance coverages
with an insurance company or companies authorized to do business in
Maryland:
l. WORKMEN'S COMPENSATION - Statutory Limits for Maryland,
together with "ALL STATES" and "VOLUNTARY COMPENSATION" and "FOREIGN
COMPENSATION" coverage endorsements.
2. EMPLOYER'S LIABILITY INSURANCE with a limit of $100,000.
3. COMPREHENSIVE LIABILITY - $3,000,000 Combined Single Limit,
including Personal Injury, Contractual and Products/ Completed Operations
Liability.
Coverage must include the following:
A. Premises - Operations
B. Elevators and Hoists
C. Independent Contractor
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D. Contractual Liability assumed under this contract.
E. Completed Operations - Products
F. Explosion, Underground and Collapse (XCU) Coverage.
4. Automobile Liability - Including Owned, Hired and Non-owned
vehicles:
$1,000,000 each person Bodily Injury
$3,000,000 each occurrence Bodily Injury
$250,000 each occurrence Property Injury
Coverage must include the following:
A. Owned vehicles
B. Leased vehicles
C. Hired vehicles
D. Non-owned vehicles
The Tenant shall furnish the Landlord with certificates of insurance
evidencing such coverage prior to commencement of any construction work
done under this Lease. The following statement shall appear in each
certificate of insurance provided to the Landlord by the Tenant hereunder:
It is agreed that in the event of any material change in,
cancellation, or non-renewal of this policy, thirty (30) days prior notice
will be given to:
ROUSE & ASSOCIATES-METRO EAST
EXECUTIVE TERRACE LIMITED PARTNERSHIP
Suite 150
5950 Symphony Woods Road
Columbia, Maryland 21044
5.9 The Tenant shall give prompt notice to the Landlord of all
losses, damages, or injuries to any person or to property of the Tenant,
the Landlord, or third parties which may in any way be related to the Lease
or for which a claim may be made against the Landlord. The Tenant shall
promptly report to the Landlord all such claims of which the Tenant has
notice, whether related to matters insured or uninsured. No settlement or
payment for any claim, loss, injury, damage, or other matter as to which
the Landlord may be charged with an obligation to make any payment or
reimbursement shall be made by the Tenant without the written consent of
the Landlord, which shall not unreasonably be withheld or delayed.
The carrying of any of the insurance required hereunder shall not be
interpreted as relieving the Tenant of any responsibility to the Landlord.
The Tenant shall assist and cooperate with any insurance company in the
adjustment or litigation of all claims arising under the terms of this
Section.
The Tenant shall procure and maintain the Tenant installation floater
insurance to protect its interests and that of its subcontractors during
the course of the construction work.
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<PAGE>
The Landlord does not and will not waive any rights which it may have
against the Tenant and/or its representatives for any loss, expense and
damage to persons and property (tangible and intangible) from any cause
whatsoever.
5.10 Not later than sixty (60) days after substantial completion of
the Improvements, the Landlord shall measure the Premises by measuring from
the outside of any exterior walls of the Premises to the center line of any
partitions constructed which separate the Premises from the remaining or
adjacent portions of the Building and shall give the Tenant notice of the
floor area so determined. The floor area stated in such notice shall be
deemed the number of square feet of floor area and net rentable square feet
of the Premises for all purposes of this Lease unless, within thirty (30)
days after receipt of such notice, the Tenant shall give the Landlord
notice that the Tenant believes the Landlord's measurement to be
inaccurate. In such event, the Independent Arbiter shall measure the
Premises and certify the floor area thereof to the parties. The Tenant's
floor area as so certified shall be binding on the parties and shall be
deemed the number of square feet of floor area and net rentable square feet
of the Premises for all purposes of this Lease. In the event the floor area
of the Premises shall be greater or less than 26,000 square feet, the Base
Rent for the first Lease Year shall be adjusted based on a rate of $13.25
per square foot, the Costs Component shall be adjusted based on a rate of
$6.25 per square foot and the Landlord Contribution shall be adjusted based
on a rate of $15.00 per square foot. The Landlord and the Tenant shall
execute such amendment to this Lease as may be necessary to reflect any
change in the floor area of the Premises, the Base Rent, the Costs
Component and the Landlord Contribution. Until such time as a new floor
area of the Premises is established in accordance with this Section 5.10,
the floor area of the Premises, the Base Rent, the Costs Component and the
Landlord Contribution shall be as stated herein, subject to appropriate
adjustment between the Landlord and the Tenant when such floor area is so
established.
2.15 Section 18 is hereby deleted and the following is hereby inserted in
lieu thereof:
"Section 18. NOTICES
(a) All notices, demands, requests and other instruments which may or
are required to be given by either party to the other under this Lease
shall be given in writing. All notices, demands, requests and other
instruments from the Landlord to the Tenant shall be deemed to have been
properly given if sent by United States Registered or Certified Mail,
postage prepaid, return receipt requested, addressed to the Tenant at
Property Development Center-East, COP-5/9, 6406 Ivy Lane, Greenbelt,
Maryland 20770, with a copy to Real Estate Law Manager, 111 Powdermill
Road, Maynard, Massachusetts 01754-1418, or at such other address as the
Tenant from time to time shall have designated by written notice to the
Landlord.
(b) All notices, demands, requests and other instruments from the
Tenant to the Landlord shall be deemed properly given if sent by United
States Registered or Certified Mail, postage prepaid, return receipt
requested, addressed to the Landlord at Rouse & Associates-Metro East
Executive Terrace Limited Partnership, Suite 150, 5950 Symphony Woods Road,
Columbia, Maryland 21044, or at such other address as the Landlord from
time to time shall have designated by written notice to the Tenant."
Section 3. EFFECT OF AMENDMENT. Except as specifically amended hereby, the
Lease shall remain in full force and effect according to its terms. To the
extent of any conflict between the terms of this Amendment and the terms of the
remainder of the Lease, the terms of this Amendment shall control and prevail.
Capitalized terms used but not defined herein shall have those respective
meanings attributed to them in the Lease. This Amendment shall hereafter be
deemed part of the Lease for all purposes.
Section 4. REPRESENTATIONS. The Landlord and the Tenant each hereby
represents and warrants to the other that, as of the date each hereof, it (a) is
the sole legal and beneficial owner of all of the right, title and interest
reserved by or granted to it by the Lease, and (b) has the full and sufficient
right at law and in equity to execute and deliver this Amendment as the owner of
such right, title and interest, without the necessity of obtaining any other
person's consent thereto or joinder therein.
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<PAGE>
IN WITNESS WHEREOF, each party hereto has executed and ensealed this
Amendment or caused it to be executed and ensealed on its behalf by its duly
authorized representatives, the day and year first above written.
WITNESS or ATTEST: ROUSE & ASSOCIATES-METRO EAST EXECUTIVE
TERRACE LIMITED PARTNERSHIP
/s/ Diane E. Denison By: /s/ Claiborn M. Carr, III (SEAL)
- ------------------------- ---------------------------
Claiborn M. Carr, III,
General Partner
- Landlord -
DIGITAL EQUIPMENT CORPORATION
By: /s/ Mark A. Coffey (SEAL)
- ------------------------- ---------------------------
Mark A. Coffey, Manager
Property Development Center
Eastern Region
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<PAGE>
METRO EXECUTIVE TERRACE
AGREEMENT OF LEASE
by and between
ROUSE & ASSOCIATES-METRO EAST EXECUTIVE TERRACE
LIMITED PARTNERSHIP
and
DIGITAL EQUIPMENT CORPORATION
(covering 26,000 square feet)
EXHIBIT A
PLAT SHOWING THE PREMISES
<PAGE>
METRO EXECUTIVE TERRACE
AGREEMENT OF LEASE
by and between
ROUSE & ASSOCIATES-METRO EAST EXECUTIVE TERRACE
LIMITED PARTNERSHIP
and
DIGITAL EQUIPMENT CORPORATION
(covering 26,000 square feet)
EXHIBIT B
SCHEDULE OF APPROVED PLANS AND SPECIFICATIONS
The Tenant, at the Tenant's expense, shall prepare and submit proposed plans and
specifications to the Landlord for approval, which approval shall not be
unreasonably withheld. Once the proposed plans and specifications are in a form
satisfactory to each party hereto, the parties hereto shall agree in writing on
a schedule identifying such plans and specifications as so approved and
identifying such schedule as Exhibit B to this Lease. Such plans and
specifications shall be deemed the Approved Plans and Specifications for all
purposes of this Lease.
<PAGE>
EXHIBIT D TO SUBLEASE
CONSENT OF LANDLORD
[Landlord's Letterhead]
[Date]
[Applicable Digital address Attention: ]
Re: [Description of Prime Lease] (the "Prime Lease")
Dear Sir:
You have requested our consent to a sublease of [a portion of] the
premises demised by the Prime Lease upon the terms described in the attached
Exhibit A [attach letter of intent or other written description of the proposed
sublease].
We hereby grant such consent upon the terms so described, provided that:
[State any conditions required by the Prime Lease, such as execution of the
sublease within a designated period or payment of a percentage of
subletting profits]
We hereby agree that in the event of any default by the subtenant under the
terms of the Prime Lease, notice of such default, as required under [Section __]
of the Prime Lease, shall be delivered simultaneously both to you and to the
subtenant, and we will accept cure of such default by subtenant as cure by you.
We will not exercise any remedies provided under the Prime Lease until all
notices have been so given and all grace periods provided under the Prime Lease
have expired.
In all other respects, the terms of the Prime Lease are hereby ratified and
confirmed.
Sincerely,
<PAGE>
EXHIBIT E TO SUBLEASE
CONSENT OF LANDLORD'S MORTGAGEES
[Attach Consents of Landlord's mortgagees if required by Prime Lease or
Digital's subordination, recognition and non-disturbance agreements.]
<PAGE>
EXHIBIT F
OFFICE SYSTEMS FURNITURE
During the term of sublease, subtenant shall have the right to utilize up
to a quantity of 50 (fifty) of sublandlords' office systems furniture presently
located at 8301 Corporate Drive, Landover, Maryland 20785.
Subtenant shall be responsible for delivery and installation of said office
systems furniture at the premises.
Said office systems furniture shall be made available to Subtenant at no
additional cost during the term of this sublease.
Upon expiration or early termination of this agreement, said office
furniture systems shall be returned to sublandlord in the same condition in
which delivery was taken, normal wear and tear excepted.
<PAGE>
EXHIBIT 10.9
FEDERAL DATA CORPORATION
DEFERRED BASIC SALARY
SUPPLEMENT PLAN
TRUST AGREEMENT
<PAGE>
TRUST AGREEMENT
THIS AGREEMENT, made this 27th day of December, 1994 by and among
FEDERAL DATA CORPORATION, a Delaware corporation (the "Company") and CHARLES R.
HANLEY, II, DANIEL YOUNG, HARRY MARREN, MARVIN HABER and PAUL TALTAVULL (each,
individually, a "Trustee" and collectively, the "Trustees," which term shall
include all additional and successor Trustees who may hereafter be appointed in
accordance with the provisions hereof).
W I T N E S S E T H :
WHEREAS, the Company has adopted and maintains the Federal Data
Corporation Deferred Basic Salary Supplement Plan (the "Plan"); and
WHEREAS, the Company has appointed the Trustees herein named; and
WHEREAS, under the Plan, funds will be delivered to the Trustees, the
same to be held as a trust fund for the benefit of persons who are Participants
and Beneficiaries (as those terms are defined in the Plan); and
WHEREAS, the Company desires the Trustees to hold and administer such
money and other property as now and hereafter may constitute the Trust Fund, and
the Trustees are willing to do so under the terms of this Agreement,
NOW, THEREFORE, in consideration of the premises and the mutual
covenants herein contained, it is agreed by and between the Company and the
Trustees as follows:
ARTICLE I.
ESTABLISHMENT OF THE TRUST
Sec. 1.01. CORPUS OF THE TRUST. The Company hereby establishes
with the Trustees the trust consisting of such sums of money and property as
shall from time to time be delivered or paid to the Trustees under the Plan, and
such earnings, profits, increments, additions and appreciation thereto and
thereon as may accrue from time to time. All such sums of money, all
investments made therewith or proceeds thereof, and all earnings, profits,
increments, appreciation and additions thereto and thereon, less the payments
which shall have been made by the Trustees, as authorized herein to carry out
the Plan, are referred to herein as the "Trust Fund."
Sec 1.02. COLLECTION OF TRUST FUNDS. The Trustees shall not be
responsible for the collection of any funds required by the Plan to be paid by
the Company to the Trustees.
Sec. 1.03. DUTIES OF THE TRUSTEES.
<PAGE>
(a) INVESTMENT DUTIES. It shall be the duty of the Trustees to
invest, to reinvest, to manage and to administer the Trust Fund for the
exclusive benefit of the Participants and their respective Beneficiaries in
accordance with the provisions of this Agreement.
(b) BENEFIT PAYMENT DUTIES. It shall be the duty of the
Trustees, on written direction of the Plan Administrator, to make payments
out of the Trust Fund to such persons, in such manner, in such amounts, and
for such purposes as may be specified in such written direction. The
Trustees shall be under no liability for any payment made by it pursuant to
such a direction.
(c) ADMINISTRATIVE DUTIES. It shall be the duty of the Trustees
to account for the assets of the Trust Fund as further set forth in this
Agreement, and to apply the assets of the Trust Fund, to the extent
necessary, to defray the reasonable administrative costs of the Plan and of
the Trust established hereunder.
Sec. 1.04. GENERAL NON-REVERSION PROVISIONS. Except as
hereinafter provided in Section 1.05, the Company shall not have any right,
title, interest, claim or demand whatsoever in or to the Trust Fund held by the
Trustees, other than the right to a proper application thereof and accounting
therefor by the Trustees as provided herein, nor shall any assets of the Trust
Fund revert to the Company.
Sec. 1.05. CORRECTIVE REFUNDS. Nothing in this instrument shall
be construed to prevent any refund to the Company or to any Participant of any
amount necessary to prevent or rectify a violation of an applicable statutory
ceiling.
ARTICLE II.
INVESTMENT OF THE TRUST FUND
Sec. 2.01. PRINCIPAL AND INCOME. The Trustees shall invest and
reinvest the principal and income of the Trust Fund and shall keep the same
invested without distinction between principal and income, except, however, that
regardless of the manner in which the Trust Fund is otherwise invested, the
Trustees shall endeavor to retain in cash for distribution to Participants that
portion of the current income of the Trust Fund the distribution of which is
required pursuant to Section 8 . 01 (a) (1) of the Plan.
Sec. 2.02. INVESTMENT DIRECTION. The selection, retention or
disposition of any investment of assets of the Trust Fund shall be determined by
the Trustees, who shall have exclusive authority to manage and control the
assets of the Trust Fund. The Trustees may receive investment suggestions from
any Participant with respect to the Account of that Participant, but they shall
not be bound by any such suggestion or suggestions. To the extent that they
receive and attempt to honor any such suggestion, they shall be fully protected
from all liability for having done so and shall be indemnified and held harmless
by the Participant for losses experienced or gains not achieved by reason of the
actions they take, attempt to take or forebear from taking in connection with
any such suggestion.
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<PAGE>
Sec. 2.03. POWERS OF THE TRUSTEES. The Trustees shall have the
following powers in addition to the powers customarily vested in trustees by
law, and in no way in derogation thereof:
(a) With any cash at any time held by them, to purchase or
subscribe for any authorized investment, and to retain such authorized
investment in the Trust Fund;
(b) To retain uninvested all or any part of the Trust Fund and
to deposit the same in an interest bearing account in any banking or
savings institution;
(c) To cause any investment in the Trust Fund to be registered
in, or transferred into, their names as Trustees or the name of their
nominee or nominees or to retain such investments unregistered or in form
permitting transfer by delivery, but the books and records of the Trustees
shall at all times show that all such investments are part of the Trust
Fund, and the Trustees shall cause the indicia of ownership to be
maintained within the jurisdiction of the district courts of the United
states, except as may otherwise be permitted pursuant to regulations
promulgated by the Secretary of Labor;
(d) To do all acts which they may deem necessary or proper and
to exercise any and all powers of the Trustees under this Agreement upon
such terms and conditions as they may deem to be in the best interests of
the Trust Fund;
(e) To apply for, purchase, hold, transfer, pay premiums on,
surrender, and exercise all incidents of ownership of any annuity contract;
and
(f) To invest in shares or units of any registered investment
company the investments of which are limited to authorized investments (as
defined herein).
Sec. 2.04. AUTHORIZED INVESTMENTS. "Authorized Investments"' as
used in this Article shall mean only the following:
(a) debt obligations of the United States government having a
maturity not later than December 31, 2002 or one year from date of
purchase, whichever is later;
(b) debt obligations of any agency or instrumentality of the
United States government or of a political subdivision of the United States
if (1) such debt obligation is fully guaranteed as to repayment of
principal and payment of interest by the government of the United States
and (2) the maturity of such obligation is not later than the later of (A)
December 31, 2002, or (B) one year from date of purchase;
(c) such high grade obligations of domestic corporations in
amounts having maturity dates corresponding to the amounts and dates
described in (a) hereof, and having a rating published by Standard &
Poor's Corporation of not less than AA or a rating published by Moody's
Investors Service, Inc. of not less than Aa;
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(d) prime commercial paper issued by domestic corporations and
having a rating published by Standard & Poor's Corporation of not less than
A-2 or a rating published by Moody's Investors Service, Inc. of not less
than prime-2 (P-2), and prime certificates of deposit issued by domestic
or foreign banks or trust companies, each of which banks shall have a
combined capital and surplus of at least $100,000,000, and which
instruments mature in amounts and at dates corresponding to the maturation
date schedule described in (a) hereof; and
(e) guaranteed investment contracts or other annuity contracts
issued by an underwriter licensed to do business in the State of Maryland
and having a Best's rating not lower than A+ at the time of contract
issuance, which contracts shall impose no penalty, back-end load, special
administrative service fee, market value adjustment or other special charge
associated with the termination or surrender of such contract (1) upon the
death or total disability of the Participant with respect to whom issued,
or (2) upon the surrender thereof after the seventh anniversary of the
date of issue thereof, and which contracts shall provide that upon
surrender thereof prior to the seventh anniversary of the date of issuance
for reasons other than the death or total disability of the person with
respect to whose life the contract is issued, (A) the aggregate of all
such penalty, back-end load, special administrative service fees, and
other special charges upon surrender shall not exceed 7% of premium if the
contract is surrendered within one year of issuance; 6% of premium if the
contract is surrendered within two years of issuance but not within one
year of issuance; 5% of premium if the contract is surrendered within three
years of issuance but not within two years of issuance; 4% of premium if
the contract is surrendered within four years of issuance but not within
three years of issuance; 3% of premium if the contract is surrendered
within five years of issuance but not within four years of issuance; 2% of
premium if the contract is surrendered within six years of issuance but not
within five years of issuance, and 1% of premium if the contract is
surrendered within seven years of issuance but not within six years of
issuance, and (B) the market value adjustment of which shall be not greater
than 12% of the excess, if any, of (i) the face amount of 8-year U.S.
Treasury Notes in the same face amount as the premium paid on the subject
contract where such U.S. Treasury securities are issued at the next
issuance date for such securities following the date of issuance of the
contract over (ii) the fair market value of the same securities on the
date of surrender of the contract, as reported in the Wall Street Journal.
Sec. 2.05. INDIVIDUAL PARTICIPANT RECORDS AND ACCOUNTS. In
general, the maintenance of individual Participant and Beneficiary records
shall be the duty of the Trustees. However, to the extent that the Plan
Administrator is other than the Trustees, and that the Trustees and the Plan
Administrator have entered into a separate written agreement providing for the
maintenance of such records, such records may be maintained by the Plan
Administrator, and the Trustees are absolved from maintaining the same.
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<PAGE>
ARTICLE III.
TRUSTEES' ACCOUNTS
Sec. 3.01. INVESTMENT AND ASSET BOOKS AND RECORDS. The Trustees
shall keep accurate and detailed accounts of all investments, receipts and
disbursements and other transactions hereunder, including such specific records
as shall be required by law and such additional records as may be agreed upon in
writing between the Plan Administrator and the Trustees. All accounts, books and
records relating thereto shall be open to inspection and audit by any person or
persons designated by the Plan Administrator or the Company at all reasonable
times.
Sec. 3.02. ACCOUNTINGS . Within ninety ( 90 ) days following the
close of each year of the Plan or the receipt of the Company' s contribution (or
notice that there shall be no such contribution) for such year, whichever is the
later, and within ninety (90) days after the effective date of the removal or
resignation of any Trustee, the Trustees shall file with the Plan Administrator
a written account, setting forth all investments, receipts and disbursements,
and other transactions effected by it during such year of the Plan or during the
period from the close of the last preceding year of the Plan to the date of such
removal or resignation, including a description of all securities and
investments purchased and sold with the cost or net proceeds of such purchases
or sales, and showing all cash, securities and other property held at the end of
such year or as of the date of removal or resignation, as the case may be. None
of the Company nor the Plan Administrator nor any other person shall have the
right to demand or to be entitled to any further or different accounting by the
Trustees, except as may be required by statute or by regulations published by
Federal government agencies with respect to reporting and disclosure.
Sec. 3.03. TRUSTEE LIABILITY. Except with respect to alleged
breaches of fiduciary responsibility under ERISA or other applicable law, upon
the expiration of ninety (90) days from the date of filing such annual or other
account, the Trustees shall be forever released and discharged from any
liability or accountability to anyone with respect to the propriety of its acts
or transactions shown in such account, except with respect to any acts or
transactions which the Plan Administrator shall within such ninety (90) day
period file with the Trustees a written statement claiming negligence, willful
misconduct, lack of good faith, breach of fiduciary responsibility or other
violation of applicable law on the part of the Trustees . In the event such a
statement is filed, the Trustees shall, unless the matter is compromised by
agreement between the Plan Administrator and the Trustees, file their account
covering the period from the date of the most recent annual account to which no
objection was made in any court of competent jurisdiction for audit or
adjudication. With respect to alleged breaches of ERISA, the Trustees shall be
entitled to rely upon the statutes of limitations set forth therein.
Sec. 3.04. VALUATIONS . The Trustees shall value the assets of the
Trust Fund as of the last day of each Plan Year and at such frequency or on such
other occasions as may be directed by the Plan Administrator. Plan assets shall
be valued at fair market value, and, in addition where appropriate, at book or
other value consistent with generally accepted accounting principles or with
applicable statutory or regulatory provisions.
5
<PAGE>
ARTICLE IV.
THE TRUSTEES
Sec. 4.01. CONDITIONS OF ACCEPTANCE OF TRUSTEESHIP. The Trustees,
as Named Fiduciaries, accept the Trust hereby created and agree to perform the
duties hereby required of them, subject, however, to the following conditions:
(a) The Trustees shall receive as compensation for their
services such amounts as may be agreed upon at the time of execution of
this Agreement, subject to change at any time and from time to time by
agreement between the Plan Administrator and the Trustees. The Trustees'
compensation shall be paid by the Plan, and shall be a proper charge
against the Trust Fund, except to the extent that the Company elects to pay
such amount or any part thereof. All other proper expenses of the Trust
Fund (unless payable out of the Trustees ' compensation), including,
without limitation, all real and personal property taxes, income taxes,
transfer taxes, and other taxes of any and all kinds whatsoever that may be
levied or assessed under existing or future laws of any jurisdiction upon
or in respect of the Trust hereby created, or any money, property or
securities forming a part thereof, shall be paid out of the Trust Fund.
Notwithstanding the foregoing, no person who is either an employee of the
Company or a Participant in the Plan shall receive any compensation for his
or her services as a Trustee.
(b) The Trustees shall not be answerable for any action taken
pursuant to any direction, consent, request, or other paper or document on
the belief that the same is genuine and signed by the proper person if such
direction, consent, request or other paper or document relates to a matter
with respect to which the purported initiator or signatory has authority
under the Plan or this Agreement.
(c) Each of the Trustees shall be indemnified by the Company
against his or her prospective costs, expenses, and liability in connection
with all litigation relating to the Plan, this Agreement or the Trust Fund.
Notwithstanding the foregoing, no such indemnification shall extend or
exist to the extent such costs, expenses and liability are covered by
insurance or would be so covered if any policy then in force included a
waiver of subrogation by the underwriter, nor shall any such
indemnification apply where there is a determination by a court of
competent jurisdiction that the Trustee is guilty of fraud or willful
misconduct.
(d) Nothing in this Agreement shall preclude the purchase by or
for the Trustees of one or more policies of insurance to protect the
Trustees from liability for breach of fiduciary or co-fiduciary duty;
provided, however, that if such insurance shall be purchased by the Trust
Fund utilizing the assets thereof to pay any premiums, such insurance must
permit recourse by the insurer against a Trustee in the case of a breach by
the Trustee of his or her fiduciary duties; and further provided that no
such insurance shall be purchased without the explicit written consent of
the Company .
6
<PAGE>
Sec. 4.02. CHANGES IN TRUSTEES . Each Trustee shall cease to be a
Trustee upon the earliest to occur of:
(a) declaration of his legal incompetence by a court of
competent jurisdiction;
(b) his death;
(c) his ineligibility to serve as a Trustee by reason of the
operation of section 411 of ERISA, or the occurrence of an event that would
make him ineligible to serve as a Trustee if section 411 of ERISA applied;
(d) the effective date of his resignation from the position of
Trustee, which resignation shall not be retroactive, and which resignation
shall not become effective until completion of the dissolution of the Trust
if, after giving effect to such resignation, there would be fewer than
three Trustees in office (including in such Trustee count the automatic
successor Trustee identified in the following paragraph) .
Upon the cessation of service of the first Trustee to cease to be a Trustee,
Charles R. Hanley, III shall be the successor to such Trustee if Charles R.
Hanley, III is then living and is not otherwise disqualified by reason of the
provisions of this Section, and is willing to serve as Trustee. Upon qualifying
as a successor Trustee by delivering to the remaining Trustees in office a
written acceptance of his appointment as a Trustee, the said Charles R. Hanley,
III shall, without further act, become vested with all the rights, powers,
discretion and duties of the predecessor Trustee, with the same effect as though
he had been originally named as Trustee herein.
Sec. 4.03. EMERGENCY TRUSTEESHIP. If an event occurs that
results in there being no Trustees in office, the Participants in the Plan shall
be the successor Trustees, each to have the same authority and duties as though
initially appointed as a Trustee. If an event occurs that results in there being
no Trustees in office and no living Participants, the Beneficiaries shall be the
successor Trustees, each to have the same authority and duties as though
initially appointed as a Trustee. If there continues to exist a Trust Fund at
a time when no person is qualified and willing to serve as a Trustee
pursuant to this provision, application shall be made by the Company to a
court of competent jurisdiction for the appointment of a Trustee to wind up the
affairs of the Trust and to distribute all of the remaining assets of the Trust
Fund.
Sec. 4.04. ACTIONS OF THE TRUSTEE. The Trustees shall act by a
majority of their number, either at a meeting, or by writing, telegram,
cablegram or other electronic or telephonic communication without a meeting.
The Trustees may elect a chairperson from among their number and may appoint
a secretary who need not be a Trustee. Any act of the Trustees shall
be sufficiently evidenced if certified by not less than a majority of the
Trustees then serving or by the person then holding the office of Secretary.
Any Trustee may authorize any other Trustee to act in his stead and on his
behalf in his absence.
7
<PAGE>
Sec. 4.05. BONDING. Each Trustee shall be bonded to the extent
required by law, but no bond shall be required beyond that required by law (if
any). Premiums for bonds covering individuals serving as Trustee shall be
treated as expenses of the Plan.
ARTICLE V.
DELEGATION OF DUTIES AND RESPONSIBILITIES
Sec. 5.01. DELEGATION OF DUTIES. The Trustees may delegate to any
qualified person or entity any of its duties hereunder other than those
identified as "trustee duties" under ERISA. The Trustees shall be fully
protected to the extent permissible by law in so doing.
ARTICLE VI.
CONCERNING INSURANCE COMPANIES
Sec. 6.01. INSURANCE COMPANIES NOT PARTIES . If, on any occasion
as provided in the Plan, the Trustees purchase one or more guaranteed income or
other type of annuity contract from an insurance company, the insurance company
from which such contract is purchased shall not be deemed a party to this
Agreement. No insurance company shall have any obligation to determine that any
person with respect to whom the Trustees make an application for a contract is,
in fact, eligible for benefits or participation under the Plan, nor shall the
insurer have any obligation to determine any fact, the determination of which is
necessary or desirable for the proper issuance of such contracts. Any such
insurance company shall be fully protected in acting upon any advice,
representation or other instrument executed by the Trustees. In no event shall
the insurer be responsible for any lack or failure of proper authority in the
establishment or maintenance of the Plan. The responsibilities of the insurer
shall be limited to the terms of its policies. Notice of modification, change or
termination of this Agreement shall not be effective notice to the insurer until
actual receipt thereof at its home of f ice . The insurer may expect the Trust
established under this Agreement to continue in force as is, and the named
Trustees to continue as the Trustees of the Trust until notified otherwise in
writing at its home office.
Sec. 6.02. ACCEPTANCE OF CERTIFICATIONS . A certification in
writing to the insurer by the Trustees, by the Plan Administrator or by the
Company as to the occurrence of any event contemplated by this Agreement or the
Plan shall constitute conclusive evidence of such occurrence, and the insurer
shall be fully protected in accepting and relying upon such certification and
shall incur no liability or responsibility for so doing.
Sec. 6.03. INSURER ABSOLVED. The insurer shall not be responsible
to see that any action taken by the Trustees with respect to any contract is
authorized by the terms of this Agreement or by the Plan. Any change made or
action taken by the insurer under any contract upon the written direction of the
Trustees shall fully discharge such insurer from all liability with respect
thereto, and the insurer shall not be obligated to see to the distribution or
further application of any moneys paid by it to the Trustees or in accordance
with the written direction of the Trustees .
8
<PAGE>
ARTICLE VII.
AMENDMENTS TO TRUST AGREEMENT
Sec. 7.01. AMENDMENTS. The provisions of this Agreement may be
amended at any time and from time to time by the same parties and by the same
process as amendments to the Plan provided that:
(a) No such amendment shall be effective unless the Plan and
this Agreement, as so amended, shall be for the exclusive benefit of the
Participants and their respective Beneficiaries;
(b) No such amendment shall operate to deprive a Participant of
any rights or benefits irrevocably vested in him under the Plan or this
Agreement prior to such amendment, unless such amendment is specifically
required by law; and
(c) Each such amendment shall be effective as of the date
specified therein by the enacting party; provided, however, that if the
amendment affects the Trustees, such amendment must be consented to or
ratified by the Trustees.
Sec. 7.02. DISCONTINUANCE OF THE PLAN. In the event of the
termination of the Plan, the Trustees shall continue to hold the Trust Fund in
trust to be applied and distributed in accordance with the terms of the
terminated Plan. The provisions of the Plan relating to the administration
thereof and to the provision of benefits thereunder shall be deemed for this
purpose to have survived the termination of the Plan .
Sec.7.03. AUTOMATIC DISSOLUTION OF THE TRUST. The Trust established
hereunder shall be dissolved and the assets of the Trust Fund delivered to the
respective interest holders therein upon (a) the date specified in any
resolution by the Trustees providing for the dissolutions of the Trust, or (b)
the occurrence of the circumstance requiring such dissolution pursuant to the
provisions of Section 4 . 02 (d) .
ARTICLE VIII.
MISCELLANEOUS PROVISIONS
Sec. 8.01. RELIANCE ON INSTRUMENTS. Any person dealing with the
Trustees may rely upon a copy of this Agreement and any amendments thereto,
certified to be a true and correct copy by the Trustees .
Sec. 8.02 EXCLUSIVE BENEFIT. Other than as specifically provided
elsewhere in this Agreement, in no circumstance, whether upon amendment or
termination of this Agreement or otherwise, shall any part of the Trust Fund be
used for or diverted to any purpose other than the exclusive benefit of the
employees and former employees of the Company who are Participants under the
Plan and their respective Beneficiaries.
9
<PAGE>
Sec. 8.03. THIS AGREEMENT AS PART OF THE PLAN. This Agreement
shall be deemed a part of the Plan, and shall be considered as incorporated
therein . Any term defined in the Plan shall have the same meaning in this
Agreement unless a different meaning is clearly required by context . The term "
Plan" whenever used in this Agreement, shall mean the Plan as it exists on the
date of adoption of this Agreement, and as it may be from time to time amended.
The Company will cause a copy of the Plan and of each amendment thereto to be
delivered to the Trustees.
Sec. 8.04. RATIFICATION OF THE TRUSTEES' ACTS. The Participants
shall have the right to acknowledge the acts of the Trustees and to ratify or
object to the same, and to approve or decline to approve any action taken by the
Trustees. If there be no Participants but there be Beneficiaries, the
Beneficiaries shall have the rights of the Participants under this Section.
Sec. 8.05. COUNTERPART DOCUMENTS. This Agreement and any amendment
hereto may be executed in multiple counterparts. Each such counterpart document
shall be deemed an original, and the production of any one such counterpart
shall be considered the production of all and shall be sufficient for all legal
purposes.
Sec. 8.06. CONTROLLING LAW. This Agreement shall be construed,
enforced and regulated under Federal law, and to the extent, if any, that state
law is not preempted by Federal law, under the laws of the state of Maryland.
Sec. 8.07 NAME OF THE TRUST. The Trust established hereunder shall
be known as the Federal Data Corporation Deferred Basic Salary Supplement Plan
Trust.
IN WITNESS WHEREOF, the Company and the Trustees have caused this
Agreement to be executed as of the day and date first set forth above.
FEDERAL DATA CORPORATION
Attest:
/s/ Marvin S. Haber By: /s/ Daniel R. Young
- ------------------------- --------------------------------
Secretary President
[Corporate Seal]
WITNESS: TRUSTEES:
/s/ Marvin S. Haber /s/ Charles R. Hanley
- ------------------------- -----------------------------------
Charles R. Hanley, II
10
<PAGE>
/s/ Marvin S. Haber /s/ Daniel Young
- ------------------------- -----------------------------------
Daniel Young
/s/ Marvin S. Haber /s/ Harry Marren
- ------------------------- -----------------------------------
Harry Marren
/s/ Charles R. Hanley, II /s/ Marvin Haber
- ------------------------- -----------------------------------
Marvin Haber
/s/ Marvin S. Haber /s/ Paul Taltavull
- ------------------------- -----------------------------------
Paul Taltavull
CONTINGENT TRUSTEE
/s/ Marvin S. Haber /s/ Charles R. Hanley
- ------------------------- -----------------------------------
Charles R. Hanley, III
11
<PAGE>
EXHIBIT 11.1
FEDERAL DATA CORPORATION
COMPUTATION OF NET INCOME PER COMMON AND COMMON EQUIVALENT SHARE
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, SIX MONTHS ENDED JUNE 30,
---------------------------------------- --------------------------
1994(3) 1995(3) 1996 1996 1997
------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Weighted average common shares
outstanding.............................. 5,757,828 5,440,194 1,910,896 1,910,896 2,096,081
Common Stock options, as if converted
(1)(2)................................... 2,385 4,149 35,298 -- 109,963
------------ ------------ ------------ ------------ ------------
Total weighted average common and common
equivalent shares........................ 5,757,828 5,444,343 1,946,194 1,910,896 2,206,045
Net income (loss)......................... $ 4,192,000 $ 1,797,000 $ 4,728,000 $ (95,000) $ 12,000
------------ ------------ ------------ ------------ ------------
Net income (loss) per common and common
equivalent share......................... $ 0.73 $ 0.33 $ 2.43 $ (0.05) $ 0.01
------------ ------------ ------------ ------------ ------------
------------ ------------ ------------ ------------ ------------
</TABLE>
- ------------------------
(1) Note that the average stock price was used to convert stock options when
computing primary EPS. There is no material difference (less than 3%) when
using the ending stock price for fully diluted EPS. Fully diluted EPS is
therefore not shown.
(2) Note that common stock options are included only if they are dilutive to
primary EPS.
(3) Net income per share has been omitted from the Consolidated Statement of
Operations on page F-4 for 1994 and 1995 because of the material change in
outstanding common shares resulting from the Recapitalization.
<PAGE>
EXHIBIT 12.1
FEDERAL DATA CORPORATION
COMPUTATION OF HISTORICAL RATIO OF EARNINGS TO FIXED CHARGES
(IN THOUSANDS)
<TABLE>
<CAPTION>
SIX MONTHS
YEAR ENDED DECEMBER 31, ENDED
----------------------------------------------------- JUNE 30,
1992 1993 1994 1995 1996 1997
--------- --------- --------- --------- --------- -----------
<S> <C> <C> <C> <C> <C> <C>
Income (loss) from continuing operations before
income taxes..................................... $ 5,549 $ 6,034 $ 5,363 $ (2,153) $ 7,930 $ 175
--------- --------- --------- --------- --------- -----------
Fixed Charges:
Total interest expense, including amortization
of deferred financing fees.................... 4,377 5,389 3,580 3,663 7,564 3,734
Rentals:
Buildings--33%................................ 964 820 892 511 594 490
--------- --------- --------- --------- --------- -----------
Total fixed charges......................... 5,341 6,209 4,472 4,174 8,158 4,224
--------- --------- --------- --------- --------- -----------
Earnings before income taxes and fixed charges.... $ 10,890 $ 12,243 $ 9,835 $ 2,021 $ 16,088 $ 4,399
--------- --------- --------- --------- --------- -----------
--------- --------- --------- --------- --------- -----------
Ratio of earnings to fixed charges................ 2.04 1.97 2.20 (A) 1.97 1.04
--------- --------- --------- --------- --------- -----------
--------- --------- --------- --------- --------- -----------
</TABLE>
- ------------------------
(A) As a result of the loss incurred in 1995, the Company was unable to fully
cover the indicated fixed charges. Earnings did not cover fixed charges by
$2,153.
<PAGE>
EXHIBIT 12.2
FEDERAL DATA CORPORATION
COMPUTATION OF PRO FORMA RATIO OF EARNINGS TO FIXED CHARGES
(IN THOUSANDS)
<TABLE>
<CAPTION>
SIX
MONTHS
YEAR ENDED ENDED
DECEMBER 31, JUNE 30,
1996 1997
------------ ---------
<S> <C> <C>
Income (loss) from continuing operations before income taxes............................. $ 3,929 $ (5,134)
------------ ---------
Fixed Charges:
Pro forma total interest expense, including amortization of deferred
financing fees....................................................................... 15,771 7,048
Rentals:
33% of combined rental expense....................................................... 1,922 980
------------ ---------
Total fixed charges................................................................ 17,693 8,028
------------ ---------
Earnings before income taxes and fixed charges........................................... $ 21,622 $ 2,894
------------ ---------
------------ ---------
Ratio of earnings to fixed charges....................................................... 1.22 (A)
------------ ---------
------------ ---------
</TABLE>
- ------------------------
(A) As a result of the loss incurred during the six month period ended June 30,
1997, the Company was unable to fully cover the indicated fixed charges.
Earnings did not cover fixed charges by $5,134.
<PAGE>
EXHIBIT 21.1
SUBSIDIARIES OF FEDERAL DATA CORPORATION
State of Doing
Subsidiaries Incorporation Business Names
- ---------------- ------------- ---------------
FDCT Corp. Delaware FDCT Corp.
FDC Technologies, Inc. Delaware FDC Technologies,
Inc.
DoxSys, Inc. Delaware DoxSys, Inc.
VAD International, Inc. Maryland VAD International, Inc.
NYMA, Inc. Maryland NYMA, Inc.
Sylvest Management Sylvest Management
Systems Corporation Maryland Systems Corporation
<PAGE>
EXHIBIT 23.2
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the use in the Prospectus constituting part of this
Registration Statement on Form S-4 of Federal Data Corporation of our report
dated March 28, 1997 relating to the consolidated financial statements of
Federal Data Corporation, which appears in such Prospectus. We also consent to
the references to us under the headings "Experts" and "Selected Consolidated
Historical Financial Data of Federal Data Corporation" in such Prospectus.
However, it should be noted that Price Waterhouse LLP has not prepared or
certified such "Selected Consolidated Historical Financial Data of Federal Data
Corporation."
PRICE WATERHOUSE LLP
Washington, DC
September 25, 1997
<PAGE>
EXHIBIT 23.3
INDEPENDENT AUDITORS' CONSENT
We consent to the use in this Registration Statement of Federal Data
Corporation on Form S-4 of our report on our audits of the financial statements
of NYMA, Inc., dated March 21, 1997 (May 2, 1997 as to Note 9), appearing in the
Prospectus which is part of the Registration Statement. We also consent to the
reference to our firm under the heading "Experts."
Deloitte & Touche LLP
Washington, D.C.
September 25, 1997
<PAGE>
EXHIBIT 23.4
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the inclusion in this Registration Statement on Form S-4 of
Federal Data Corporation of our report dated March 21, 1997, except for Notes 5
and 10, as to which the date is June 30, 1997, on our audits of the financial
statements of Sylvest Management Systems Corporation. We also consent to the
reference to our firm under the caption "Experts."
COOPERS & LYBRAND L.L.P.
Washington, D.C.
September 25, 1997
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C> <C>
<PERIOD-TYPE> YEAR 6-MOS
<FISCAL-YEAR-END> DEC-31-1996 DEC-31-1997
<PERIOD-START> JAN-01-1996 JAN-01-1997
<PERIOD-END> DEC-31-1996 JUN-30-1997
<CASH> 1,191 7,276
<SECURITIES> 0 0
<RECEIVABLES> 54,379 91,893
<ALLOWANCES> 0 0
<INVENTORY> 0 0
<CURRENT-ASSETS> 69,450 118,968
<PP&E> 8,938 16,141
<DEPRECIATION> 7,476 12,151
<TOTAL-ASSETS> 83,286 194,389
<CURRENT-LIABILITIES> 53,201 74,150
<BONDS> 0 0
0 0
0 0
<COMMON> 19 29
<OTHER-SE> (22,845) 3,444
<TOTAL-LIABILITY-AND-EQUITY> 83,286 194,389
<SALES> 87,543 42,035
<TOTAL-REVENUES> 151,108 87,172
<CGS> 67,748 29,699
<TOTAL-COSTS> 114,248 70,277
<OTHER-EXPENSES> 21,366 12,986
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 7,564 3,734
<INCOME-PRETAX> 7,930 175
<INCOME-TAX> 3,202 163
<INCOME-CONTINUING> 4,728 12
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> 4,728 12
<EPS-PRIMARY> 2.43 .01
<EPS-DILUTED> 0 0
</TABLE>
<PAGE>
EXHIBIT 99.1
LETTER OF TRANSMITTAL
TO TENDER FOR EXCHANGE
10 1/8% SENIOR SUBORDINATED NOTES DUE 2005
FEDERAL DATA CORPORATION
PURSUANT TO THE PROSPECTUS DATED , 1997
THE EXCHANGE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 5:00 P.M., NEW YORK CITY
TIME, ON , 1997 (THE "EXPIRATION DATE"), UNLESS THE EXCHANGE OFFER
IS EXTENDED BY THE COMPANY IN ITS SOLE DISCRETION, IN WHICH CASE THE TERM
"EXPIRATION DATE" SHALL MEAN THE LATEST DATE AND TIME TO WHICH THE EXCHANGE
OFFER IS EXTENDED. TENDERS MAY BE WITHDRAWN AT ANY TIME PRIOR TO 5:00 P.M., NEW
YORK CITY TIME, ON THE EXPIRATION DATE.
THE EXCHANGE AGENT IS
Norwest Bank Minnesota, National Association
<TABLE>
<S> <C>
BY REGISTERED OR CERTIFIED IN PERSON:
MAIL: Northstar East Bldg.
Norwest Bank Minnesota, 608 2nd Ave S.
National Association 12th Floor
Corporate Trust Operations Corporate Trust Ser.
P.O. Box 1517 Minneapolis, MN
Minneapolis, MN 55480-1517
BY HAND OR OVERNIGHT BY FACSIMILE (FOR ELIGIBLE
COURIER: INSTITUTIONS ONLY):
Norwest Bank Minnesota, (612) 667-4927
National Association CONFIRM RECEIPT OF NOTICE OF
Corporate Trust Operations GUARANTEED DELIVERY BY TELEPHONE:
Norwest Center (612) 667-9764
Sixth and Marquette
Minneapolis, MN 55479-0113
</TABLE>
DELIVERY OF THIS INSTRUMENT TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE OR
TRANSMISSION OF INSTRUCTIONS VIA A FACSIMILE NUMBER OTHER THAN THE
ONE LISTED ABOVE WILL NOT CONSTITUTE A VALID DELIVERY. THE
INSTRUCTIONS SET FORTH IN THIS LETTER OF TRANSMITTAL
SHOULD BE READ CAREFULLY BEFORE THIS LETTER OF
TRANSMITTAL IS COMPLETED.
<PAGE>
The undersigned acknowledges receipt of the Prospectus dated ,
1997 (the "Prospectus"), of Federal Data Corporation, a Delaware corporation
(the "Company"), and this Letter of Transmittal (the "Letter of Transmittal"),
which together with the Prospectus constitutes the Company's offer (the
"Exchange Offer") to exchange $1,000 principal amount of its 10 1/8% Senior
Subordinated Notes due 2005 (the "Exchange Notes") for each $1,000 principal
amount of its outstanding 10 1/8% Senior Subordinated Notes due 2005 (the
"Private Notes"). Recipients of the Prospectus should read the requirements
described in such Prospectus with respect to eligibility to participate in the
Exchange Offer. Capitalized terms used but not defined herein have the meaning
given to them in the Prospectus.
The undersigned hereby tenders the Private Notes described in the box
entitled "Description of Private Notes" below pursuant to the terms and
conditions described in the Prospectus and this Letter of Transmittal. The
undersigned is the registered owner of all the Private Notes and the undersigned
represents that it has received from each beneficial owner of Private Notes
("Beneficial Owners") a duly completed and executed form of "Instruction to
Registered Holder from Beneficial Owner" accompanying this Letter of
Transmittal, instructing the undersigned to take the action described in this
Letter of Transmittal.
This Letter of Transmittal is to be used by a holder of Private Notes (i) if
certificates representing Private Notes are to be forwarded herewith, (ii) if
delivery of Private Notes is to be made by book-entry transfer to the Exchange
Agent's account at The Depository Trust Company ("DTC"), pursuant to the
procedures set forth in the section of the Prospectus entitled "The Exchange
Offer--Procedures for Tendering," or (iii) if a tender is made pursuant to the
guaranteed delivery procedures in the section of the Prospectus entitled "The
Exchange Offer--Guaranteed Delivery Procedures."
The undersigned hereby represents and warrants that the information received
from the beneficial owners is accurately reflected in the boxes entitled
"Beneficial Owner(s)--Purchaser Status" and "Beneficial Owner(s)--Residence."
Any beneficial owner whose Private Notes are registered in the name of a
broker, dealer, commercial bank, trust company or other nominee and who wishes
to tender should contact such registered holder of Private Notes promptly and
instruct such registered holder of Private Notes to tender on behalf of the
beneficial owner. If such beneficial owner wishes to tender on its own behalf,
such beneficial owner must, prior to completing and executing this Letter of
Transmittal and delivering its Private Notes, either make appropriate
arrangements to register ownership of the Private Notes in such beneficial
owner's name or obtain a properly completed bond power from the registered
holder of Private Notes. The transfer of record ownership may take considerable
time.
In order to properly complete this Letter of Transmittal, a holder of
Private Notes must (i) complete the box entitled "Description of Private Notes,"
(ii) complete the boxes entitled "Beneficial Owner(s)-- Purchaser Status" and
"Beneficial Owner(s)--Residence", (iii) if appropriate, check and complete the
boxes relating to book-entry transfer, guaranteed delivery, Special Issuance
Instructions and Special Delivery Instructions, (iv) sign the Letter of
Transmittal by completing the box entitled "Sign Here" and (v) complete the
Substitute Form W-9. Each holder of Private Notes should carefully read the
detailed instructions below prior to completing the Letter of Transmittal.
2
<PAGE>
Holders of Private Notes who desire to tender their Private Notes for
exchange and (i) whose Private Notes are not immediately available or (ii) who
cannot deliver their Private Notes, this Letter of Transmittal and all other
documents required hereby to the Exchange Agent on or prior to the Expiration
Date, must tender the Private Notes pursuant to the guaranteed delivery
procedures set forth in the section of the Prospectus entitled "The Exchange
Offer--Guaranteed Delivery Procedures." See Instruction 2.
Holders of Private Notes who wish to tender their Private Notes for exchange
must complete columns (1) through (3) in the box below entitled "Description of
Private Notes," complete the boxes entitled and sign the box below entitled
"Sign Here." If only those columns are completed, such holder of Private Notes
will have tendered for exchange all Private Notes listed in column (3) below. If
the holder of Private Notes wishes to tender for exchange less than all of such
Private Notes, column (4) must be completed in full. In such case, such holder
of Private Notes should refer to Instruction 5.
3
<PAGE>
<TABLE>
<CAPTION>
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DESCRIPTION OF PRIVATE NOTES
-------------------------------------------------------------------------------------------
(1) (2) (3) (4)
PRINCIPAL
AMOUNT
AGGREGATE TENDERED FOR
NAME(S) AND ADDRESS(ES) OF REGISTERED PRIVATE NOTE PRINCIPAL EXCHANGE
HOLDER(S) OF PRIVATE NOTE(S), EXACTLY AS NUMBER(S) AMOUNT (MUST BE IN
NAME(S) APPEAR(S) ON PRIVATE NOTE (ATTACH SIGNED REPRESENTED INTEGRAL
CERTIFICATES(S) LIST IF BY MULTIPLES
(PLEASE FILL IN, IF BLANK) NECESSARY) CERTIFICATE(S)(1) OF $1,000)(2)
<S> <C> <C> <C>
- ---------------------------------------------------------------------------------------------
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----------------------------------------------
----------------------------------------------
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- ---------------------------------------------------------------------------------------------
</TABLE>
1. Unless indicated in the column "Principal Amount Tendered For Exchange," any
tendering Holder of 10 1/8% Senior Subordinated Notes due 2005 will be
deemed to have tendered the entire aggregate principal amount represented by
the column labeled "Aggregate Principal Amount Represented by
Certificate(s)."
2. The minimum permitted tender is $1,000 in principal amount of 10 1/8% Senior
Subordinated Notes due 2005. All other tenders must be in integral multiples
of $1,000.
/ / CHECK HERE IF TENDERED PRIVATE NOTES ARE ENCLOSED HEREWITH.
/ / CHECK HERE IF TENDERED PRIVATE NOTES ARE BEING DELIVERED BY BOOK-ENTRY
TRANSFER MADE TO THE ACCOUNT MAINTAINED BY THE EXCHANGE AGENT WITH DTC AND
COMPLETE THE FOLLOWING (FOR USE BY ELIGIBLE INSTITUTIONS (AS HEREINAFTER
DEFINED) ONLY):
Name of Tendering Institution: _____________________________________________
Account Number: ____________________________________________________________
Transaction Code Number: ___________________________________________________
/ / CHECK HERE IF TENDERED PRIVATE NOTES ARE BEING DELIVERED PURSUANT TO A
NOTICE OF GUARANTEED DELIVERY ENCLOSED HEREWITH AND COMPLETE THE FOLLOWING
(FOR USE BY ELIGIBLE INSTITUTIONS ONLY):
Name of Registered Holder of Private Note(s): ______________________________
Date of Execution of Notice of Guaranteed Delivery: ________________________
Window Ticket Number (if available): _______________________________________
Name of Institution which Guaranteed Delivery: _____________________________
Account Number (if delivered by book-entry transfer): ______________________
/ / CHECK HERE IF YOU ARE A BROKER-DEALER AND WISH TO RECEIVE 10 ADDITIONAL
COPIES OF THE PROSPECTUS AND 10 COPIES OF ANY AMENDMENTS OR SUPPLEMENTS
THERETO.
Name: ______________________________________________________________________
Address: ___________________________________________________________________
____________________________________
4
<PAGE>
- -------------------------------------------
SPECIAL ISSUANCE INSTRUCTIONS
(SEE INSTRUCTIONS 1, 6, 7 AND 8)
To be completed ONLY (i) if the Exchange Notes issued in exchange for
Private Notes, certificates for Private Notes in a principal amount not
exchanged for Exchange Notes, or Private Notes (if any) not tendered for
exchange, are to be issued in the name of someone other than the undersigned
or (ii) if Private Notes tendered by book-entry transfer which are not
exchanged are to be returned by credit to an account maintained at DTC.
Issue to:
Name _______________________________________________________________________
(PLEASE PRINT)
Address ____________________________________________________________________
____________________________________________________________________________
____________________________________________________________________________
(INCLUDE ZIP CODE)
__________________________________________________________________________
(TAX IDENTIFICATION OR SOCIAL SECURITY NO.)
Credit Private Notes not exchanged and delivered by book-entry transfer
to DTC account set forth below:
____________________________________________________________________________
(ACCOUNT NUMBER)
- ------------------------------------------------------
- ------------------------------------------------------
SPECIAL DELIVERY INSTRUCTIONS
(SEE INSTRUCTIONS 1, 6, 7 AND 8)
To be completed ONLY if the Exchange Notes issued in exchange for
Private Notes, certificates for Private Notes in a principal amount not
exchanged for Exchange Notes, or Private Notes (if any) not tendered for
exchange, are to be mailed or delivered (i) to someone other than the
undersigned or (ii) to the undersigned at an address other than the address
shown below the undersigned's signature.
Mail or deliver to:
Name _______________________________________________________________________
(PLEASE PRINT)
Address ____________________________________________________________________
____________________________________________________________________________
____________________________________________________________________________
(INCLUDE ZIP CODE)
__________________________________________________________________________
(TAX IDENTIFICATION OR SOCIAL SECURITY NO.)
- -----------------------------------------------------
5
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------
BENEFICIAL OWNER(S)--RESIDENCE
<S> <C>
- ------------------------------------------------------------------------------------------------------------------
STATE OF DOMICILE/PRINCIPAL PLACE OF BUSINESS OF EACH PRINCIPAL AMOUNT OF PRIVATE NOTES HELD FOR ACCOUNT OF
BENEFICIAL OWNER OF PRIVATE NOTES BENEFICIAL OWNER(S)
- ------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<S> <C>
BENEFICIAL OWNER(S)--PURCHASER STATUS
The beneficial owner of each of the Private Notes described herein is (check the box that
applies):
/ / A "Qualified Institutional Buyer" (as defined in Rule 144A under the Securities Act)
/ / An "Institutional Accredited Investor" (as defined in Rule 501(a)(1), (2), (3) or (7)
under the Securities Act)
/ / A non "U.S. person" (as defined in Regulation S of the Securities Act) that purchased
the Private Notes outside the United States in accordance with Rule 904 of the
Securities Act
/ / Other (describe)
</TABLE>
6
<PAGE>
SIGNATURES MUST BE PROVIDED BELOW
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY
LADIES AND GENTLEMEN:
Pursuant to the offer by Federal Data Corporation, a Delaware corporation
(the "Company"), upon the terms and subject to the conditions set forth in the
Prospectus dated , 1997 (the "Prospectus") and this Letter of
Transmittal (the "Letter of Transmittal"), which together with the Prospectus
constitutes the Company's offer (the "Exchange Offer") to exchange $1,000
principal amount of its 10 1/8% Senior Subordinated Notes due 2005 (the
"Exchange Notes") for each $1,000 principal amount of its outstanding 10 1/8%
Senior Subordinated Notes due 2005 (the "Private Notes"), the undersigned hereby
tenders to the Company for exchange the Private Notes indicated above.
By executing this Letter of Transmittal and subject to and effective upon
acceptance for exchange of the Private Notes tendered for exchange herewith, the
undersigned will have irrevocably sold, assigned, transferred and exchanged, to
the Company, all right, title and interest in, to and under all of the Private
Notes tendered for exchange hereby, and hereby will have appointed the Exchange
Agent as the true and lawful agent and attorney-in-fact (with full knowledge
that the Exchange Agent also acts as agent of the Company) of such holder of
Private Notes with respect to such Private Notes, with full power of
substitution to (i) deliver certificates representing such Private Notes, or
transfer ownership of such Private Notes on the account books maintained by DTC
(together, in any such case, with all accompanying evidences of transfer and
authenticity), to the Company, (ii) present and deliver such Private Notes for
transfer on the books of the Company and (iii) receive all benefits and
otherwise exercise all rights and incidents of beneficial ownership with respect
to such Private Notes, all in accordance with the terms of the Exchange Offer.
The power of attorney granted in this paragraph shall be deemed to be
irrevocable and coupled with an interest.
The undersigned hereby represents and warrants that (i) the undersigned is
the owner; (ii) has a net long position within the meaning of Rule 14e-4 under
the Securities Exchange Act as amended ("Rule 14e-4") equal to or greater than
the principal amount of Private Notes tendered hereby; (iii) the tender of such
Private Notes complies with Rule 14e-4 (to the extent that Rule 14e-4 is
applicable to such exchange); (iv) the undersigned has full power and authority
to tender, exchange, assign and transfer the Private Notes and (v) that when
such Private Notes are accepted for exchange by the Company, the Company will
acquire good and marketable title thereto, free and clear of all liens,
restrictions, charges and encumbrances and not subject to any adverse claims.
The undersigned will, upon receipt, execute and deliver any additional documents
deemed by the Exchange Agent or the Company to be necessary or desirable to
complete the exchange, assignment and transfer of the Private Notes tendered for
exchange hereby.
By tendering, the undersigned hereby further represents to the Company that
(i) the Exchange Notes to be acquired by the undersigned in exchange for the
Private Notes tendered hereby and any beneficial owner(s) of such Private Notes
in connection with the Exchange Offer will be acquired by the undersigned and
such beneficial owner(s) in the ordinary course of business of the undersigned,
(ii) the undersigned have no arrangement or understanding with any person to
participate in the distribution of the Exchange Notes, (iii) the undersigned and
each beneficial owner acknowledge and agree that any person who is a
broker-dealer registered under the Exchange Act or is participating in the
Exchange Offer for the purpose of distributing the Exchange Notes must comply
with the registration and prospectus delivery requirements of the Securities Act
in connection with a secondary resale transaction of the Exchange Notes acquired
by such person and cannot rely on the position of the staff of the Commission
set forth in certain no-action letters, (iv) the undersigned and each beneficial
owner understand that a secondary resale transaction described in clause (iii)
above and any resales of Exchange Notes obtained by the undersigned in exchange
for the Private Notes acquired by the undersigned directly from the Company
should be covered by an effective registration statement containing the selling
securityholder information required by Item 507 or
7
<PAGE>
Item 508, as applicable, of Regulation S-K of the Commission and (vi) neither
the undersigned nor any beneficial owner is an "affiliate," as defined under
Rule 405 under the Securities Act, of the Company. If the undersigned is a
broker-dealer that will receive Exchange Notes for its own account in exchange
for Private Notes that were acquired as a result of market-making activities or
other trading activities, it acknowledges that it will deliver a prospectus
meeting the requirements of the Securities Act in connection with any resale of
such Exchange Notes; however, by so acknowledging and by delivering a
prospectus, the undersigned will not be deemed to admit that it is an
"underwriter" within the meaning of the Securities Act.
For purposes of the Exchange Offer, the Company will be deemed to have
accepted for exchange, and to have exchanged, validly tendered Private Notes,
if, as and when the Company gives oral or written notice thereof to the Exchange
Agent. Tenders of Private Notes for exchange may be withdrawn at any time prior
to 5:00 p.m., New York City time, on the Expiration Date. See "The Exchange
Offer-- Withdrawal of Tenders" in the Prospectus. Any Private Notes tendered by
the undersigned and not accepted for exchange will be returned to the
undersigned at the address set forth above unless otherwise indicated in the box
above entitled "Special Delivery Instructions" as promptly as practicable after
the Expiration Date.
The undersigned acknowledges that the Company's acceptance of Private Notes
validly tendered for exchange pursuant to any one of the procedures described in
the section of the Prospectus entitled "The Exchange Offer" and in the
instructions hereto will constitute a binding agreement between the undersigned
and the Company upon the terms and subject to the conditions of the Exchange
Offer.
Unless otherwise indicated in the box entitled "Special Issuance
Instructions," please return any Private Notes not tendered for exchange in the
name(s) of the undersigned. Similarly, unless otherwise indicated in the box
entitled "Special Delivery Instructions," please mail any certificates for
Private Notes not tendered or exchanged (and accompanying documents, as
appropriate) to the undersigned at the address shown below the undersigned's
signature(s). In the event that both "Special Issuance Instructions" and
"Special Delivery Instructions" are completed, please issue the certificates
representing the Exchange Notes issued in exchange for the Private Notes
accepted for exchange in the name(s) of, and return any Private Notes not
tendered for exchange or not exchanged to, the person(s) so indicated. The
undersigned recognizes that the Company has no obligation pursuant to the
"Special Issuance Instructions" and "Special Delivery Instructions" to transfer
any Private Notes from the name of the holder of Private Note(s) thereof if the
Company does not accept for exchange any of the Private Notes so tendered for
exchange or if such transfer would not be in compliance with any transfer
restrictions applicable to such Private Note(s).
IN ORDER TO VALIDLY TENDER PRIVATE NOTES FOR EXCHANGE, HOLDERS OF PRIVATE
NOTES MUST COMPLETE, EXECUTE, AND DELIVER THIS LETTER OF TRANSMITTAL.
Except as stated in the Prospectus, all authority herein conferred or agreed
to be conferred shall survive the death, incapacity, or dissolution of the
undersigned, and any obligation of the undersigned hereunder shall be binding
upon the heirs, personal representatives, successors and assigns of the
undersigned. Except as otherwise stated in the Prospectus, this tender for
exchange of Private Notes is irrevocable.
8
<PAGE>
- --------------------------------------------------------------------------------
SIGN HERE
____________________________________________________________________________
____________________________________________________________________________
SIGNATURE(S) OF OWNER(S)
Dated: __________________, 1997
Must be signed by the registered holder(s) of Private Notes exactly as
name(s) appear(s) on certificate(s) representing the Private Notes or on a
security position listing or by person(s) authorized to become registered
Private Note holder(s) by certificates and documents transmitted herewith.
If signature is by trustees, executors, administrators, guardians,
attorneys-in-fact, officers of corporations or others acting in a fiduciary
or representative capacity, please provide the following information. (See
Instruction 6).
Name(s) ____________________________________________________________________
____________________________________________________________________________
____________________________________________________________________________
(PLEASE PRINT)
Capacity (full title) ______________________________________________________
____________________________________________________________________________
____________________________________________________________________________
Address ____________________________________________________________________
____________________________________________________________________________
____________________________________________________________________________
____________________________________________________________________________
(INCLUDE ZIP CODE)
Principal place of business (if different from address listed above): ______
____________________________________________________________________________
____________________________________________________________________________
(INCLUDE ZIP CODE)
Area Code and Telephone No. ( )___________________________________________
Tax Identification or Social Security Nos. _________________________________
PLEASE COMPLETE SUBSTITUTE FORM W-9
GUARANTEE OF SIGNATURE(S)
(SIGNATURE(S) MUST BE GUARANTEED IF REQUIRED BY INSTRUCTION 1)
Authorized Signature _______________________________________________________
Dated ______________________________________________________________________
Name and Title _____________________________________________________________
(PLEASE PRINT)
Name of Firm _______________________________________________________________
- --------------------------------------------------------------------------------
9
<PAGE>
INSTRUCTIONS
FORMING PART OF THE TERMS AND CONDITIONS OF THE EXCHANGE OFFER
1. GUARANTEE OF SIGNATURES. Except as otherwise provided below, all
signatures on this Letter of Transmittal must be guaranteed by an institution
which is (1) a member firm of a registered national securities exchange or of
the National Association of Securities Dealers, Inc., (2) a commercial bank or
trust company having an office or correspondent in the Unites States, or (3) an
"eligible guarantor institution" within the meaning of Rule 17Ad-15 under the
Securities Exchange Act of 1934 which is a member of one of the following
recognized Signature Guarantee Programs (an "Eligible Institution"):
a. The Securities Transfer Agents Medallion Program (STAMP)
b. The New York Stock Exchange Medallion Signature Program (MSP)
c. The Stock Exchange Medallion Program (SEMP)
Signatures on this Letter of Transmittal need not be guaranteed (i) if this
Letter of Transmittal is signed by the registered holder(s) of the Private Notes
tendered herewith and such registered holder(s) have not completed the box
entitled "Special Issuance Instructions" or the box entitled "Special Delivery
Instructions" on this Letter of Transmittal or (ii) if such Private Notes are
tendered for the account of an Eligible Institution. IN ALL OTHER CASES, ALL
SIGNATURES MUST BE GUARANTEED BY AN ELIGIBLE INSTITUTION.
2. DELIVERY OF THIS LETTER OF TRANSMITTAL AND PRIVATE NOTES; GUARANTEED
DELIVERY PROCEDURES. This Letter of Transmittal is to be completed by holders of
Private Notes (i) if certificates are to be forwarded herewith or (ii) if
tenders are to be made pursuant to the procedures for tender by book-entry
transfer or guaranteed delivery set forth in the section of the Prospectus
entitled "The Exchange Offer." Certificates for all physically tendered Private
Notes or any timely confirmation of a book-entry transfer (a "Book-Entry
Confirmation"), as well as a properly completed and duly executed copy of this
Letter of Transmittal or facsimile hereof, and any other documents required by
this Letter of Transmittal, must be received by the Exchange Agent at its
address set forth on the cover of this Letter of Transmittal prior to 5:00 p.m.,
New York City time, on the Expiration Date. Holders of Private Notes who elect
to tender Private Notes and (i) whose Private Notes are not immediately
available or (ii) who cannot deliver the Private Notes, this Letter of
Transmittal or other required documents to the Exchange Agent prior to 5:00
p.m., New York City time, on the Expiration Date, must tender their Private
Notes according to the guaranteed delivery procedures set forth in the
Prospectus. Holders may have such tender effected if: (a) such tender is made
through an Eligible Institution; (b) prior to 5:00 p.m., New York City time, on
the Expiration Date, the Exchange Agent has received from such Eligible
Institution a properly completed and duly executed Notice of Guaranteed
Delivery, setting forth the name and address of the holder of such Private
Notes, the certificate numbers(s) of such Private Notes and the principal amount
of Private Notes tendered for exchange, stating that tender is being made
thereby and guaranteeing that, within five New York Stock Exchange trading days
after the Expiration Date, this Letter of Transmittal (or a facsimile thereof),
together with the certificate(s) representing such Private Notes (or a
Book-Entry Confirmation), in proper form for transfer, and any other documents
required by this Letter of Transmittal, will be deposited by such Eligible
Institution with the Exchange Agent; and (c) a properly executed Letter of
Transmittal (or a facsimile hereof), as well as the certificate(s) for all
tendered Private Notes in proper form for transfer or a Book-Entry Confirmation,
together with any other documents required by this Letter of Transmittal, are
received by the Exchange Agent within five New York Stock Exchange trading days
after the Expiration Date.
12
<PAGE>
THE METHOD OF DELIVERY OF PRIVATE NOTES, THIS LETTER OF TRANSMITTAL AND ALL
OTHER REQUIRED DOCUMENTS TO THE EXCHANGE AGENT IS AT THE ELECTION AND RISK OF
THE HOLDER. EXCEPT AS OTHERWISE PROVIDED BELOW, THE DELIVERY WILL BE DEEMED MADE
ONLY WHEN ACTUALLY RECEIVED OR CONFIRMED BY THE EXCHANGE AGENT. INSTEAD OF
DELIVERY BY MAIL, IT IS RECOMMENDED THAT HOLDERS USE AN OVERNIGHT OR HAND
DELIVERY SERVICE, PROPERLY INSURED. IN ALL CASES, SUFFICIENT TIME SHOULD BE
ALLOWED TO ASSURE DELIVERY TO THE EXCHANGE AGENT BEFORE THE EXPIRATION DATE.
NEITHER THIS LETTER OF TRANSMITTAL NOR ANY PRIVATE NOTES SHOULD BE SENT TO THE
COMPANY. HOLDERS MAY REQUEST THEIR RESPECTIVE BROKERS, DEALERS, COMMERCIAL
BANKS, TRUST COMPANIES OR NOMINEES TO EFFECT THE ABOVE TRANSACTIONS FOR SUCH
HOLDERS.
No alternative, conditional or contingent tenders will be accepted. All
tendering holders of Private Notes, by execution of this Letter of Transmittal
(or facsimile hereof, if applicable), waive any right to receive notice of the
acceptance of their Private Notes for exchange.
3. INADEQUATE SPACE. If the space provided in the box entitled "Description
of Private Notes" above is inadequate, the certificate numbers and principal
amounts of the Private Notes being tendered should be listed on a separate
signed schedule affixed hereto.
4. WITHDRAWALS. A tender of Private Notes may be withdrawn at any time
prior to 5:00 p.m., New York City time, on the Expiration Date by delivery of
written or facsimile notice of withdrawal to the Exchange Agent at the address
set forth on the cover of this Letter of Transmittal. To be effective, a notice
of withdrawal of Private Notes must (i) specify the name of the person who
tendered the Private Notes to be withdrawn (the "Depositor"), (ii) identify the
Private Notes to be withdrawn (including the certificate number or numbers and
aggregate principal amount of such Private Notes), and (iii) be signed by the
holder of Private Notes in the same manner as the original signature on the
Letter of Transmittal by which such Private Notes were tendered (including any
required signature guarantees). All questions as to the validity, form and
eligibility (including time of receipt) of such notices will be determined by
the Company in its sole discretion, whose determination shall be final and
binding on all parties. Any Private Notes so withdrawn will thereafter be deemed
not validly tendered for purposes of the Exchange Offer and no Exchange Notes
will be issued with respect thereto unless the Private Notes so withdrawn are
validly retendered. Properly withdrawn Private Notes may be retendered by
following one of the procedures described in the section of the Prospectus
entitled "The Exchange Offer--Procedures for Tendering" at any time prior to
5:00 p.m., New York City time, on the Expiration Date.
5. PARTIAL TENDERS. Tenders of Private Notes will be accepted only in
integral multiples of $1,000 principal amount. If a tender for exchange is to be
made with respect to less than the entire principal amount of any Private Notes,
fill in the principal amount of Private Notes which are tendered for exchange in
column (4) of the box entitled "Description of Private Notes," as more fully
described in the footnotes thereto. In case of a partial tender for exchange, a
new certificate, in fully registered form, for the remainder of the principal
amount of the Private Notes, will be sent to the holders of Private Notes unless
otherwise indicated in the appropriate box on this Letter of Transmittal as
promptly as practicable after the expiration or termination of the Exchange
Offer.
6. SIGNATURES ON THIS LETTER OF TRANSMITTAL, ASSIGNMENT AND ENDORSEMENTS.
(a) The signature(s) of the holder of Private Notes on this Letter of
Transmittal must correspond with the name(s) as written on the face of the
Private Notes without alternation, enlargement or any change whatsoever.
(b) If tendered Private Notes are owned of record by two or more joint
owners, all such owners must sign this Letter of Transmittal.
13
<PAGE>
(c) If any tendered Private Notes are registered in different names on
several certificates, it will be necessary to complete, sign and submit as many
separate copies of this Letter of Transmittal and any necessary or required
documents as there are different registrations or certificates.
(d) When this Letter of Transmittal is signed by the holder of the Private
Notes listed and transmitted hereby, no endorsements of Private Notes or bond
powers are required. If, however, Private Notes not tendered or not accepted,
are to be issued or returned in the name of a person other than the holder of
Private Notes, then the Private Notes transmitted hereby must be endorsed or
accompanied by a properly completed bond power, in a form satisfactory to the
Company, in either case signed exactly as the name(s) of the holder of Private
Notes appear(s) on the Private Notes. Signatures on such Private Notes or bond
powers must be guaranteed by an Eligible Institution (unless signed by an
Eligible Institution).
(e) If this Letter of Transmittal or Private Notes or bond powers are
signed by trustees, executors, administrators, guardians, attorneys-in-fact,
officers of corporations or others acting in a fiduciary or representative
capacity, such persons should so indicate when signing, and unless waived by the
Company, evidence satisfactory to the Company of their authority to so act must
be submitted with this Letter of Transmittal.
(f) If this Letter of Transmittal is signed by a person other than the
registered holder of Private Notes listed, the Private Notes must be endorsed or
accompanied by a properly completed bond power, in either case signed by such
registered holder exactly as the name(s) of the registered holder of Private
Notes appear(s) on the certificates. Signatures on such Private Notes or bond
powers must be guaranteed by an Eligible Institution (unless signed by an
Eligible Institution).
7. TRANSFER TAXES. Except as set forth in this Instruction 7, the Company
will pay all transfer taxes, if any, applicable to the exchange of Private Notes
pursuant to the Exchange Offer. If, however, a transfer tax is imposed for any
reason other than the exchange of the Private Notes pursuant to the Exchange
Offer, then the amount of any such transfer taxes (whether imposed on the
registered holder or any other persons) will be payable by the tendering holder.
If satisfactory evidence of payment of such taxes or exemptions therefrom is not
submitted with this Letter of Transmittal, the amount of such transfer taxes
will be billed directly to such tendering holder.
8. SPECIAL ISSUANCE AND DELIVERY INSTRUCTIONS. If the Exchange Notes are to
be issued, or if any Private Notes not tendered for exchange are to be issued or
sent to someone other than the holder of Private Notes or to an address other
than that shown above, the appropriate boxes on this Letter of Transmittal
should be completed. Holders of Private Notes tendering Private Notes by
book-entry transfer may request that Private Notes not accepted be credited to
such account maintained at DTC as such holder of Private Notes may designate.
9. IRREGULARITIES. All questions as to the validity, form, eligibility
(including time of receipt), compliance with conditions, acceptance and
withdrawal of tendered Private Notes will be determined by the Company in its
sole discretion, which determination will be final and binding. The Company
reserves the absolute right to reject any and all Private Notes not properly
tendered or any Private Notes the Company's acceptance of which would, in the
opinion of counsel for the Company, be unlawful. The Company also reserves the
right to waive any defects, irregularities or conditions of tender as to
particular Private Notes. The Company's interpretation of the terms and
conditions of the Exchange Offer (including the instructions in the Letter of
Transmittal) will be final and binding on all parties. Unless waived, any
defects or irregularities in connection with tenders of Private Notes must be
cured within such time as the Company shall determine. Although the Company
intends to notify holders of defects or irregularities with respect to tenders
of Private Notes, neither the Company, the Exchange Agent nor any other person
shall incur any liability for failure to give such notification. Tenders of
Private Notes will not be deemed to have been made until such defects or
irregularities have been cured or waived. Any Private Notes received by the
Exchange Agent that are not properly tendered and as to which the defects or
irregularities have not
14
<PAGE>
been cured or waived will be returned by the Exchange Agent to the tendering
holders, unless otherwise provided in this Letter of Transmittal, as soon as
practicable following the Expiration Date.
10. WAIVER OF CONDITIONS. The Company reserves the absolute right to waive,
amend or modify certain of the specified conditions as described under "The
Exchange Offer--Conditions" in the Prospectus in the case of any Private Notes
tendered (except as otherwise provided in the Prospectus).
11. MUTILATED, LOST, STOLEN OR DESTROYED PRIVATE NOTES. Any tendering
Holder whose Private Notes have been mutilated, lost, stolen or destroyed should
contact the Exchange Agent at the address listed below for further instructions:
Norwest Bank Minnesota,
National Association
Corporate Trust Operations
Norwest Center
Sixth and Marquette
Minneapolis, MN 55479-0113
(612) 667-9764
12. REQUESTS FOR INFORMATION OR ADDITIONAL COPIES. Requests for information
or for additional copies of the Prospectus and this Letter of Transmittal may be
directed to the Exchange Agent at the address or telephone number set forth on
the cover of this Letter of Transmittal.
IMPORTANT: THIS LETTER OF TRANSMITTAL (OR A FACSIMILE THEREOF, IF
APPLICABLE) TOGETHER WITH CERTIFICATES, OR CONFIRMATION OF BOOK-ENTRY OR THE
NOTICE OF GUARANTEED DELIVERY, AND ALL OTHER REQUIRED DOCUMENTS MUST BE RECEIVED
BY THE EXCHANGE AGENT PRIOR TO 5:00 P.M., NEW YORK CITY TIME, ON THE EXPIRATION
DATE.
15
<PAGE>
IMPORTANT TAX INFORMATION
Under current federal income tax law, a holder of Private Notes whose
tendered Private Notes are accepted for exchange may be subject to backup
withholding unless the holder provides the Company (as payor), through the
Exchange Agent, with either (i) such holder's correct taxpayer identification
number ("TIN") on Substitute Form W-9 attached hereto, certifying that the TIN
provided on Substitute Form W-9 is correct (or that such holder of Private Notes
is awaiting a TIN) and that (A) the holder of Private Notes has not been
notified by the Internal Revenue Service that he or she is subject to backup
withholding as a result of a failure to report all interest or dividends or (B)
the Internal Revenue Service has notified the holder of Private Notes that he or
she is no longer subject to backup withholding; or (ii) an adequate basis for
exemption from backup withholding. If such holder of Private Notes is an
individual, the TIN is such holder's social security number. If the Exchange
Agent is not provided with the correct taxpayer identification number, the
holder of Private Notes may be subject to certain penalties imposed by the
Internal Revenue Service.
Certain holders of Private Notes (including, among others, all corporations
and certain foreign individuals) are not subject to these backup withholding and
reporting requirements. Exempt holders of Private Notes should indicate their
exempt status on Substitute Form W-9. A foreign individual may qualify as an
exempt recipient by submitting to the Exchange Agent a properly completed
Internal Revenue Service Form W-8 (which the Exchange Agent will provide upon
request) signed under penalties of perjury, attesting to the holder's exempt
status. See the enclosed Guidelines for Certification of Taxpayer Identification
Number on Substitute Form W-9 (the "Guidelines") for additional instructions.
If backup withholding applies, the Company is required to withhold 31% of
any payment made to the holder of Private Notes or other payee. Backup
withholding is not an additional federal income tax. Rather, the federal income
tax liability of persons subject to backup withholding will be reduced by the
amount of tax withheld. If withholding results in an overpayment of taxes, a
refund may be obtained from the Internal Revenue Service.
The holder of Private Notes is required to give the Exchange Agent the TIN
(e.g., social security number or employer identification number) of the record
owner of the Private Notes. If the Private Notes are held in more than one name
or are not held in the name of the actual owner, consult the enclosed Guidelines
for additional guidance regarding which number to report.
16
<PAGE>
INSTRUCTION TO REGISTERED HOLDER
FROM BENEFICIAL OWNER
OF
10 1/8% SENIOR SUBORDINATED NOTES DUE 2005
OF
FEDERAL DATA CORPORATION
The undersigned hereby acknowledges receipt of the Prospectus dated
September , 1997 (the "Prospectus") of Federal Data Corporation, a Delaware
corporation (the "Company"), and the accompanying Letter of Transmittal (the
"Letter of Transmittal"), that together constitute the Company's offer (the
"Exchange Offer"). Capitalized terms used but not defined herein have the
meanings ascribed to them in the Prospectus.
This will instruct you, the registered holder, as to the action to be taken
by you relating to the Exchange Offer with respect to the 10 1/8% Senior
Subordinated Notes due 2005 (the "Private Notes") held by you for the account of
the undersigned.
The aggregate face amount of the Private Notes held by you for the account
of the undersigned is (FILL IN AMOUNT):
$ of the Private Notes.
With respect to the Exchange Offer, the undersigned hereby instructs you
(check appropriate box):
/ / To TENDER the following Private Notes held by you for the account of
the undersigned (INSERT PRINCIPAL AMOUNT OF PRIVATE NOTES TO BE TENDERED, IF
ANY):
$ of the Private Notes.
/ / NOT to TENDER any Private Notes held by you for the account of the
undersigned.
If the undersigned instructs you to tender the Private Notes held by you for
the account of the undersigned, it is understood that you are authorized (a) to
make, on behalf of the undersigned (and the undersigned, by its signature below,
hereby makes to you), the representations and warranties contained in the Letter
of Transmittal that are to be made with respect to the undersigned as a
beneficial owner of the Private Notes, including but not limited to the
representations that (i) the undersigned's principal residence is in the state
of (FILL IN STATE) , (ii) the undersigned is acquiring the Exchange
Notes in the ordinary course of business of the undersigned, (iii) the
undersigned has no arrangement or understanding with any person to participate
in the distribution of Exchange Notes, (iv) the undersigned acknowledges that
any person who is a broker-dealer registered under the Exchange Act or is
participating in the Exchange Offer for the purpose of distributing the Exchange
Notes must comply with the registration and prospectus delivery requirements of
the Securities Act of 1933, as amended, in connection with a secondary resale
transaction of the Exchange Notes acquired by such person and cannot rely on the
position of the Staff of the Securities and Exchange Commission set forth in
certain no-action letters (See the section of the Prospectus entitled "The
Exchange Offer--Resale of the Exchange Notes"), (v) the undersigned understands
that a secondary resale transaction described in clause (iv) above and any
resales of Exchange Notes obtained by the undersigned in exchange for the
Private Notes acquired by the undersigned directly from the Company should be
covered by an effective registration statement containing the selling
securityholder information required by Item 507 or Item 508, if applicable, of
Regulation S-K of the Commission, (vi) the undersigned is not an "affiliate," as
defined in Rule 405 under the Securities Act, of the Company, and (vii) if the
undersigned is a broker-dealer that will receive Exchange Notes for its own
account in exchange for Private Notes that were acquired as a result of
market-making activities or other trading activities, it acknowledges that it
will deliver a prospectus meeting the requirements of the Securities Act in
connection with any sale of such Exchange Notes; however, by so acknowledging
and by delivering a prospectus, the undersigned will not be deemed to admit that
it is an
17
<PAGE>
"underwriter" within the meaning of the Securities Act; (b) to agree, on behalf
of the undersigned, as set forth in the Letter of Transmittal; and (c) to take
such other action as necessary under the Prospectus or the Letter of Transmittal
to effect the valid tender of Private Notes.
The purchaser status of the undersigned is (check the box that applies):
/ / A "Qualified Institutional Buyer" (as defined in Rule 144A under the
Securities Act)
/ / An "Institutional Accredited Investor" (as defined in Rule 501(a)(1),
(2), (3) or (7) under the Securities Act)
/ / A non "U.S. person" (as defined in Regulation S of the Securities Act)
that purchased the Private Notes outside the United States in
accordance with Rule 904 of the Securities Act
/ / Other (describe) ______________________________________________________
___________________________________________________________
- --------------------------------------------------------------------------------
SIGN HERE
____________________________________________________________________________
____________________________________________________________________________
Name of Beneficial Owners(s) _______________________________________________
____________________________________________________________________________
Signature(s): ______________________________________________________________
____________________________________________________________________________
Name(s) (PLEASE PRINT): ____________________________________________________
____________________________________________________________________________
Address: ___________________________________________________________________
____________________________________________________________________________
Principal place of business (if different from address listed above) _______
____________________________________________________________________________
Telephone Number(s): _______________________________________________________
____________________________________________________________________________
Taxpayer Identification of Social Security Number(s): ______________________
____________________________________________________________________________
Date: ______________________________________________________________________
- --------------------------------------------------------------------------------
18
<PAGE>
PAYER'S NAME:
<TABLE>
<C> <S> <C>
- -----------------------------------------------------------------------------------------
SUBSTITUTE PART I: PLEASE Social Security Number
FORM W-9 PROVIDE YOUR TIN IN OR ------------------------
Department of the Treasury THE BOX AT RIGHT AND Employer Identification Number
Internal Revenue Service CERTIFY BY SIGNING
AND DATING BELOW
-------------------------------------------------------
PART II: For Payees exempt from backup withholding, see
the enclosed Guidelines for Certification of Taxpayer
Identification Number on Substitute Form W-9 and
Payer's Request for Taxpayer complete as instructed under "Important Tax
Identification Number (TIN) Information" above.
-------------------------------------------------------
PART III: Awaiting TIN / /
- -----------------------------------------------------------------------------------------
CERTIFICATION. Under penalties of perjury, I certify that:
(1) the number shown on this form is my correct Taxpayer Identification Number (or I am
waiting for a number to be issued to me) and
(2) I am not subject to backup withholding either because I have not been notified by
the Internal Revenue Service (IRS) that I am subject to backup withholding as a result
of a failure to report all interest or dividends, or the IRS has notified me that I am
no longer subject to backup withholding.
CERTIFICATION INSTRUCTIONS. You must cross out item (2) above if you have been notified
by the IRS that you are subject to backup withholding because of underreported interest
or dividends on your tax return. However, if after being notified by the IRS that you
were subject to backup withholding you received another notification from the IRS that
you are no longer subject to backup withholding, do not cross out item (2). (Also see
instructions in the enclosed Guidelines for Certification of Taxpayer Identification
Number on Substitute Form W-9.)
Signature -------------------------------------------------------- Date
-----------------
Name ----------------------------------------------------------------------------------
Address ---------------------------------------------------------------------------------
City ------------------------- States--------------- Zip Code
- ---------------------------
- -----------------------------------------------------------------------------------------
</TABLE>
NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP
WITHHOLDING OF 31% OF ANY PAYMENT MADE TO YOU PURSUANT TO THE EXCHANGE OFFER.
PLEASE REVIEW THE ENCLOSED GUIDELINES FOR CERTIFICATION OF TAXPAYER
IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9 FOR ADDITIONAL DETAILS.
19
<PAGE>
YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU
CHECK THE BOX IN PART 3 OF SUBSTITUTE FORM W-9
PAYOR'S NAME: NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION
CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER
I certify under penalties of perjury that a taxpayer identification
number has not been issued to me, and either (a) I have mailed or
delivered an application to receive a taxpayer identification number
to the appropriate Internal Revenue Service Center or Social Security
Administration Office or (b) I intend to mail or deliver such an
application in the near future.I understand that if I do not provide a
taxpayer identification number within sixty (60) days, 31% of all
reportable payments made to me thereafter will be withheld until I
provide such a number.
- ----------------------------------------------------------------------
SIGNATURE DATE
20
<PAGE>
EXHIBIT 99.2
NOTICE OF GUARANTEED DELIVERY
WITH RESPECT TO
10 1/8% SENIOR SUBORDINATED NOTES DUE 2005
THIS FORM, OR ONE SUBSTANTIALLY EQUIVALENT HERETO, MUST BE USED BY ANY HOLDER OF
10 1/8% SENIOR SUBORDINATED NOTES DUE 2005 (THE "PRIVATE NOTES") OF FEDERAL DATA
CORPORATION, A DELAWARE CORPORATION (THE "COMPANY"), WHO WISHES TO TENDER
PRIVATE NOTES PURSUANT TO THE COMPANY'S EXCHANGE OFFER, AS DEFINED IN THE
PROSPECTUS DATED , 1997 (THE "PROSPECTUS") AND (i) WHOSE PRIVATE NOTES
ARE NOT IMMEDIATELY AVAILABLE OR (ii) WHO CANNOT DELIVER SUCH PRIVATE NOTES OR
ANY OTHER DOCUMENTS REQUIRED BY THE LETTER OF TRANSMITTAL ON OR BEFORE THE
EXPIRATION DATE (AS DEFINED IN THE PROSPECTUS) OR (iii) WHO CANNOT COMPLY WITH
THE BOOK-ENTRY TRANSFER PROCEDURE ON A TIMELY BASIS. SUCH FORM MAY BE DELIVERED
BY FACSIMILE TRANSMISSION, MAIL OR HAND DELIVERY TO THE EXCHANGE AGENT. SEE "THE
EXCHANGE OFFER--GUARANTEED DELIVERY PROCEDURES" IN THE PROSPECTUS.
FEDERAL DATA CORPORATION
NOTICE OF GUARANTEED DELIVERY
To: Norwest Bank Minnesota, National Association, the Exchange Agent
<TABLE>
<S> <C>
BY REGISTERED OR CERTIFIED IN PERSON:
MAIL: Northstar East Bldg.
Norwest Bank Minnesota, 608 2nd Ave S.
National Association 12th Floor
Corporate Trust Operations Corporate Trust Ser.
P.O. Box 1517 Minneapolis, MN
Minneapolis, MN 55480-1517
BY HAND OR OVERNIGHT BY FACSIMILE (FOR ELIGIBLE
COURIER: INSTITUTIONS ONLY):
Norwest Bank Minnesota, (612) 667-4927
National Association CONFIRM RECEIPT OF NOTICE OF
Corporate Trust Operations GUARANTEED DELIVERY BY TELEPHONE:
Norwest Center (612) 667-9764
Sixth and Marquette
Minneapolis, MN 55479-0113
</TABLE>
DELIVERY OF THIS NOTICE OF GUARANTEED DELIVERY TO AN ADDRESS OTHER THAN AS
SET FORTH ABOVE OR TRANSMISSION VIA A FACSIMILE NUMBER OTHER THAN AS SET FORTH
ABOVE WILL NOT CONSTITUTE A VALID DELIVERY.
<PAGE>
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY
Ladies and Gentlemen
The undersigned hereby tenders to the Company upon the terms and subject to
the conditions set forth in the Prospectus and the related Letter of
Transmittal, receipt of which is hereby acknowledged, the principal amount of
Private Notes specified below pursuant to the guaranteed delivery procedures set
forth under the caption "The Exchange Offer--Guaranteed Delivery Procedures" in
the Prospectus. By so tendering, the undersigned does hereby make, at and as of
the date hereof, the representations and warranties of a tendering Holder of
Private Notes set forth in the Letter or Transmittal. The undersigned hereby
tenders the Private Notes listed below:
<TABLE>
<S> <C>
CERTIFICATE NUMBERS
(IF AVAILABLE) PRINCIPAL AMOUNT TENDERED
</TABLE>
All authority herein conferred or agreed to be conferred shall survive the
death, incapacity, or dissolution of the undersigned and every obligation of the
undersigned hereunder shall be binding upon the heirs, personal representatives,
successors and assigns of the undersigned.
<TABLE>
<S> <C>
If Private Notes will be tendered SIGN HERE
by book-entry transfer -------------------------------------------
Name of Tendering Institution: Signature(s)
- ------------------------------------------- --------------------------------------------
The Depository Trust Company --------------------------------------------
Account No.: Name(s) (Please Print)
- ------------------------------------------- --------------------------------------------
--------------------------------------------
Address
--------------------------------------------
Zip Code
--------------------------------------------
Area Code and Telephone No.
Date: ------------------------
</TABLE>
2
<PAGE>
GUARANTEE
(NOT TO BE USED FOR SIGNATURE GUARANTEE)
The undersigned, a participant in a Recognized Signature Guarantee Medallion
Program, guarantees deposit with the Exchange Agent of the Letter of Transmittal
(or facsimile thereof), together with the Private Notes tendered hereby in
proper form for transfer, or confirmation of the book-entry transfer of such
Private Notes into the Exchange Agent's account at the Depository Trust Company,
pursuant to the procedure for book-entry transfer set forth in the Prospectus,
and any other required documents, all by 5:00 p.m., New York City time, on the
fifth New York Stock Exchange trading day following the Expiration Date (as
defined in the Prospectus).
<TABLE>
<S> <C>
SIGN HERE
--------------------------------------------
Name of Firm
---------------------------------------------
Authorized Signature
---------------------------------------------
Name (Please print)
---------------------------------------------
---------------------------------------------
---------------------------------------------
Address
---------------------------------------------
Zip Code
---------------------------------------------
Area Code and Telephone No.
Date: ------------------------
</TABLE>
DO NOT SEND CERTIFICATES FOR PRIVATE NOTES WITH THIS FORM. ACTUAL SURRENDER OF
CERTIFICATES FOR PRIVATE NOTES MUST BE MADE PURSUANT TO, AND BE ACCOMPANIED BY,
A COPY OF THE PREVIOUSLY EXECUTED LETTER OF TRANSMITTAL.
3
<PAGE>
INSTRUCTIONS
1. DELIVERY OF THIS NOTICE OF GUARANTEED DELIVERY. A properly completed
and duly executed copy of this Notice of Guaranteed Delivery and any other
documents required by this Notice of Guaranteed Delivery must be received by the
Exchange Agent at one of its addresses set forth on the cover hereof prior to
the Expiration Date. The method of delivery of this Notice of Guaranteed
Delivery and all other required documents to the Exchange Agent is at the
election and risk of the Holder but, except as otherwise provided below, the
delivery will be deemed made only when actually received by the Exchange Agent.
Instead of delivery by mail, it is recommended that holders use an overnight or
hand delivery service, properly insured. If such delivery is by mail, it is
recommended that the Holder use properly insured, registered mail with return
receipt requested. For a full description of the guaranteed delivery procedures,
see the Prospectus under the caption "The Exchange Offer--Guaranteed Delivery
Procedures." In all cases, sufficient time should be allowed to assure timely
delivery. No Notice of Guaranteed Delivery should be sent to the Company.
2. SIGNATURE ON THIS NOTICE OF GUARANTEED DELIVERY; GUARANTEE OF
SIGNATURES. If this Notice of Guaranteed Delivery is signed by the registered
Holder(s) of the Private Notes referred to herein, then the signature must
correspond with the name(s) as written on the face of the Private Notes without
alteration, enlargement or any change whatsoever.
If this Notice of Guaranteed Delivery is signed by a person other than the
registered Holder(s) of any Private Notes listed, this Notice of Guaranteed
Delivery must be accompanied by a properly completed bond power signed as the
name of the registered Holder(s) appear(s) on the face of the Private Notes
without alteration, enlargement or any change whatsoever.
If this Notice of Guaranteed Delivery is signed by a trustee, executor,
administrator, guardian, attorney-in-fact, officer of a corporation or other
person acting in a fiduciary or representative capacity, such person should so
indicate when signing, and, unless waived by the Company, evidence satisfactory
to the Company of their authority so to act must be submitted with this Notice
of Guaranteed Delivery.
3. REQUESTS FOR ASSISTANCE OR ADDITIONAL COPIES. Questions relating to the
Exchange Offer or the procedure for consenting and tendering as well as requests
for assistance or for additional copies of the Prospectus, the Letter of
Transmittal and this Notice of Guaranteed Delivery, may be directed to the
Exchange Agent at the address set forth on the cover hereof or to your broker,
dealer, commercial bank or trust company.
4
<PAGE>
EXHIBIT 99.3
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
GUIDELINES FOR DETERMINING THE PROPER IDENTIFICATION NUMBER TO GIVE THE PAYER.--
Social Security numbers have nine digits separated by two hyphens: i.e. 000-00-
0000. Employer identification numbers have nine digits separated by only one
hyphen: i.e. 00-0000000. The table below will help determine the number to
give the payer.
<TABLE>
<CAPTION>
- ---------------------------------------------------------------- -------------------------------------------------------------
FOR THIS TYPE OF ACCOUNT: GIVE THE FOR THIS TYPE OF ACCOUNT: GIVE THE EMPLOYER
SOCIAL SECURITY IDENTIFICATION
NUMBER OF-- NUMBER OF--
- ---------------------------------------------------------------- -------------------------------------------------------------
<S> <C> <C> <C>
1.An individual's account The individual 6.A valid trust, estate, or The legal entity (Do not
pension trust furnish the identifying
2.Two or more individuals The actual owner of the number of the personal
(joint account) account or, if combined funds, representative or trustee
any one of the individuals (1) unless the legal entity
itself is not designated
in the account title.) (4)
3.Custodian account of a minor The minor (2) 7.Corporate The corporation
(Uniform Gift to Minors Act)
The grantor-trustee (1) 8.Religious, charitable, or The organization
4.a.The usual revocable savings educational organization
trust account (grantor is The actual owner (1) account
also trustee)
b.So-called trust account that 9.Partnership The partnership
is not a legal or valid trust The owner (3)
under State law 10.Association, club, or other The organization
tax-exempt organization
5.Sole proprietorship account
11.A broker or registered The broker or nominee
nominee
12.Account with the The public entity
Department of Agriculture in
the name of a public entity
(such as a State or local
government, school district,
or prison) that receives
agricultural program
payments
</TABLE>
- -------------------------------------------------------------------------------
(1) List first and circle the name of the person whose number you furnish.
(2) Circle the minor's name and furnish the minor's social security number.
(3) Show individual name, but may also enter the business or "doing business
as" name. Use either individual's social security number or employer
identification number.
(4) List first and circle the name of the legal trust, estate, or pension
trust.
NOTE: If no name is circled when there is more than one name, the number will
be considered to be that of the first name listed.
<PAGE>
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
PAGE 2
OBTAINING A NUMBER
If you don't have a taxpayer identification number or you do not know your
number, obtain Form SS-5, Application for a Social Security Number Card, or
Form SS-4, Application for Employer Identification Number, at the local
office of the Social Security Administration or the Internal Revenue Service
and apply for a number.
PAYEES EXEMPT FROM BACKUP WITHHOLDING
Payees specifically exempted from backup withholding on ALL payments include
the following:
- A corporation.
- A financial institution.
- An organization exempt from tax under Section 501(a), or an
individual retirement plan, or a custodial account under
Section 403(b)(7).
- The United States or any agency or instrumentality thereof.
- A state, the District of Columbia, a possession of the United
States, or any political subdivision or instrumentality thereof.
- A foreign government, a political subdivision of a foreign
government, or any agency or instrumentality thereof.
- An international organization or any agency or instrumentality
thereof.
- A dealer in securities or commodities required to register in
the U.S. or a possession of the U.S.
- A real estate investment trust.
- A common trust fund operated by a bank under Section 584(a).
- A trust exempt from tax under Section 664 or described in
Section 4947.
- An entity registered at all times during the tax year under the
Investment Company Act of 1940.
- A foreign central bank of issue.
- A middleman known in the investment community as a nominee or listed
in the most recent publication of the American Society of Corporate
Secretaries, Inc. Nominee List.
- A futures commission merchant registered with the Commodity
Futures Trading Commission.
Payments of dividends and patronage dividends not generally subject to
backup withholding include the following:
- Payments to nonresident aliens subject to withholding under
Section 1441.
- Payments to partnerships not engaged in a trade or business in
the U.S. and which have at least one nonresident partner.
- Payments of patronage dividends where the amount received is not
paid in money.
- Payments made by certain foreign organizations.
Payments of interest not generally subject to backup withholding include the
following:
- Payments of interest on obligations issued by individuals.
Note: You may be subject to backup withholding if this interest is
$600 or more and is paid in the course of the payer's trade or
business and you have not provided your correct taxpayer
identification number to the payer.
- Payments of tax-exempt interest (including exempt-interest
dividends under Section 852).
- Payments described in Section 6049(b)(5) to nonresident aliens.
- Payments on tax-free covenant bonds under Section 1451.
- Payments made by certain foreign organizations.
- Mortgage interest paid by you.
Exempt payees described above should file Substitute Form W-9 to avoid possible
erroneous backup withholding. FILE SUBSTITUTE FORM W-9 WITH THE PAYER, FURNISH
YOUR TAXPAYER IDENTIFICATION NUMBER, WRITE "EXEMPT" ON THE FACE OF THE FORM, AND
RETURN IT TO THE PAYER. IF THE PAYMENTS ARE INTEREST, DIVIDENDS, OR PATRONAGE
DIVIDENDS, ALSO SIGN AND DATE THE FORM. If you are a nonresident alien not
subject to backup withholding, submit a completed Form W-8, Certificate of
Foreign Status.
Certain payments other than interest, dividends, and patronage dividends,
that are not subject to information reporting are also not subject to backup
withholding. For details, see Sections 6041, 6041(A)(a), 6042, 6044, 6045,
6049, 6050A and 6050N, and the regulations thereunder.
PRIVACY ACT NOTICE.--Section 6109 requires most recipients of dividend,
interest, or other payments to give taxpayer identification numbers to payers
who must report the payments to IRS. The IRS uses the numbers for
identification purposes. Payers must be given the numbers whether or not
recipients are required to file tax returns. Payers must generally withhold 31%
of certain taxable payments to a payee who does not furnish a taxpayer
identification number to a payer. Certain penalties may also apply.
PENALTIES
(1) PENALTY FOR FAILURE TO FURNISH TAXPAYER IDENTIFICATION NUMBER.--If you fail
to furnish your taxpayer identification number to a payer, you are subject to a
penalty of $50 for each such failure unless your failure is due to reasonable
cause and not to willful neglect.
(2) CIVIL PENALTY FOR FALSE INFORMATION WITH RESPECT TO WITHHOLDING.--If you
make a false statement with no reasonable basis which results in no imposition
of backup withholding, you are subject to a penalty of $500.
(3) CRIMINAL PENALTY FOR FALSIFYING INFORMATION.--Willfully falsifying
certifications or affirmations may subject you to criminal penalties including
fines and/or imprisonment.
(4) MISUSE OF TINS.--If the requester discloses or uses the TINs in violation of
Federal law, the requester may be subject to civil and criminal penalties.
FOR ADDITIONAL INFORMATION CONTACT YOUR TAX CONSULTANT OR THE INTERNAL REVENUE
SERVICE
