<PAGE>
United States
Securities and Exchange Commission
Washington, D.C. 20549
FORM 10-Q
[x] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 For the Quarterly Period Ended June 30, 1999
[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 For the Transition Period from: ____________ to
____________
Commission file number 0-22554
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OPINION RESEARCH CORPORATION
--------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 22-3118960
---------------------------- --------------------------
(State of incorporation) (I.R.S. Employer
Identification No.)
23 Orchard Road
Skillman, NJ 08558
- ---------------------------------------- --------------------------
(Address of principle executive offices) (Zip Code)
908-281-5100
- --------------------------------------------------------------------------------
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter periods that the registrant was
required to file such reports) and, (2) has been subject to such filing
requirements for the past 90 days:
Yes X No ______
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Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practical date.
Common Stock, $0.01 Par Value - 4,243,889 shares outstanding as of June 30,
1999
<PAGE>
INDEX
Opinion Research Corporation and Subsidiaries
Part I. Financial Information
Item 1. Financial Statements (Unaudited)
Condensed consolidated balance sheets - June 30, 1999 and
December 31, 1998
Condensed consolidated statements of income - Six months ended
June 30, 1999 and 1998
Condensed consolidated statements of cash flows - Six months ended
June 30, 1999 and 1998
Notes to condensed consolidated financial statements - June 30, 1999
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
Item 3. Quantitative and Qualitative Disclosure About Market Risk
Part II. Other Information
Item 1. Legal Proceedings
Item 2. Changes in Securities and Use of Proceeds
Item 3. Defaults upon Senior Securities
Item 4. Submission of Matters to a Vote of Security Holders
Item 5. Other Information
Item 6. Exhibits and Reports on Form 8-K
Signature
<PAGE>
OPINION RESEARCH CORPORATION AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
(in thousands, except share amounts)
(Unaudited)
<TABLE>
<CAPTION>
June 30, December 31,
1999 1998
---------- ----------
<S> <C> <C>
Assets
Current Assets:
Cash and cash equivalents $ 3,075 $ 1,058
Accounts receivable:
Billed 19,439 9,457
Unbilled services 12,270 3,383
---------- ----------
31,709 12,840
Less: allowance for doubtful accounts 249 209
---------- ----------
31,460 12,631
Prepaid and other current assets 3,937 4,244
---------- ----------
Total current assets 38,472 17,933
Property and equipment, net 8,367 5,421
Intangibles, net 4,686 2,134
Goodwill, net 35,638 23,659
Other assets 4,400 1,463
---------- ----------
$ 91,563 $ 50,610
========== ==========
Liabilities and Stockholders' Equity
Current Liabilities:
Accounts payable $ 3,381 $ 1,688
Accrued expenses 10,494 4,695
Deferred revenues 2,178 2,683
Acquisition payable - 3,000
Short term borrowings 1,043 2,623
---------- ----------
Total current liabilities 17,096 14,689
Long term debt 50,703 15,600
Deferred income taxes 1,944 404
Other liabilities 3,170 3,226
Stockholders' Equity:
Preferred stock, $.01 par value, 1,000,000 shares authorized,
none issued or outstanding - -
Common stock, $.01 par value, 10,000,000 shares authorized,
4,281,747 shares issued and 4,243,889 outstanding in 1999
and 1998 42 42
Additional paid-in capital 15,399 14,216
Retained earnings 3,564 2,507
Treasury stock, at cost, 37,858 shares in 1999 and 1998 (186) (186)
Accumulated other comprehensive income (loss):
Foreign currency translation adjustment (169) 112
---------- ----------
Total stockholders' equity 18,650 16,691
---------- ----------
$ 91,563 $ 50,610
========== ==========
</TABLE>
See notes to financial statements
<PAGE>
OPINION RESEARCH CORPORATION AND SUBSIDIARIES
Condensed Consolidated Statements of Income
(in thousands, except share and per share amounts)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
------------ ------------ ------------ ------------
1999 1998 1999 1998
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Revenues $ 28,866 $ 18,164 $ 46,208 $ 36,640
Cost of revenues 18,595 10,705 28,693 22,238
------------ ------------ ------------ ------------
Gross profit 10,271 7,459 17,515 14,402
Selling, general and administrative expenses 6,750 4,845 11,541 9,737
Depreciation and amortization 1,454 1,284 2,469 2,202
------------ ------------ ------------ ------------
Operating income 2,067 1,330 3,505 2,463
Interest expense, net 878 428 1,302 789
------------ ------------ ------------ ------------
Income before provision for income taxes and
extraordinary loss 1,189 902 2,203 1,674
Provision for income taxes 594 440 1,056 787
------------ ------------ ------------ ------------
Income before extraordinary loss 595 462 1,147 887
Extraordinary loss on debt refinancings,
net of tax benefit of $60 in 1999 and $133 in 1998 (90) (150) (90) (150)
------------ ------------ ------------ ------------
Net income $ 505 $ 312 $ 1,057 $ 737
============ ============ ============ ============
Income before extraordinary loss per common share:
Basic $ 0.14 $ 0.11 $ 0.27 $ 0.21
============ ============ ============ ============
Diluted $ 0.14 $ 0.10 $ 0.27 $ 0.20
============ ============ ============ ============
Extraordinary loss on debt refinancings
per common share:
Basic $ (0.02) $ (0.04) $ (0.02) $ (0.03)
============ ============ ============ ============
Diluted $ (0.02) $ (0.03) $ (0.02) $ (0.03)
============ ============ ============ ============
Net income per common share:
Basic $ 0.12 $ 0.07 $ 0.25 $ 0.18
============ ============ ============ ============
Diluted $ 0.12 $ 0.07 $ 0.25 $ 0.17
============ ============ ============ ============
Weighted average common shares outstanding:
Basic 4,243,889 4,193,889 4,243,889 4,193,889
Diluted 4,288,099 4,458,843 4,304,123 4,364,409
- ------------------------------------------------------------------- ------------------------------ ------------
</TABLE>
See notes to financial statements
<PAGE>
OPINION RESEARCH CORPORATION AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows
(in thousands)
(Unaudited)
<TABLE>
<CAPTION>
Six Months Ended
June 30,
-------------------------------
1999 1998
---------- -----------
<S> <C> <C>
Net cash provided by operating activities $ 556 $ 399
Cash flows from investing activities:
Payments for acquisitions (26,383) (12,122)
Proceeds from disposal of assets 106 123
Capital expenditures (1,489) (1,117)
---------- ----------
Net cash used in investing activities (27,766) (13,116)
---------- ----------
Cash flows from financing activities:
Borrowings under line-of-credit agreements 17,038 29,760
Repayments under line-of-credit agreements (21,621) (23,446)
Issuance of notes payable 43,970 7,595
Repayments of notes payable (11,287) (710)
Issuance of warrants 1,183 -
Repayments under capital lease arrangements (56) (96)
---------- ----------
Net cash provided by financing activities 29,227 13,103
---------- ----------
Increase in cash and cash equivalents 2,017 386
Cash and cash equivalents at beginning of period 1,058 160
----------- ----------
Cash and cash equivalents at end of period $ 3,075 $ 546
=========== ==========
</TABLE>
See notes to financial statements
<PAGE>
OPINION RESEARCH CORPORATION AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
June 30, 1999
(Unaudited)
(in thousands, except per share data)
NOTE A - BASIS OF PRESENTATION
The accompanying unaudited condensed consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-Q and Article 10 of
Regulation S-X. Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements. In the opinion of management, all adjustments (consisting
of normal recurring accruals) considered necessary for a fair presentation have
been included. Operating results for the six-month period ended June 30, 1999
are not necessarily indicative of the results that may be expected for the year
ending December 31, 1999. For further information, refer to the consolidated
financial statements and footnotes thereto included in the Company's Annual
Report on Form 10-K for the year ended December 31, 1998, as amended.
NOTE B - EARNINGS PER SHARE
The following table sets forth the computation of basic and diluted earnings per
share for income before extraordinary loss:
<TABLE>
<CAPTION>
Three Months Six Months
Ended June 30, Ended June 30,
-------------------------- ---------------------------
1999 1998 1999 1998
----------- ----------- ----------- ------------
<S> <C> <C> <C> <C>
Numerator:
Income before extraordinary loss $595 $462 $1,147 $887
----------- ----------- ----------- ------------
Numerator for basic and diluted earnings
per share $595 $462 $1,147 $887
=========== =========== =========== ============
Denominator:
Denominator for basic earnings per share,
Weighted-average shares 4,244 4,194 4,244 4,194
Effect of dilutive stock options 44 265 60 170
----------- ----------- ----------- ------------
Denominator for diluted earnings per share
Adjusted weighted-average shares 4,288 4,459 4,304 4,364
=========== =========== =========== ============
Basic earnings per share $0.14 $0.11 $0.27 $0.21
=========== =========== =========== ============
Diluted earnings per share $0.14 $0.10 $0.27 $0.20
=========== =========== =========== ============
</TABLE>
<PAGE>
NOTE C - ACQUISITION
The Company acquired all of the outstanding shares of stock of Macro
International Inc. ("Macro") pursuant to a Stock Purchase Agreement dated April
30, 1999. The purchase price was comprised of a $22,300 cash payment and
approximately $1,010 of additional costs related to the acquisition. The fair
value of the net assets acquired was $8,742. Identifiable intangible assets
valued at $2,960 are being amortized using the straight-line method over a
period of five years. The excess consideration paid over the estimated fair
value of net assets acquired and identifiable intangible assets of $11,608 has
been recorded as goodwill and is being amortized using the straight-line method
over a period of twenty years.
In addition, over the next two years, the sellers may earn up to an additional
$8,700 of cash payments, contingent upon Macro achieving certain future targets
for revenues and earnings before interest, income taxes, depreciation and
amortization. The pro forma amounts presented below do not give effect to any
such contingent payments.
The unaudited pro forma results of operations for the six months ended June 30,
1999 and 1998, which assumes the consummation of the Macro purchase as of the
beginning of the respective periods are as follows:
<TABLE>
<CAPTION>
Pro Forma Six Months
Ended June 30,
1999 1998
--------------- --------------
<S> <C> <C>
Revenues $68,301 $67,201
Income before extraordinary loss 418 557
Income before extraordinary loss per share:
Basic $0.10 $0.13
Diluted $0.10 $0.12
</TABLE>
The pro forma income before extraordinary loss includes adjustments for
amortization of goodwill and intangible assets, interest expense, and the
related income tax effects of such adjustments.
NOTE D - CREDIT FACILITIES
During July 1998, the Company entered into an agreement with a three bank
syndicate for a credit facility of $32,000. The credit facility provided
$12,500 of term notes and up to $19,500 of revolving credit. The agreement was
for a three-year term and was secured by substantially all of the assets of the
Company.
<PAGE>
In May 1999, in connection with the acquisition of Macro, the Company entered
into a credit agreement with a financial institution for a new facility of
$50,000 (the "Senior Facility"). This financial institution later syndicated
the facility to include four additional financial institutions. The Senior
Facility provides $30,000 of term notes and up to $20,000 of revolving credit
for a six-year term and is secured by substantially all of the assets of the
Company. The Senior Facility carries an interest rate at the discretion of the
Company of either the financial institution's designated base rate (7.75% at
June 30, 1999) plus 125 basis points or LIBOR (3-month LIBOR was 5.22% at June
30, 1999) plus 275 basis points for both revolving credit and term notes.
Principal payments on the term notes are due in escalating quarterly
installments commencing September 30, 1999. As of June 30, 1999, the Company
had approximately $9,735 of additional credit available under the Senior
Facility.
In May 1999, the Company also issued $15,000 of subordinated debentures to a
financial institution. In exchange for consideration received in connection
with this debt, the Company also issued warrants to purchase a maximum of
437,029 shares of the Company's common stock at an exercise price of $5.422 per
share. The warrants are exercisable from the date of issuance and expire in
2007. The subordinated financing has an eight-year term and a coupon rate of
12%.
All debt outstanding as of May 26, 1999 was repaid with proceeds from the above
borrowings. In conjunction with its new credit facilities, the Company recorded
an after-tax, non-cash charge of $90 for the write-off of unamortized loan fees.
This charge is shown as an extraordinary loss from debt refinancing in the
second quarter of 1999.
NOTE E - COMPREHENSIVE INCOME
The Company's comprehensive income for the three months and the six months ended
June 30, 1999 and 1998, are set forth in the following table:
<TABLE>
<CAPTION>
Three Months Six Months
Ended June 30, Ended June 30,
1999 1998 1999 1998
------------ ------------ ----------- -----------
<S> <C> <C> <C> <C>
Net income $505 $312 $1,057 $737
Other comprehensive income (loss):
Foreign currency translation adjustment (37) (195) (281) 94
------------ ------------ ----------- -----------
Comprehensive income $468 $117 $776 $831
============ ============ =========== ===========
</TABLE>
<PAGE>
NOTE F - SEGMENTS
The Company's operations by business segments for the three months and the six
months ended June 30, 1999 and 1998 are as follows:
<TABLE>
<CAPTION>
U.S. Market U.K. Market Macro Total
Research Research Teleservices International Segments Other Consolidated
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Three months ended June 30, 1999:
- ---------------------------------
Revenues from external
customers $9,184 $3,610 $4,499 $10,573 $27,866 $1,000 $28,866
Operating income 913 56 497 481 1,947 120 2,067
Interest expense, net 878
Income before income taxes
and extraordinary loss $ 1,189
Three months ended June 30, 1998:
- -----------------------------
Revenues from external
customers $9,696 $3,547 $3,934 - $17,177 $987 $18,164
Operating income 1,233 121 34 - 1,388 (58) 1,330
Interest expense, net 428
Income before income taxes
and extraordinary loss $ 902
Six months ended June 30, 1999:
- -----------------------------
Revenues from external
customers $18,545 $6,984 $8,310 $10,573 $44,412 $1,796 $46,208
Operating income 1,775 98 1,078 481 3,432 73 3,505
Interest expense, net 1,302
Income before income taxes
and extraordinary loss $ 2,203
Six months ended June 30, 1998:
- -----------------------------
Revenues from external
customers $19,808 $7,088 $7,758 - $34,654 $1,986 $36,640
Operating income 2,035 210 258 - 2,503 (40) 2,463
Interest expense, net 789
Income before income taxes
and extraordinary loss $ 1,674
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
(in thousands)
Results of Operations - Second Quarter 1999 as Compared to Second Quarter 1998
Revenues for the second quarter of 1999 increased $10,702, or 59%, from $18,164
in the second quarter of 1998 to $28,866 in the second quarter of 1999. The
acquisition of Macro International Inc. (the "Acquisition") in the second
quarter of 1999 accounted for substantially all the increase in revenues for the
three months ended June 30, 1999 relative to the same period in 1998. Non-
acquisition revenues were flat for the second quarter of 1999 as compared to the
second quarter of 1998.
Gross profit for the three months ended June 30, 1999 was $10,271, an increase
of $2,812, or 38%, over the same period in 1998. The Acquisition contributed
$2,915 of gross profit. The gross profit as a percent of revenues for the
Acquisition was 28% for the second quarter of 1999. Due to the impact of the
Acquisition, gross profit as a percent of revenues decreased to 36% for the
second quarter of 1999 compared to 41% in 1998. Non-acquisition gross profit
decreased from 41% to 40%.
Selling, general and administrative expenses ("SG&A") increased to $6,750 from
$4,845 for the three months ended June 30, 1999 relative to the same period in
1998. The Acquisition accounted for $2,024, or 106%, of the increase while non-
acquisition SG&A experienced a slight decrease of $119, or 2%. Inclusive of the
Acquisition, combined SG&A as a percent of revenue has decreased to 23% for the
three months ended June 30, 1999 from 27% for the comparable period in 1998.
The lower gross profit and lower SG&A percentages for the Acquisition are due to
the nature of its business, as approximately 70% of Macro's business is
conducted with government entities. Consequently, in accordance with the
prescribed accounting procedures for government contractors, Macro's cost of
revenues reflect certain costs attributable to its contract projects which the
Company classifies as general and administrative expenses for its other
operating segments. Therefore, the inclusion of Macro in the operating results
of the Company has, and will continue to have, the effect of lowering, as a
percentage of revenues, the consolidated gross profit and SG&A.
Depreciation and amortization expense increased to $1,454 from $1,284 for the
three months ended June 30, 1999 relative to the same period in 1998. Non-
acquisition depreciation and amortization decreased from $1,284 to $1,044, or
19%, from the second quarter of 1998 to the second quarter of 1999. This
decrease was due to a write-down of goodwill of $324 in the second quarter of
1998 associated with a minor acquisition in 1997. Without this charge,
depreciation and amortization would have increased by $84, or 9%. The
Acquisition increased depreciation and amortization by $410. As a percent of
revenues, inclusive of the goodwill write-down in the second quarter of 1998,
the combined depreciation and amortization expense decreased from 7% to 5% for
the three months ended June 30, 1998 and 1999, respectively.
<PAGE>
Without the write-down, depreciation and amortization expense as a percentage of
revenue would have been 5% of revenues for the second quarter of 1998.
The Company recorded extraordinary losses, net of tax benefits, of $90 and $150,
for the second quarters of 1999 and 1998, respectively. These non-cash charges
resulted from the write-off of unamortized loan origination fees in connection
with debt refinancings during each period.
As a result of all of the above, net income for the Company increased from $312
to $505 for the three months ended June 30, 1998 and 1999, respectively.
Results of Operations - Six Months Year-to-Date 1999 as Compared to Six Months
Year-to-Date 1998
Revenues for the first six months of 1999 increased $9,568, or 26%, as compared
to the first six months of 1998. The Acquisition added $10,573 to the total
revenues in 1999. Non-acquisition revenues decreased by $1,005, or 3%, for the
first six months of 1999 compared to the same period in 1998.
Gross profit for the six months ended June 30, 1999 increased by $3,113, or 22%,
from $14,402 to $17,515. As a percent of revenues, gross profit decreased from
39% in 1998 to 38% in 1999. The decrease in the gross profit percentage is
attributable to the inclusion of the Acquisition for 1999, for which the gross
profit percentage is 28%. Non-acquisition gross profit has increased by $198,
or 1%, during 1999. As a percent of revenues, non-acquisition gross profit has
increased from 39% in 1998 to 41% in 1999.
Selling, general and administrative expenses increased from $9,737 to $11,541
for the six months ended June 30, 1999, relative to the same period in 1998. As
a percent of revenues, SG&A has decreased from 27% for the six months ended June
30, 1998 to 25% for the comparable period in 1999. Substantially all of the
dollar increase in SG&A is due to the inclusion of the Acquisition.
The lower gross profit and lower SG&A percentages for the Acquisition are due to
the nature of its business, as approximately 70% of Macro's business is
conducted with government entities. Consequently, in accordance with the
prescribed accounting procedures for government contractors, Macro's cost of
revenues reflect certain costs attributable to its contract projects which the
Company classifies as general and administrative expenses for its other
operating segments. Therefore, the inclusion of Macro in the operating results
of the Company has, and will continue to have, the effect of lowering, as a
percentage of revenues, the consolidated gross profit and SG&A.
Depreciation and amortization expense increased from $2,202 to $2,469 for the
six months ended June 30, 1999, relative to the same period in 1998. The
increase in depreciation and amortization is attributable to the inclusion of
the Acquisition for 1999, offset by a $324 write-down of goodwill in 1998
associated with a minor acquisition in 1997.
<PAGE>
The Company recorded extraordinary losses, net of tax benefits, of $90 and $150,
for the second quarters of 1999 and 1998, respectively. These non-cash charges
resulted from the write-off of unamortized loan origination fees in connection
with debt refinancings during each period.
As a result of all of the above, net income for the Company increased from $737
to $1,057 for the six months ended June 30, 1998 and 1999, respectively.
Liquidity and Capital Resources
Net cash provided by operations for the first six months of 1999 was $556.
Investing and financing activities for the first six months of 1999 included
capital expenditures of $1,489 and payments of $26,383 for Macro and earn-out
payments for previous acquisitions. The Company believes that its current
sources of liquidity and capital will be sufficient to fund its long-term
obligations and working capital needs for the foreseeable future.
In May 1999, in connection with the acquisition of Macro, the Company entered
into a credit agreement with a financial institution for a new facility of
$50,000 (the "Senior Facility"). This financial institution later syndicated
the facility to include four additional financial institutions. The Senior
Facility provides $30,000 of term notes and up to $20,000 of revolving credit
for a six-year term and is secured by substantially all of the assets of the
Company. The Senior Facility carries an interest rate at the discretion of the
Company of either the financial institution's designated base rate (7.75% at
June 30, 1999) plus 125 basis points or LIBOR (3-month LIBOR was 5.22% at June
30, 1999) plus 275 basis points for both revolving credit and term notes.
Principal payments on the term notes are due in escalating quarterly
installments commencing September 30, 1999. As of June 30, 1999, the Company
had approximately $9,735 of additional credit available under the Senior
Facility.
In May 1999, the Company also issued $15,000 of subordinated debentures to a
financial institution. In exchange for consideration received in connection
with this debt, the Company also issued warrants to purchase a maximum of
437,029 shares of the Company's common stock at an exercise price of $5.422 per
share. The warrants are exercisable from the date of issuance and expire in
2007. The subordinated financing has an eight-year life and a coupon rate of
12%.
All debt outstanding as of May 26, 1999 was repaid with proceeds from the above
borrowings. In conjunction with its new credit facilities, the Company recorded
an after-tax, non-cash charge of $90 for the write-off of unamortized loan fees.
This charge is shown as an extraordinary loss from debt refinancing in the
second quarter of 1999.
Readiness for Year 2000
The Year 2000 issue concerns the inability of some computer hardware and
software to distinguish between the year 1900 and the year 2000. If not
corrected, the potential exists for computer system failures or miscalculations.
<PAGE>
The Company uses computer systems in many aspects of its business, and Year 2000
problems in such systems, if not corrected, could disrupt operations and have an
adverse impact on the Company's operating results. The Company is also exposed
to the risk that one or more of its vendors or service providers could
experience Year 2000 problems that impact the ability of such vendor or service
provider to provide goods and services. To date, the Company is not aware of
any vendor or service provider Year 2000 issue that would have a material
adverse impact on the Company's operations.
The implementation of Year 2000 compliance procedures at the Company has
consisted of: compiling information as to the information technology (IT) and
non-IT systems that are sensitive to the Year 2000 problem; coordinating with
clients, vendors, service providers, and other third parties who are affected
by, or may affect, the Company's plans to address the Year 2000 issue.
Additionally, analysis of critical systems to determine which systems are not
Year 2000 compliant and evaluating the costs to repair or replace those systems
have been undertaken by the Company. As potential problems are identified,
affected programs have been modified, or are in the process of being modified by
the Company's system support group to ensure future compliance.
The Company has completed the testing of Year 2000 compliance of its critical
and non-critical systems. Systems that are not Year 2000 compliant have been
identified and plans have been developed to correct the deficiencies. The
Company expects to replace or upgrade its systems, where necessary, to be Year
2000 compliant by the end of September 1999. Incremental out-of-pocket costs
incurred through June 30, 1999 have not been significant. The Company estimates
that no more than $100 will be needed to modify or replace its existing software
and hardware in order to be Year 2000 compliant. All maintenance and
modification costs are expensed as incurred, while the costs of new systems are
being capitalized according to generally accepted accounting principles.
Based upon its analysis to date, management believes that the Company will be
able to continue operations in the year 2000 and beyond without a material
adverse effect caused by the Year 2000 problems. The Company relies upon
commercially available hardware and software which have been certified by the
Company's suppliers as Year 2000 compliant. Therefore, the Company is reliant
on the claims and statements provided by vendors, the majority of whom have a
national presence and reputation. A worst case scenario resulting from one or
more of the Company's systems being non-compliant might be an inability to
service one or more of our clients until such problem was corrected. The
Company believes that such Year 2000 difficulties experienced by the Company
would be isolated in nature and will not have a material adverse effect on the
Company's operations.
<PAGE>
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK
Market risks relating to the Company's operations result primarily from changes
in interest rates and changes in foreign exchange rates. The table below
presents principal cash flows and related weighted average interest rates by
expected maturity dates for its debt obligations.
<TABLE>
<CAPTION>
Interest Rate Sensitivity
Principal Amount by Expected Maturity
Average Interest Rate
There- Fair Value
1999 2000 2001 2002 2003 After Total 6/30/99
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
LIABILITIES
Long-term debt including current portion:
Variable rate debt $1,000 $2,000 $3,000 $4,500 $6,000 $21,135 $37,635 $37,635
Average interest rate -
LIBOR+2.75%
Fixed rate debt - 12% $15,000 $15,000 $13,978
Other, average interest rate - 10.1% $43 $90 $133 $133
- ---------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
PART II: OTHER INFORMATION
Item 1. Legal Proceedings
None.
Item 2. Changes in Securities and Use of Proceeds
None.
Item 3. Defaults upon Senior Securities
None.
Item 4. Submission of Matters to a Vote of Security Holders
None.
Item 5. Other Information
None.
Item 6. Exhibits and Reports on Form 8-K
a) Exhibits
Exhibit No.
10.1 Credit Agreement dated May 26, 1999 among Opinion Research Corporation,
ORC Inc., and Heller Financial, Inc.
10.2 Security Agreement dated May 26, 1999 among Opinion Research
Corporation, ORC Inc., and Heller Financial, Inc.
10.3 Guaranty dated May 26, 1999 by ORC Teleservice Corp., ORC ProTel, Inc.,
Macro International Inc., and Quantum Research Corporation for the
benefit of Heller Financial, Inc.
10.4 Subsidiary Security Agreement dated May 26, 1999 by ORC Teleservice
Corp., ORC ProTel, Inc., Macro International Inc., Quantum Research
Corporation and Heller Financial, Inc.
10.5 Investment Agreement dated May 26, 1999 among Opinion Research
Corporation, Allied Investment Corporation, and Allied Capital
Corporation.
<PAGE>
10.6 Subsidiary Guaranty dated May 26, 1999 by ORC Teleservice Corp., ORC
ProTel, Inc., Macro International Inc., and Quantum Research Corporation
for the benefit of Allied Capital Corporation and Allied Investment
Corporation.
10.7 Subordinated Debenture for $9.5 million dated May 26, 1999 issued by
Opinion Research Corporation to Allied Capital Corporation.
10.8 Subordinated Debenture for $5.5 million dated May 26, 1999 issued by
Opinion Research Corporation to Allied Investment Corporation.
10.9 Registration Rights Agreement dated May 26, 1999 among Opinion
Research Corporation, Allied Capital Corporation and Allied Investment
Corporation.
10.10 Common Stock Warrant Issued by Opinion Research Corporation to Allied
Capital Corporation dated May 26, 1999.
10.11 Common Stock Warrant Issued by Opinion Research Corporation to Allied
Investment Corporation dated May 26, 1999.
10.12 Employment agreement dated January 1, 1999 between Opinion Research
Corporation and John F. Short.
b) Reports on Form 8-K
One report filed on June 9, 1999, under Items 2 and 7 of Form 8-K,
describing the acquisition of Macro International Inc. (see Note C).
An amendment to this Form 8-K was filed on August 6, 1999, under Item
7 of Form 8-K, including audited 1999, 1998 and 1997 financial
statements of Macro International Inc. and unaudited pro forma
consolidated financial statements of the Registrant as of and for the
three months ended March 31, 1999 and for the year ended December 31,
1998.
<PAGE>
Signature
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Opinion Research Corporation
----------------------------------------
(Registrant)
Date: August 13, 1999 /s/Douglas L. Cox
--------------- ------------------------------------------
Douglas L. Cox
Executive Vice President &
Chief Financial Officer
<PAGE>
EXHIBIT 10.1
================================================================================
CREDIT AGREEMENT
DATED AS OF MAY __, 1999
Between
OPINION RESEARCH CORPORATION
and
ORC INC.
as Borrowers
and
HELLER FINANCIAL, INC.
as Agent and as a Lender
================================================================================
<PAGE>
TABLE OF CONTENTS
<TABLE>
<S> <C>
SECTION 1 AMOUNTS AND TERMS OF LOANS......................................................................... 2
1.1 Loans......................................................................................... 2
1.2 Interest and Related Fees...................................................................... 7
1.3 Other Fees and Expenses........................................................................ 12
1.4 Payments....................................................................................... 12
1.5 Prepayments.................................................................................... 13
1.6 Maturity....................................................................................... 14
1.7 Loan Accounts.................................................................................. 14
1.8 Capital Adequacy and Other Adjustments......................................................... 15
1.9 Taxes.......................................................................................... 15
1.10 Optional Prepayment/Replacement of Lenders..................................................... 17
SECTION 2 AFFIRMATIVE COVENANTS............................................................................... 18
2.1 Compliance With Laws and Contractual Obligations............................................... 18
2.2 Maintenance of Properties; Insurance........................................................... 19
2.3 Inspection; Lender Meeting..................................................................... 19
2.4 Corporate Existence............................................................................ 20
2.5 Further Assurances............................................................................. 20
2.6 Syndication Assurances......................................................................... 20
2.7 Distributions.................................................................................. 20
SECTION 3 NEGATIVE COVENANTS.................................................................................. 21
3.1 Indebtedness................................................................................... 21
3.2 Liens and Related Matters...................................................................... 22
3.3 Investments; Joint Ventures.................................................................... 23
3.4 Contingent Obligations......................................................................... 24
3.5 Restricted Junior Payments..................................................................... 26
3.6 Restriction on Fundamental Changes............................................................. 27
3.7 Disposal of Assets or Subsidiary Stock......................................................... 28
3.8 Transactions with Affiliates................................................................... 28
3.9 Conduct of Business............................................................................ 29
3.10 Changes Relating to Indebtedness............................................................... 29
3.11 Fiscal Year.................................................................................... 29
3.12 Press Release; Public Offering Materials....................................................... 29
3.13 Subsidiaries................................................................................... 29
3.14 Bank Accounts.................................................................................. 29
3.15 Earn-Out....................................................................................... 29
SECTION 4 FINANCIAL COVENANTS/REPORTING....................................................................... 30
4.1 Capital Expenditure Limits..................................................................... 30
4.2 [Intentionally Omitted.]....................................................................... 30
4.3 EBITDA......................................................................................... 30
</TABLE>
i
<PAGE>
<TABLE>
<S> <C>
4.4 Fixed Charge Coverage.......................................................................... 31
4.5 Total Interest Coverage........................................................................ 32
4.6 Senior Indebtedness to Adjusted EBITDA Ratio................................................... 32
4.7 Indebtedness to Adjusted EBITDA Ratio.......................................................... 33
4.8 Financial Statements and Other Reports......................................................... 33
4.9 Accounting Terms; Utilization of GAAP for Purposes of Calculations Under Agreement............. 37
SECTION 5 REPRESENTATIONS AND WARRANTIES...................................................................... 37
5.1 Disclosure..................................................................................... 37
5.2 No Material Adverse Effect..................................................................... 37
5.3 No Default..................................................................................... 38
5.4 Organization, Powers, Capitalization and Good Standing......................................... 38
5.5 Financial Statements and Projections........................................................... 39
5.6 Intellectual Property.......................................................................... 39
5.7 Investigations, Audits, Etc.................................................................... 40
5.8 Employee Matters............................................................................... 40
5.9 Solvency....................................................................................... 40
5.10 Year 2000...................................................................................... 40
5.11 Use of Proceeds; Margin Regulations............................................................ 41
5.12 Purchase Agreement and Subordinated Loan Agreement............................................. 41
5.13 Dormant Foreign Subsidiaries................................................................... 41
SECTION 6 DEFAULT, RIGHTS AND REMEDIES........................................................................ 41
6.1 Event of Default............................................................................... 41
6.2 Suspension of Commitments...................................................................... 45
6.3 Acceleration................................................................................... 45
6.4 Performance by Agent........................................................................... 45
SECTION 7 CONDITIONS TO LOANS................................................................................. 46
7.1 Conditions to Initial Loans.................................................................... 46
7.2 Conditions to All Loans........................................................................ 46
SECTION 8 ASSIGNMENT AND PARTICIPATION........................................................................ 47
8.1 Assignments and Participations in Loans and Notes.............................................. 47
8.2 Agent.......................................................................................... 48
8.3 Amendments, Consents and Waivers for Certain Actions........................................... 53
8.4 Set Off and Sharing of Payments................................................................ 53
8.5 Disbursement of Funds.......................................................................... 54
8.6 Disbursements of Advances; Payment............................................................. 54
SECTION 9 MISCELLANEOUS....................................................................................... 57
9.1 Indemnities.................................................................................... 57
9.2 Amendments and Waivers......................................................................... 57
9.3 Notices........................................................................................ 58
</TABLE>
ii
<PAGE>
<TABLE>
<S> <C>
9.4 Failure or Indulgence Not Waiver; Remedies Cumulative.......................................... 59
9.5 Marshalling; Payments Set Aside................................................................ 60
9.6 Severability................................................................................... 60
9.7 Lenders' Obligations Several; Independent Nature of Lenders' Rights............................ 60
9.8 Headings....................................................................................... 60
9.9 Applicable Law................................................................................. 60
9.10 Successors and Assigns......................................................................... 60
9.11 No Fiduciary Relationship...................................................................... 60
9.12 Construction................................................................................... 61
9.13 Confidentiality................................................................................ 61
9.14 CONSENT TO JURISDICTION........................................................................ 61
9.15 WAIVER OF JURY TRIAL........................................................................... 61
9.16 Survival of Warranties and Certain Agreements.................................................. 61
9.17 Entire Agreement............................................................................... 62
9.18 Counterparts; Effectiveness.................................................................... 62
9.19 Joint and Several Liability of Borrowers....................................................... 62
SECTION 10 DEFINITIONS........................................................................................ 63
10.1 Certain Defined Terms.......................................................................... 63
10.2 Other Definitional Provisions.................................................................. 71
</TABLE>
iii
<PAGE>
INDEX OF DEFINED TERMS
Defined Term Defined in Section
Acquisition (S)10.1
Affiliate (S)10.1
Agent (S)10.1
Agreement (S)10.1
Asset Disposition (S)10.1
Bankruptcy Code (S)10.1
Base Rate (S)1.2(A)
Base Rate Loans (S)1.2(A)
Borrower Preamble &(S)10.1
Borrowing Base (S)1.1(B)(1)
Borrowing Base Certificate (S)1.1(B)(1)
Business Day (S)10.1
Capitalization/Acquisition Documents (S)10.1
Closing Date (S)10.1
Collateral (S)10.1
Company 1st Recital
Contingent Obligation (S)3.4
Contractual Obligation (S)2.1
Default (S)10.1
Domestic Subsidiary (S)10.1
Earn-Out Reserve (S)10.1
Event of Default (S)6.1
Expiry Date (S)10.1
Foreign Subsidiary (S)10.1
Funding Date (S)7.2
GAAP (S)10.1
Heller Preamble
Indebtedness (S)10.1
Interest Period (S)1.2(A)
IRC (S)10.1
Lender(s) (S)10.1
Assignment and Acceptance Agreement(S)10.1
Lender Letter of Credit (S)1.1(C)
LIBOR (S)1.2(A)
LIBOR Breakage Fee (S)1.3(C)
LIBOR Loans (S)1.2(A)
Lien (S)10.1
Loan(s) (S)10.1
v
<PAGE>
Loan Documents (S)10.1
Loan Party (S)10.1
Macro Earn-Out (S)10.1
Material Adverse Effect (S)10.1
Maximum Revolving Loan Balance (S)1.1(B)(1)
Net Proceeds (S)10.1
Note(s) (S)10.1
Obligations (S)10.1
Permitted Encumbrances (S)3.2(A)
Person (S)10.1
Pro Forma (S)10.1
Pro Rata Share (S)10.1
Projections (S)10.1
ProTel Earn-Out (S)10.1
Purchase Agreement 1st Recital
Related Transactions (S)10.1
Related Transactions Documents (S)10.1
Requisite Lenders (S)10.1
Restricted Junior Payment (S)1.5
Revolving Loan Commitment (S)1.1(B)
Revolving Loans (S)1.1(B)(1)
Risk Participation Agreement (S)1.1(C)
Risk Participation Liability (S)10.1
Scheduled Installments (S)1.1(A)
Security Documents (S)10.1
Seller 1st Recital
Senior Indebtedness (S)4.6
Subordinated Loan Agreement (S)10.1
Subordinated Note (S)10.1
Subsidiary (S)10.1
Term Loan (S)1.1(A)
Total Adjusted Indebtedness (S)1.2
Total Indebtedness (S)4.7
vi
<PAGE>
CREDIT AGREEMENT
----------------
This CREDIT AGREEMENT is dated as of May __, 1999 and entered into by
and among OPINION RESEARCH CORPORATION, a Delaware corporation ("Parent"), with
its principal place of business at 23 Orchard Road, Skillman, New Jersey 08558,
ORC INC., a Delaware corporation and a wholly owned subsidiary of Parent with
its principal place of business at Suite 1704, 300 Delaware Avenue, Wilmington,
Delaware 19899 ("ORC") (ORC and Parent are sometimes referred to individually
as a "Borrower" and together as the "Borrowers"), HELLER FINANCIAL, INC., a
Delaware corporation (in its individual capacity "Heller"), with offices at 500
West Monroe Street, Chicago, Illinois 60661, as a Lender (as hereinafter defined
in Section 10), and as agent for all Lenders, and such financial institutions
who are or hereafter become parties to this Agreement as Lenders.
R E C I T A L S:
- - - - - - - -
WHEREAS, pursuant to that certain Stock Purchase Agreement dated as of
April ____, 1999, by and among the entities and individuals identified therein
as "Stockholders" (collectively, the "Seller") and Parent (the "Purchase
Agreement"), Parent has agreed to acquire all of the outstanding shares of
capital stock of Macro International Inc., a Delaware corporation (the
"Company") (the "Macro Acquisition"); and
WHEREAS, upon completion of the Macro Acquisition, Company will be a
Subsidiary of Parent with Parent owning at least 99.7% of the issued and
outstanding capital stock of Company; and
WHEREAS, Parent and its Subsidiaries (as hereinafter defined in
Section 10) desire that Lenders extend a certain term credit facility and
revolving credit facility to Borrowers to fund the Macro Acquisition, to fund
the repayment of certain indebtedness of Borrowers, to provide working capital
financing for Parent and its Subsidiaries and to provide funds for other general
corporate purposes of Parent and its Subsidiaries; and
WHEREAS, Borrowers desire to secure all of their Obligations (as
hereinafter defined in Section 10) under the Loan Documents (as hereinafter
defined in Section 10) by pledging to Agent, for the benefit of Agent and
Lenders, all the capital stock of their Domestic Subsidiaries (as hereinafter
defined in Section 10) and sixty-five percent (65%) of the capital stock of
their Foreign Subsidiaries (as hereinafter defined in Section 10) and by
granting to Agent, for the benefit of Agent and Lenders, a security interest in
and lien upon substantially all of their personal and real property; and
1
<PAGE>
WHEREAS, each of Parent's Domestic Subsidiaries (other than ORC) is
willing to guaranty all of the Obligations of Borrowers to Lenders under the
Loan Documents and to grant to Agent, for the benefit of Agent and Lenders, a
security interest in and lien upon substantially all of its personal and real
property;
NOW, THEREFORE, in consideration of the premises and the agreements,
provisions and covenants herein contained, Borrowers, Lenders and Agent agree as
follows:
SECTION 1
AMOUNTS AND TERMS OF LOANS
1.1 Loans. Subject to the terms and conditions of this Agreement
-----
and in reliance upon the representations and warranties of Borrowers contained
herein:
(A) Term Loan. Each Lender agrees, severally and not jointly, to
---------
lend to Borrowers in one draw, on the Closing Date, its Pro Rata Share of the
aggregate amount of $30,000,000 (the "Term Loan"). Borrowers shall repay the
Term Loan through periodic payments on the dates and in the amounts indicated
below ("Scheduled Installments"). Amounts borrowed under this subsection 1.1(A)
and repaid may not be reborrowed.
<TABLE>
<CAPTION>
Date Scheduled Installment
---- ---------------------
<S> <C>
September 30, 1999 $ 500,000
December 31, 1999 500,000
March 31, 2000 500,000
June 30, 2000 500,000
September 30, 2000 500,000
December 31, 2000 500,000
March 31, 2001 750,000
June 30, 2001 750,000
September 30, 2001 750,000
December 31, 2001 750,000
March 31, 2002 1,125,000
June 30, 2002 1,125,000
September 30, 2002 1,125,000
December 31, 2002 1,125,000
</TABLE>
2
<PAGE>
<TABLE>
<S> <C>
March 31, 2003 1,500,000
June 30, 2003 1,500,000
September 30, 2003 1,500,000
December 31, 2003 1,500,000
March 31, 2004 2,125,000
June 30, 2004 2,125,000
September 30, 2004 2,125,000
December 31, 2004 2,125,000
March 31, 2005 2,500,000
May 31, 2005 2,500,000
</TABLE>
(B) Revolving Loans. (1) Each Lender agrees, severally and not
---------------
jointly, to lend to Borrowers from the Closing Date to the Expiry Date its Pro
Rata Share of the loans requested by Parent, on behalf of Borrowers, to be made
by Lenders under this subsection 1.1(B), up to an aggregate maximum for all
Lenders of $20,000,000 (as the same may be reduced from time to time hereunder,
the "Revolving Loan Commitment"). Advances or amounts outstanding under the
Revolving Loan Commitment will be called "Revolving Loans". Revolving Loans may
be repaid and reborrowed. The Revolving Loans shall be repaid in full on the
Expiry Date. The "Maximum Revolving Loan Balance" will be the lesser of (a)
the "Borrowing Base" (as calculated on Exhibit 4.8(E), the "Borrowing Base
Certificate") less the sum of (i) outstanding Risk Participation Liability, plus
---- ----
(ii) the Earn-Out Reserve, plus (iii) until the earlier to occur of final
----
payment of the Macro Earn-Out and ProTel Earn-Out and the date on which it is
determined that no further obligation exists in respect of the Macro Earn-Out
and ProTel Earn-Out, $1,000,000 (the amount computed pursuant to this clause (a)
is referred to herein as "Borrowing Base Availability") or (b) the Revolving
Loan Commitment less the sum of (i) outstanding Risk Participation Liability,
----
plus (ii) the Earn-Out Reserve, plus (iii) until the earlier to occur of final
- ---- ----
payment of the Macro Earn-Out and ProTel Earn-Out and the date on which it is
determined that no further obligation exists in respect of the Macro Earn-Out
and ProTel Earn-Out, $1,000,000. If at any time the outstanding Revolving
Loans exceed the Maximum Revolving Loan Balance (as it may be deemed increased
from time to time pursuant to subsection 1.1(B)(2)), Lenders shall not be
obligated to make Revolving Loans and issue Lender Letters of Credit and Risk
Participation Agreements, and Revolving Loans must be repaid immediately in an
amount sufficient to eliminate any excess. Revolving Loans may be requested in
any amount with one (1) Business Day prior notice required for amounts equal to
or greater than $5,000,000. For amounts less than $5,000,000, written or
telephonic notice must be provided by noon Chicago time on the day on which the
Loan is to be made. All LIBOR Loans require three (3) Business Day's notice.
All Loans requested telephonically must be confirmed in writing within one (1)
Business Day. Neither Agent nor any Lender shall incur any liability to
Borrowers for acting upon any telephonic notice that Agent believes in good
faith to have been given by a duly authorized officer or other person authorized
to borrow on behalf of Borrowers.
(2) If Parent requests that Lenders make, or permit to remain
outstanding, Revolving Loans in an aggregate amount in excess of Borrowing Base
Availability, Lenders having
3
<PAGE>
sixty-six and two-thirds percent (66-2/3%) or more of the Revolving Loan
Commitment may in their discretion elect to cause all Lenders having a Revolving
Loan Commitment to make, or permit to remain outstanding, such excess Revolving
Loans (such Revolving Loans in excess of Borrowing Base Availability being
referred to as "Overadvance Revolving Loans"), provided, however, that such
-------- -------
Lenders may not cause all Lenders having a Revolving Loan Commitment to make, or
permit to remain outstanding, (a) Revolving Loans in excess of the Revolving
Loan Commitment less outstanding Risk Participation Liability or (b) Overadvance
Revolving Loans in excess of $2,000,000. If Overadvance Revolving Loans are
made, or permitted to remain outstanding, pursuant to the preceding sentence,
then (a) the Maximum Revolving Loan Balance shall be deemed increased by the
amount of such permitted Overadvance Revolving Loans, but only for so long as
Lenders having sixty-six and two-thirds percent (66-2/3%) or more of the
Revolving Loan Commitment allow such Overadvance Revolving Loans to be
outstanding and for five (5) Business Days after notice by Agent to Parent that
such Lenders have terminated such allowance and (b) all Lenders that have
committed to make Revolving Loans shall be bound to make, or permit to remain
outstanding, such Overadvance Revolving Loans based upon their Pro Rata Shares
in accordance with the terms of this Agreement. Notwithstanding the foregoing,
if Overadvance Revolving Loans remain outstanding for more than ninety (90) days
during any 180-day period, Revolving Loans must be repaid immediately in an
amount sufficient to eliminate all of such Overadvance Revolving Loans.
(3) Borrowers shall have the right to permanently reduce the
Revolving Loan Commitment on not less than five (5) Business Days prior written
notice to Agent and Lenders provided (a) each reduction shall be in a minimum
amount of $1,000,000 and integral multiples of $500,000 in excess thereof, (b)
after giving effect to any such reduction, the Maximum Revolving Loan Balance
exceeds outstanding Revolving Loans by not less than $2,000,000 and (c) no more
than 3 reductions shall be permitted.
(C) Letters of Credit and Risk Participation Agreements. The
---------------------------------------------------
Revolving Loan Commitment may, in addition to advances under the Revolving Loan,
be utilized, upon the request of Parent, on behalf of Borrowers, for (i) the
issuance of standby letters of credit for the account of a Borrower or its
Subsidiaries by Agent (each such letter of credit, a "Lender Letter of Credit")
or (ii) the issuance by Agent of risk participation agreements (each such
agreement, a "Risk Participation Agreement") to confirm payment to banks which
issue letters of credit for the account of a Borrower or its Subsidiaries.
(1) Maximum Amount. The aggregate amount of Risk Participation
--------------
Liability with respect to all Lender Letters of Credit and Risk Participation
Agreements outstanding for the account of Borrowers at any time shall not exceed
$1,000,000.
(2) Reimbursement. Borrowers shall be irrevocably and
-------------
unconditionally obligated forthwith without presentment, demand, protest or
other formalities of any kind, to reimburse Agent for any amounts paid by Agent
with respect to a Lender Letter of Credit or a Risk Participation Agreement
issued for the account of Borrowers, including all fees, costs and expenses paid
by Agent to any bank that issues letters of credit. Borrowers hereby authorize
and direct Agent, at Agent's option, to make a Revolving Loan in the amount of
any payment made by Agent with
4
<PAGE>
respect to any Lender Letter of Credit or any Risk Participation Agreement. All
amounts paid by Agent with respect to any Lender Letter of Credit or Risk
Participation Agreement that are not immediately repaid by Borrowers with the
proceeds of a Revolving Loan or otherwise shall bear interest at the interest
rate applicable to Revolving Loans calculated using the Base Rate. Each Lender
agrees to fund its Pro Rata Share of any Revolving Loan made pursuant to this
subsection 1.1(C)(2). If no such Revolving Loan is made, each Lender agrees to
purchase, and shall be deemed to have purchased, a participation in such Lender
Letter of Credit or Risk Participation Agreement, as the case may be, in an
amount equal to its Pro Rata Share of the Risk Participation Liability of such
Lender Letter of Credit or Risk Participation Agreement, as the case may be, and
each Lender agrees to pay to Agent such Lender's Pro Rata Share of any payments
made by Agent under such Lender Letter of Credit and Risk Participation
Agreement. The obligation of each Lender to deliver to Agent an amount equal to
its respective Pro Rata Share pursuant to the preceding two (2) sentences shall
be absolute and unconditional and such remittance shall be made notwithstanding
the occurrence or continuation of an Event of Default or Default or the failure
to satisfy any condition set forth in subsection 7.2. If any Lender fails to
make available to Agent the amount of such Lender's Pro Rata Share of any
payments made by Agent in respect of such Lender Letter of Credit or Risk
Participation Agreement as provided in this subsection 1.1(C)(2), Agent shall be
entitled to recover such amount on demand from such Lender together with
interest at the Base Rate.
(3) Conditions of Issuance of Letters of Credit or Risk
---------------------------------------------------
Participation Agreements. In addition to all other terms and conditions set
- ------------------------
forth in this Agreement, the issuance by Agent of any Lender Letter of Credit or
Risk Participation Agreement shall be subject to the conditions precedent that
the Lender Letter of Credit, the Risk Participation Agreement or the letter of
credit for which Parent requests a Risk Participation Agreement shall support a
transaction entered into in the ordinary course of Borrowers' business and shall
be in such form, be for such amount, and contain such terms and conditions as
are reasonably satisfactory to Agent. The expiration date of each Lender Letter
of Credit and each letter of credit to be issued under a Risk Participation
Agreement shall be on a date which is the earlier of (a) one year from its date
of issuance, or (b) the thirtieth (30th) day before the date set forth in clause
(c) of the definition of the term Expiry Date. Each Risk Participation Agreement
shall provide that the agreement terminates and all demand or claims for payment
must be presented by a date certain, which date will be at least thirty (30)
days before the date set forth in clause (c) of the definition of the term
Expiry Date.
(4) Request for Lender Letters of Credit or Risk Participation
----------------------------------------------------------
Agreements. Parent shall give Agent at least three (3) Business Days prior
- ----------
notice specifying the date a Lender Letter of Credit is requested to be issued,
identifying the beneficiary and describing the nature of the transactions
proposed to be supported thereby. Upon Parent's request, Agent shall use
reasonable efforts to arrange Risk Participation Agreements. After the issuance
of a Risk Participation Agreement in favor of a bank that will issue letters of
credit on behalf of a Borrower or one of its Subsidiaries, Parent shall give
Agent at least two (2) Business Days prior written notice specifying the date a
letter of credit is to be issued under a Risk Participation Agreement,
identifying the beneficiary and describing the nature of the transactions
proposed to be supported thereby. Any notice described in this paragraph shall
be accompanied by the form of the Lender Letter of Credit or the letter of
credit to which such Risk Participation Agreement relates.
5
<PAGE>
(D) Notes. Each Borrower shall execute and deliver to each Lender
-----
(i) a Note to evidence the Revolving Loans, such Note to be in the principal
amount of such Lender's Pro Rata Share of the Revolving Loan Commitment and (ii)
a Note to evidence the Term Loan, such Note to be in the principal amount of
such Lender's Pro Rata Share of the Term Loan. In the event of an assignment
under subsection 8.1, Borrowers shall, upon surrender of the assigning Lender's
Notes, issue new Notes to reflect the interests of the assigning Lender and the
Person to which interests are to be assigned.
(E) Funding Authorization. The proceeds of all Loans made pursuant
---------------------
to this Agreement subsequent to the Closing Date are to be funded by wire
transfer to the following account of Parent:
Bank: The Chase Manhattan Bank
ABA No.: 021000021
Bank Address: 36 E. Midland, Paramus, NJ 07562
Account No.: 777370093
Reference: Opinion Research Corporation
Parent shall provide Agent with written notice of any change in the foregoing
instructions at least three (3) Business Days before the desired effective date
of such change.
(F) Parent as Agent. (1) The Borrowers maintain an integrated cash
---------------
management system reflecting their interdependence on one another and the mutual
benefits shared among them as a result of their respective operations. In order
to efficiently fund and operate their respective businesses and minimize the
number of borrowings which they will make under this Agreement and thereby
reduce the administrative costs and record keeping required in connection
therewith, including the necessity to enter into and maintain separately
identified and monitored borrowing facilities, the Borrowers have requested, and
the Agent and the Lenders have agreed that, subject to subsection 9.19, (i) all
Loans will be advanced to and for the account of the Borrowers on a joint and
several basis to the account identified in subsection 1.1(E) and (ii) all
Letters of Credit and Risk Participation Agreements will be issued pursuant to
requests executed by Parent on behalf of and for the account of Borrowers. Each
Borrower hereby acknowledges that it will be receiving a direct benefit from
each Loan made and each Letter of Credit issued pursuant to this Agreement.
(2) Each Borrower hereby designates, appoints, authorizes and
empowers Parent as its agent to act as specified in subsections 1.1 and 1.2 of
this Agreement and each of the other Loan Documents and Parent hereby
acknowledges such designation, authorization and empowerment, and accepts such
appointment. Each Borrower hereby irrevocably authorizes and directs Parent to
take such action on its behalf under the respective provisions of this Agreement
and the other Loan Documents, and any other instruments, documents and
agreements referred to herein or therein, and to exercise such powers and to
perform such duties hereunder and thereunder as are specifically delegated to or
required of the Parent by the respective terms and provisions hereof and
6
<PAGE>
thereof, and such other powers as are reasonably incidental thereto, including,
without limitation, to take the following actions for and on such Borrower's
behalf:
(i) to submit on behalf of each Borrower notices of borrowing
(and LIBOR Loan Requests) to Agent in accordance with the provisions of
this Agreement; and
(ii) to receive on behalf of each Borrower the proceeds of the
Loans in accordance with the provisions of this Agreement, such proceeds to
be disbursed to or for the account of the applicable Borrower as soon as
practicable after its receipt thereof;
(iii) to submit on behalf of each Borrower requests for the
issuance of Letters of Credit and Risk Participation Agreements in
accordance with the provisions of this Agreement, each such requests for
the issuance of a Letter of Credit to be submitted by Parent as soon as
practicable after its receipt o a request to do so from any Borrower; and
(iv) to submit on behalf of each Borrower, Borrowing Base
Certificates, Compliance Certificates, Excess Cash Flow Certificates, and
all other certificates, notices and other communications given or required
to be given, hereunder.
Parent is further authorized and directed by each of the Borrowers to take all
such actions on behalf of such Borrower necessary to exercise the specific power
granted in clauses (i) through (iv) above and to perform such other duties
hereunder and under the other Loan Documents, and deliver such documents as
delegated to or required of Parent by the terms hereof or thereof.
(3) The administration by Agent and Lenders of the respective credit
facilities under this Agreement as a co-borrowing facility with a borrowing
agent in the manner set forth herein is solely as an accommodation to Borrowers
and at their request and neither Agent nor any Lender shall incur any liability
to any of the Borrowers as a result thereof.
1.2 Interest and Related Fees.
-------------------------
(A) Interest. From the date the Loans are made and the date the
--------
other Obligations become due, depending upon Parent's election from time to
time, as permitted herein, to have portions of the Loans accrue interest
determined by reference to the Base Rate ("Base Rate Loans") or the LIBOR
("LIBOR Loans"), the Loans and the other Obligations shall bear interest at the
applicable rates set forth below:
(1) If a LIBOR Loan, then at the sum of the LIBOR plus the LIBOR
----
Margin.
(2) In all other cases, then at the sum of the Base Rate plus the
----
Base Rate Margin.
"Base Rate" means a variable rate of interest per annum equal to the
rate of interest from time to time published by the Board of Governors of the
Federal Reserve System in Federal Reserve statistical release H.15 (519)
entitled "Selected Interest Rates" as the Bank prime loan rate. Base Rate also
includes rates published in any successor publications of the Federal Reserve
System
7
<PAGE>
reporting the Bank prime loan rate or its equivalent. The statistical release
generally sets forth a Bank prime loan rate for each business day. The
applicable Bank prime loan rate for any date not set forth shall be the rate set
forth for the last preceding date. In the event the Board of Governors of the
Federal Reserve System ceases to publish a Bank prime loan rate or equivalent,
the term "Base Rate" shall mean a variable rate of interest per annum equal to
the highest of the "prime rate," "reference rate," "base rate" or other similar
rate as determined by Agent announced from time to time by any of Bankers Trust
Company, The Chase Manhattan Bank or Citibank, N.A. (with the understanding that
any such rate may merely be a reference rate and may not necessarily represent
the lowest or best rate actually charged to any customer by such bank).
"Base Rate Margin" shall mean (i) as of the Closing Date, 1.25% per
annum, and (ii) thereafter, as of April 1, July 1, October 1 and January 1 of
each year (each, an "Adjustment Date"), commencing on January 1, 2000, the Base
Rate Margin shall be adjusted, if necessary, to the applicable percent per annum
set forth in the pricing table below opposite the Total Adjusted Indebtedness to
Adjusted EBITDA Ratio calculated for the trailing twelve month period ending on
the last day of the most recently completed calendar quarter prior to the
applicable Adjustment Date (each such period, a "Calculation Period").
"LIBOR" means, for each Interest Period, a rate equal to: (a) the
offered rate for deposits in U.S. dollars in the London interbank market for the
relevant Interest Period which is published by the British Bankers' Association
and currently appears on Telerate Page 3750 as of 11:00 a.m. (London time) on
the day which is two (2) Business Days prior to the first day of such Interest
Period for a term comparable to such Interest Period; provided, however, that
-------- -------
if, for any reason, such a rate is not published by the British Bankers'
Association on Telerate or any other source available to Agent, LIBOR shall be
equal to a rate per annum equal to the average rate (rounded upwards, if
necessary, to the nearest 1/100 of 1%) at which Agent determines that U.S.
dollars in an amount comparable to the amount of the applicable Loans are being
offered to prime banks at approximately 11:00 a.m. (London time) on the day
which is two (2) Business Days prior to the first day of such Interest Period
for a term comparable to such Interest Period for settlement in immediately
available funds by leading banks in the London interbank market selected by
Agent; divided by (b) a number equal to 1.0 minus the aggregate (but without
------- -- -----
duplication) of the rates (expressed as a decimal fraction) of reserve
requirements in effect on the day which is two (2) Business Days prior to the
beginning of such Interest Period (including, without limitation, basic,
supplemental, marginal and emergency reserves under any regulations of the Board
of Governors of the Federal Reserve System or other governmental authority
having jurisdiction with respect thereto, as now and from time to time in
effect) for Eurocurrency funding (currently referred to as "Eurocurrency
Liabilities" in Regulation D of such Board) which are required to be maintained
by a member bank of the Federal Reserve System; such rate to be rounded upward
to the next whole multiple of one-sixteenth of one percent (.0625%).
"LIBOR Margin" shall mean (i) as of the Closing Date, 2.75% per annum,
and (ii) thereafter, as of each Adjustment Date, commencing on January 1, 2000,
the LIBOR Margin shall be adjusted, if necessary, to the applicable percent per
annum set forth in the pricing table below
8
<PAGE>
opposite the Total Adjusted Indebtedness to Adjusted EBITDA Ratio calculated for
the applicable Calculation Period.
"Total Adjusted Indebtedness to Adjusted EBITDA Ratio" means, for any
Calculation Period, the ratio of (i) the sum of (a) the average daily principal
balance of the Revolving Loans for the one month period ending on the last day
of the month for which the Compliance Certificate most recently delivered
pursuant to subsection 4.8(C) was prepared, plus (b) the outstanding principal
----
balance of the Term Loan as of the last day of such month, plus (c) all other
----
Indebtedness of the Parent and its Subsidiaries on a consolidated basis as of
the last day of such month, minus (d) to the extent included in clause (c),
-----
Indebtedness in respect of the Macro Earn-Out and ProTel Earn-Out, to (ii)
Adjusted EBITDA (calculated as illustrated on Exhibit 4.8(C)) for the twelve
(12) month period ending on the last day of such month.
PRICING TABLE
-------------
<TABLE>
<CAPTION>
==============================================================================================
Total Adjusted Base Rate Margin LIBOR Margin
Indebtedness
to Adjusted
EBITDA Ratio
- ----------------------------------------------------------------------------------------------
<S> <C> <C>
greater than or equal to 3.75 1.50% 3.00%
- ----------------------------------------------------------------------------------------------
less than 3.75 but greater than or equal to 3.25 1.25% 2.75%
- ----------------------------------------------------------------------------------------------
less than 3.25 1.00% 2.50%
- ----------------------------------------------------------------------------------------------
==============================================================================================
</TABLE>
If Borrowers shall fail to deliver a Compliance Certificate by the
date required pursuant to subsection 4.8(C), effective as of the tenth Business
Day following the date on which such Compliance Certificate was due, each
applicable Base Rate Margin and each applicable LIBOR Margin shall be
conclusively presumed to equal the highest applicable Base Rate Margin and the
highest applicable LIBOR Margin specified in the pricing table set forth above
until the date of delivery of the Compliance Certificate.
Each LIBOR Loan may be obtained for a one, two, three or six month
period (each being an "Interest Period"). With respect to all LIBOR Loans: (a)
the Interest Period will commence on the date that the LIBOR Loan is made or the
date on which a Base Rate Loan is converted into a LIBOR Loan, as applicable, or
in the case of immediately successive Interest Periods, each successive Interest
Period shall commence on the day on which the next preceding Interest Period
expires, (b) if the Interest Period expires on a day that is not a Business Day,
then it will expire on the next Business Day, (c) no Interest Period for
Revolving Loans shall extend beyond the date set forth in clause (c) of the
definition of the term "Expiry Date" and (d) no Interest Period for any portion
of the Term Loan shall extend beyond the date of the final Scheduled Installment
thereof.
9
<PAGE>
If the introduction of or the interpretation of (in each case, made
after the date hereof) any law, rule, or regulation would increase the reserve
requirement or otherwise increase the cost to any Lender of making or
maintaining a LIBOR Loan, then Agent, on behalf of all affected Lenders, shall
submit a certificate to Borrowers demonstrating the calculation of the increased
cost and requiring payment thereof to Agent for the benefit of the affected
Lenders within ten days after the date of the certificate. There are no
limitations on the number of times such certificate may be submitted.
(B) Commitment Fee. From the Closing Date, Borrowers shall pay Agent,
--------------
for the benefit of all Lenders committed to make Revolving Loans (based upon
their respective Pro Rata Shares), a fee in an amount equal to (1) (a) the
Revolving Loan Commitment less (b) the sum of (i) the average daily balance of
----
the Revolving Loans plus (ii) the average daily aggregate amount of outstanding
----
Risk Participation Liability, in each case during the preceding month,
multiplied by (2) one-half of one percent (0.50%) per annum. Such fee is to be
- ---------- --
paid monthly in arrears on the first day of each month.
(C) Risk Participation Fee. From the Closing Date, Borrowers shall
----------------------
pay Agent, for the benefit of all Lenders committed to make Revolving Loans
(based upon their respective Pro Rata Shares), a fee for each Lender Letter of
Credit and each Risk Participation Agreement from the date of issuance to the
date of termination equal to the average daily aggregate amount of outstanding
Risk Participation Liability multiplied by a percent per annum equal to the
---------- --
LIBOR Margin in effect on the date such fee is due and payable. Such fee is to
be paid monthly in arrears on the first day of each month. Borrowers shall also
reimburse Agent for any and all fees and expenses paid by Agent to the issuer of
any letter of credit that is supported by a Risk Participation Agreement.
(D) Computation of Interest and Related Fees. Interest on all Loans
----------------------------------------
and all other Obligations and any fees set forth in this subsection 1.2 shall be
calculated daily on the basis of a three hundred sixty (360) day year for the
actual number of days elapsed in the period during which it accrues. The date of
funding a Base Rate Loan and the first day of an Interest Period with respect to
a LIBOR Loan shall be included in the calculation of interest. The date of
payment of a Base Rate Loan and the last day of an Interest Period with respect
to a LIBOR Loan shall be excluded from the calculation of interest. If a Loan is
repaid on the same day that it is made, one (1) days' interest shall be charged.
Interest on all Base Rate Loans is payable in arrears on the first day of each
month and on the maturity of such Loans, whether by acceleration or otherwise.
Interest on LIBOR Loans shall be payable on the last day of the applicable
Interest Period, unless the Interest Period is greater than three (3) months, in
which case interest will be payable on the last day of each three (3) month
interval. In addition, interest on LIBOR Loans is due on the maturity of such
Loans, whether by acceleration or otherwise.
(E) Default Rate of Interest. At the election of Agent or Requisite
------------------------
Lenders, after the occurrence of an Event of Default and for so long as it
continues, the Loans and other Obligations shall bear interest at a rate that is
two percent (2.0%) in excess of the rates otherwise payable under this
Agreement. Furthermore, during any period in which any Event of Default is
continuing, as the Interest Periods for LIBOR Loans then in effect expire, such
Loans shall be converted at Agent's
10
<PAGE>
discretion into Base Rate Loans and the LIBOR election will not be available to
Borrowers until all Events of Default are cured or waived.
(F) Excess Interest. Under no circumstances will the rate of
---------------
interest chargeable be in excess of the maximum amount permitted by law. If
excess interest is charged and paid in error, then the excess amount will be
promptly refunded.
(G) LIBOR Rate Election. All Loans made on the Closing Date shall be
-------------------
Base Rate Loans and remain so until the earlier of ten (10) days after the
Closing Date or completion of the primary syndication of the credit facilities.
If the primary syndication of the credit facilities is not complete by the tenth
day after the Closing Date, then Parent, on behalf of Borrowers, may not select
an Interest Period for a LIBOR Loan which is longer than one month prior to the
earlier of ninety (90) days after the Closing Date or the date Agent notifies
Borrowers, that it has completed such primary syndication. Thereafter, Parent,
on behalf of Borrowers may request that Revolving Loans to be made be LIBOR
Loans, that outstanding portions of Revolving Loans and the Term Loan be
converted to LIBOR Loans and that all or any portion of a LIBOR Loan be
continued as a LIBOR Loan upon expiration of the applicable Interest Period. Any
such request will be made by Parent submitting a LIBOR Loan request in the form
of Exhibit 1.2(G). Once given, a LIBOR Loan request shall be irrevocable and
Borrowers shall be bound thereby. Upon the expiration of an Interest Period, in
the absence of a new LIBOR Loan request submitted to Agent not less than three
(3) Business Days prior to the end of such Interest Period, the LIBOR Loan then
maturing shall be automatically converted to a Base Rate Loan. There may be no
more than six (6) LIBOR Loans outstanding at any one time. Loans which are not
the subject of a LIBOR Loan request shall be Base Rate Loans. Agent will notify
Lenders, by telephonic or facsimile notice, of each LIBOR Loan request received
by Agent not less than two (2) Business Days prior to the first day of the
Interest Period of the LIBOR Loan requested thereby.
1.3 Other Fees and Expenses.
-----------------------
(A) Certain Fees. Borrowers shall pay to Heller, individually, the
------------
fees in the amounts and at the times specified in that certain letter agreement
dated the date of this Agreement among Borrowers and Heller.
(B) LIBOR Breakage Fee. Upon (i) any default by Borrowers in making
------------------
any borrowing of, conversion into or continuation of any LIBOR Loan following
delivery to Agent of any LIBOR Loan request in respect thereof or (ii) any
payment of a LIBOR Loan on any day that is not the last day of the Interest
Period applicable thereto (regardless of the source of such prepayment and
whether voluntary, by acceleration or otherwise), Borrowers shall pay Agent, for
the benefit of all Lenders, an amount (the "LIBOR Breakage Fee") equal to the
amount of any losses, expenses and liabilities (including, without limitation,
any loss (including interest paid) in connection with the re-employment of such
funds) that any Lender may sustain as a result of such default or such payment.
For purposes of calculating amounts payable to a Lender under this subsection,
each Lender shall be deemed to have actually funded its relevant LIBOR Loan
through the purchase of a deposit bearing interest at the LIBOR Rate in an
amount equal to the amount of that LIBOR Loan
11
<PAGE>
and having a maturity and repricing characteristics comparable to the relevant
Interest Period; provided, however, that each Lender may fund each of its LIBOR
Loans in any manner it sees fit, and the foregoing assumption shall be utilized
only for the calculation of amounts payable under this subsection.
(C) Expenses and Attorneys Fees. Borrowers agree to promptly pay all
---------------------------
reasonable out-of-pocket fees, costs and expenses (including those of attorneys)
incurred by Agent in connection with any matters contemplated by or arising out
of the Loan Documents, in connection with the examination, review, due diligence
investigation, documentation, negotiation, closing and syndication of the
transactions contemplated herein and in connection with the continued
administration of the Loan Documents including any amendments, modifications and
waivers. Borrowers agree to promptly pay all fees, costs and expenses incurred
by Agent and Lenders in connection with any action to enforce any Loan Document
or to collect any payments due from Borrowers or any other Loan Party. All
fees, costs and expenses for which a Borrower is responsible under this
subsection 1.3(C) shall be deemed part of the Obligations when incurred, payable
in accordance with the final two sentences of subsection 1.4 and secured by the
Collateral.
1.4 Payments. All payments by Borrowers of the Obligations shall
--------
be made in same day funds and delivered to Agent, for the benefit of Agent and
Lenders, as applicable, by wire transfer to the following account or such other
place as Agent may from time to time designate.
ABA No. 0710-0001-3
Account Number 55-00540
The First National Bank of Chicago
One First National Plaza
Chicago, IL 60670
Reference: Heller Corporate Finance Group
for the benefit of Opinion Research
Borrowers shall receive credit on the day of receipt for funds received by Agent
by 1:00 p.m. Chicago time. In the absence of timely receipt, such funds shall be
deemed to have been paid on the next Business Day. Whenever any payment to be
made hereunder shall be stated to be due on a day that is not a Business Day,
the payment may be made on the next succeeding Business Day and such extension
of time shall be included in the computation of the amount of interest and fees
due hereunder.
Each Borrower hereby authorizes Lenders to make Revolving Loans, on
the basis of their Pro Rata Shares, for the payment of Scheduled Installments,
interest, commitment fees, Risk Participation Liability fees, LIBOR Breakage
Fees and Risk Participation Liability payments. Prior to an Event of Default,
other fees, costs and expenses (including those of attorneys) reimbursable to
Agent pursuant to subsections 1.3(A) and (C) or elsewhere in any Loan Document
may be debited to the Revolving Loan after fifteen (15) days notice. After the
occurrence of an Event of Default, no notice will be required.
12
<PAGE>
1.5 Prepayments.
-----------
(A) Voluntary Prepayment of Term Loan. At any time, Borrowers may
---------------------------------
prepay the Term Loan, in whole or in part, but with LIBOR Breakage Fees, if
applicable. The payments shall be applied in accordance with subsection 1.5(E)
or as otherwise may be agreed by Requisite Lenders.
(B) Prepayments from Excess Cash Flow. Within one hundred (100) days
---------------------------------
after the end of each of its fiscal years, Borrowers shall prepay the Loans in
an amount equal to fifty percent (50%) of the Excess Cash Flow for such fiscal
year determined pursuant to the calculation on Exhibit 1.5(B). The calculation
shall be based on the audited financial statements for Parent and its
Subsidiaries. The payments shall be applied in accordance with subsection
1.5(E).
(C) Prepayments from Asset Dispositions. Immediately upon receipt of
-----------------------------------
the Net Proceeds in excess of $250,000 for any single transaction or series of
transactions, Borrowers shall repay the outstanding principal balance of the
Revolving Loan by the amount of any reduction in the Borrowing Base attributable
to the Asset Disposition giving rise to such Net Proceeds. Parent or any
Subsidiary may reinvest all remaining Net Proceeds of such Asset Disposition
(including insurance proceeds payable on account of a casualty), within one
hundred eighty (180) days, in productive replacement fixed assets of a kind then
used or usable in the business of Parent and its Subsidiaries. If Borrowers do
not intend to so reinvest such Net Proceeds or if the period set forth in the
immediately preceding sentence expires without Parent or its Subsidiaries having
reinvested such Net Proceeds, Borrowers shall prepay the Term Loan in an amount
equal to the remaining Net Proceeds of such Asset Disposition. The payments
shall be applied in accordance with subsection 1.5(E).
(D) Prepayment from Issuance of Securities. Immediately upon the
--------------------------------------
receipt by Parent or any of its Subsidiaries of the proceeds of the issuance of
equity securities (other than (1) proceeds of the issuance of equity securities
received on or before the Closing Date, (2) proceeds from the issuance of equity
securities to members of the management of Parent and (3) proceeds of the
issuance of equity securities to Parent or any Subsidiary of Parent), Borrowers
shall prepay the Loans in an amount equal to such proceeds, net of underwriting
discounts and commissions and other reasonable costs associated therewith. The
payments shall be applied in accordance with subsection 1.5(E).
(E) Application of Proceeds. With respect to the prepayments
-----------------------
described in subsections 1.5(A), 1.5(B), 1.5(C) (other than any amount applied
to the Revolving Loans as a result of the reduction of the Borrowing Base as
specified therein) and 1.5(D), such prepayments shall first be applied in
payment of the Term Loan pro rata against all remaining Scheduled Installments
and, at any time after the Term Loan shall have been prepaid in full, such
prepayments shall be applied to reduce the outstanding principal balance of the
Revolving Loans. Considering each type of Loan being prepaid separately, in the
absence of an Event of Default, any such prepayment shall be applied first to
Base Rate Loans of the type required to be prepaid before application to LIBOR
Loans of the
13
<PAGE>
type required to be prepaid, in each case in a manner which minimizes the amount
of any payment required to be made by Borrowers pursuant to subsection 1.3(B).
1.6 Maturity. All of the Obligations shall become due and payable
--------
as otherwise set forth herein, but in any event, all of the remaining
Obligations shall become due and payable on the date set forth in clause (c) of
the definition of the term "Expiry Date." Until all Obligations have been fully
paid and satisfied, the Revolving Loan Commitment has been terminated and all
Lender Letters of Credit and Risk Participation Agreements have been terminated,
Agent, for the benefit of Agent and Lenders, shall be entitled to retain the
security interests in the Collateral granted under the Security Documents and
the ability to exercise all rights and remedies available to them under the Loan
Documents and applicable laws.
1.7 Loan Accounts. Agent will maintain loan account records for
-------------
(a) all Loans, interest charges and payments thereof, (b) all Risk Participation
Liability, (c) the charging and payment of all fees, costs and expenses and (d)
all other debits and credits pursuant to this Agreement. The balance in the
loan accounts shall be presumptive evidence of the amounts due and owing to
Lenders, provided that any failure by Agent to so record shall not limit or
--------
affect the Borrowers' obligation to pay. Within five (5) days of the first of
each month, Agent shall provide a statement for each loan account setting forth
the principal of each account and interest due thereon. Borrowers must deliver
a written objection within sixty (60) days after receipt of the statement or the
statement will be presumptive evidence of the Obligations absent manifest error.
During the continuance of an Event of Default, each Borrower irrevocably waives
the right to direct the application of any and all payments and each Borrower
hereby irrevocably agrees that Agent shall have the continuing exclusive right
to apply and reapply payments in any manner it deems appropriate.
1.8 Capital Adequacy and Other Adjustments. In the event that any
--------------------------------------
Lender shall have determined that the adoption after the date hereof of any law,
treaty, governmental (or quasi-governmental) rule, regulation, guideline or
order regarding capital adequacy, reserve requirements or similar requirements
or compliance by any Lender or any corporation controlling such Lender with any
request or directive regarding capital adequacy, reserve requirements or similar
requirements (whether or not having the force of law and whether or not failure
to comply therewith would be unlawful) from any central bank or governmental
agency or body having jurisdiction does or shall have the effect of increasing
the amount of capital, reserves or other funds required to be maintained by such
Lender or any corporation controlling such Lender and thereby reducing the rate
of return on such Lender's or such corporation's capital as a consequence of its
obligations hereunder, then Borrowers shall from time to time within fifteen
(15) days after notice and demand from such Lender (together with the
certificate referred to in the next sentence and with a copy to Agent) pay to
Agent, for the account of such Lender, additional amounts sufficient to
compensate such Lender for such reduction. A certificate as to the amount of
such cost and showing the basis of the computation of such cost submitted by
such Lender to Borrowers and Agent shall, absent demonstrable error, be final,
conclusive and binding for all purposes.
1.9 Taxes.
-----
14
<PAGE>
(A) No Deductions. Any and all payments or reimbursements made
-------------
hereunder or under the Notes shall be made free and clear of and without
deduction for any and all taxes, levies, imposts, deductions, charges or
withholdings, and all liabilities with respect thereto (all such taxes, levies,
imposts, deductions, charges or withholdings and all liabilities with respect
thereto excluding such taxes imposed on net income, herein "Tax Liabilities"),
excluding, however, taxes imposed on the net income of a Lender or Agent. If
Borrowers shall be required by law to deduct any such amounts from or in respect
of any sum payable hereunder to any Lender or Agent, then the sum payable
hereunder shall be increased as may be necessary so that, after making all
required deductions, such Lender or Agent receives an amount equal to the sum it
would have received had no such deductions been made.
(B) Changes in Tax Laws. In the event that, subsequent to the Closing
-------------------
Date, (1) any changes in any existing law, regulation, treaty or directive or in
the interpretation or application thereof, (2) any new law, regulation, treaty
or directive enacted or any interpretation or application thereof, or (3)
compliance by Agent or any Lender with any request or directive (whether or not
having the force of law) from any governmental authority, agency or
instrumentality:
(a) does or shall subject Agent or any Lender to any tax of any
kind whatsoever with respect to this Agreement, the other Loan Documents or
any Loans made or Lender Letters of Credit or Risk Participation Agreements
issued hereunder, or change the basis of taxation of payments to Agent or
such Lender of principal, fees, interest or any other amount payable
hereunder (except for net income taxes, or franchise taxes imposed in lieu
of net income or gross receipts taxes, imposed generally by federal, state
or local taxing authorities with respect to interest or commitment or other
fees payable hereunder or changes in the rate of tax on the overall net
income or gross receipts of Agent or such Lender); or
(b) does or shall impose on Agent or any Lender any other
condition or increased cost in connection with the transactions
contemplated hereby or participations herein;
and the result of any of the foregoing is to increase the cost to Agent or any
such Lender of issuing any Lender Letter of Credit or Risk Participation
Agreement or making or continuing any Loan hereunder, as the case may be, or to
reduce any amount receivable hereunder, then, in any such case, Borrowers shall
promptly pay to Agent or such Lender, upon its demand, any additional amounts
necessary to compensate Agent or such Lender, on an after-tax basis, for such
additional cost or reduced amount receivable, as determined by Agent or such
Lender with respect to this Agreement or the other Loan Documents. If Agent or
such Lender becomes entitled to claim any additional amounts pursuant to this
subsection, it shall promptly notify Borrowers of the event by reason of which
Agent or such Lender has become so entitled. A certificate as to any additional
amounts payable pursuant to the foregoing sentence submitted by Agent or such
Lender to Borrowers and Agent shall, absent manifest error, be final, conclusive
and binding for all purposes.
15
<PAGE>
(C) Foreign Lenders. Each Lender organized under the laws of a
---------------
jurisdiction outside the United States (a "Foreign Lender") as to which payments
to be made under this Agreement or under the Notes are exempt from United States
withholding tax or are subject to United States withholding tax at a reduced
rate under an applicable statute or tax treaty shall provide to Borrower and
Agent (1) a properly completed and executed Internal Revenue Service Form 4224
or Form 1001 or other applicable form, certificate or document prescribed by the
Internal Revenue Service of the United States certifying as to such Foreign
Lender's entitlement to such exemption or reduced rate of withholding with
respect to payments to be made to such Foreign Lender under this Agreement and
under the Notes (a "Certificate of Exemption") or (2) a letter from any such
Foreign Lender stating that it is not entitled to any such exemption or reduced
rate of withholding (a "Letter of Non-Exemption"). Prior to becoming a Lender
under this Agreement and within fifteen (15) days after a reasonable written
request of Borrowers or Agent from time to time thereafter, each Foreign Lender
that becomes a Lender under this Agreement shall provide a Certificate of
Exemption or a Letter of Non-Exemption to Borrowers and Agent.
If a Foreign Lender is entitled to an exemption with respect to
payments to be made to such Foreign Lender under this Agreement (or to a reduced
rate of withholding) and does not provide a Certificate of Exemption to
Borrowers and Agent within the time periods set forth in the preceding
paragraph, Borrowers shall withhold taxes from payments to such Foreign Lender
at the applicable statutory rates and Borrowers shall not be required to pay any
additional amounts as a result of such withholding, provided that all such
--------
withholding shall cease upon delivery by such Foreign Lender of a Certificate of
Exemption to Borrowers and Agent.
1.10 Optional Prepayment/Replacement of Lenders. Within thirty
------------------------------------------
(30) days after receipt by Borrowers of written notice and demand from any
Lender for payment pursuant to subsection 1.8 or 1.9 or, as provided in
subsection 8.3(C), in the case of certain refusals by any Lender to consent to
certain proposed amendments, modifications, terminations or waivers with respect
to this Agreement that have been approved by Requisite Lenders (any such Lender
demanding such payment or refusing to consent being referred to herein as an
"Affected Lender"), Borrowers may, at their option, notify Agent and such
Affected Lender of its intention to do one of the following:
(A) Borrowers may obtain, at Borrowers' expense, a replacement
Lender ("Replacement Lender") for such Affected Lender, which Replacement
Lender shall be reasonably satisfactory to Agent. In the event Borrowers
obtain a Replacement Lender that will refinance all outstanding Obligations
owed to such Affected Lender and assume its Commitments hereunder within
ninety (90) days following notice of Borrowers' intention to do so, the
Affected Lender shall sell and assign all of its rights and delegate all of
its obligations under this Agreement to such Replacement Lender in
accordance with the provisions of subsection 8.1, provided that Borrowers
--------
have reimbursed such Affected Lender for any administrative fee payable
pursuant to subsection 8.1 and, in any case where such replacement occurs
as the result of a demand for payment pursuant to subsection 1.8 or 1.9,
paid all amounts required to
16
<PAGE>
be paid to such Affected Lender pursuant to subsection 1.8 or 1.9 through
the date of such sale and assignment; or
(B) Borrowers may prepay in full all outstanding Obligations owed to
such Affected Lender and terminate such Affected Lender's Pro Rata Share of
the Revolving Loan Commitment, in which case the Revolving Loan Commitment
will be reduced by the amount of such Pro Rata Share. Borrowers shall,
within ninety (90) days following notice of its intention to do so, prepay
in full all outstanding Obligations owed to such Affected Lender
(including, in any case where such replacement occurs as the result of a
demand for payment for increased costs, such Affected Lender's increased
costs for which it is entitled to reimbursement under this Agreement
through the date of such prepayment), and terminate such Affected Lender's
obligations under the Revolving Loan Commitment.
SECTION 2
AFFIRMATIVE COVENANTS
Each Borrower covenants and agrees that so long as the Revolving Loan
Commitment is in effect and until payment in full of all Obligations (other than
contingent indemnification obligations to the extent no unsatisfied claim giving
rise thereto has been asserted) and termination of all Lender Letters of Credit
and Risk Participation Agreements, unless Requisite Lenders shall otherwise give
their prior written consent, each Borrower shall perform and comply with, and
shall cause each of the other Loan Parties to perform and comply with, all
covenants in this Section 2 applicable to such Person.
2.1 Compliance With Laws and Contractual Obligations. Each
------------------------------------------------
Borrower will (a) comply with and will cause each of its Subsidiaries to comply
with (i) the requirements of all applicable laws, rules, regulations and orders
of any governmental authority (including, without limitation, laws, rules,
regulations and orders relating to taxes, employer and employee contributions,
securities, employee retirement and welfare benefits, environmental protection
matters and employee health and safety) as now in effect and which may be
imposed in the future in all jurisdictions in which Parent or its Subsidiaries
are now doing business or may hereafter be doing business and (ii) the
obligations, covenants and conditions contained in all Contractual Obligations
of such Borrower or such Subsidiary, as applicable other than those laws, rules,
regulations, orders and provisions of such Contractual Obligations the
noncompliance with which could not be reasonably expected to have, either
individually or in the aggregate, a Material Adverse Effect, and (b) maintain or
obtain and will cause each of its Subsidiaries to maintain or obtain, all
licenses, qualifications and permits now held or hereafter required to be held
by Parent and its Subsidiaries, for which the loss, suspension, revocation or
failure to obtain or renew, could reasonably be expected to have a Material
Adverse Effect. This subsection 2.1 shall not preclude a Borrower or any
Subsidiary from contesting any taxes or other payments, if they are being
diligently contested in good faith in a manner which stays enforcement thereof
and if appropriate expense provisions have been recorded in conformity
17
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with GAAP. Each Borrower represents and warrants that as of the date hereof, it
(i) is in compliance and each of its Subsidiaries is in compliance with the
requirements of all applicable laws, rules, regulations and orders of any
governmental authority as now in effect other than those laws, rules,
regulations, orders and provisions of such Contractual Obligations, the
noncompliance with which could not be reasonably expected to have, either
individually or in the aggregate, a Material Adverse Effect and (ii) maintains
and each of its Subsidiaries maintains all licenses, qualifications and permits
referred to above.
"Contractual Obligations," as applied to any Person, means any indenture,
mortgage, deed of trust, contract, undertaking, agreement or other instrument to
which that Person is a party or by which it or any of its properties is bound or
to which it or any of its properties is subject including, without limitation,
the Related Transactions Documents.
2.2 Maintenance of Properties; Insurance. Each Borrower will
------------------------------------
maintain or cause to be maintained in good repair, working order and condition
all material properties used in the business of such Borrower and its
Subsidiaries and will make or cause to be made all appropriate repairs, renewals
and replacements thereof. Each Borrower will maintain or cause to be
maintained, with financially sound and reputable insurers, public liability and
property damage insurance with respect to its business and properties and the
business and properties of its Subsidiaries against loss or damage of the kinds
customarily carried or maintained by corporations of established reputation
engaged in similar businesses and in amounts acceptable to Agent and will
deliver evidence thereof to Agent. Parent will maintain business interruption
insurance providing coverage for a period of at least six months and in an
amount not less than $7,000,000. Borrowers shall cause Agent, pursuant to
endorsements and/or assignments in form and substance reasonably satisfactory to
Agent, to be named as lender's loss payee in the case of casualty insurance,
additional insured in the case of all liability insurance and assignee in the
case of all business interruption insurance, in each case for the benefit of
Lenders. Each Borrower represents and warrants that it and each of its
Subsidiaries currently maintains all material properties as set forth above and
maintains all insurance described above. In the event Borrowers fail to provide
Agent with evidence of the insurance coverage required by this Agreement, Agent
may purchase insurance at Borrowers' expense to protect Agent's interests in the
Collateral. This insurance may, but need not, protect Borrowers' interests.
The coverage purchased by Agent may not pay any claim made by Borrowers or any
claim that is made against Borrowers in connection with the Collateral.
Borrowers may later cancel any insurance purchased by Agent, but only after
providing Agent with evidence that Borrowers have obtained insurance as required
by this Agreement. If Agent purchases insurance for the Collateral, Borrowers
will be responsible for the costs of that insurance, including interest and
other charges imposed by Agent in connection with the placement of the
insurance, until the effective date of the cancellation or expiration of the
insurance. The costs of the insurance may be added to the Obligations. The
costs of the insurance may be more than the cost of insurance Borrowers are able
to obtain on their own.
2.3 Inspection; Lender Meeting. Each Borrower shall permit any
--------------------------
authorized representatives of Agent to visit and inspect any of the properties
of such Borrower or any of its Subsidiaries, including its and their financial
and accounting records, and to make copies and take
18
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extracts therefrom, and to discuss its and their affairs, finances and business
with its and their officers and certified public accountants, at such reasonable
times during normal business hours, as often as may be reasonably requested and,
provided no Default or Event of Default has occurred and is continuing, upon
reasonable prior notice. Representatives of each Lender will be permitted to
accompany representatives of Agent during each visit, inspection and discussion
referred to in the immediately preceding sentence. Without in any way limiting
the foregoing, each Borrower will participate and will cause its key management
personnel to participate in a meeting with Agent and Lenders at least once
during each year, which meeting shall be held at such time and such place as may
be reasonably requested by Agent.
2.4 Corporate Existence. Except as otherwise permitted by
-------------------
subsection 3.6, each Borrower will, and will cause each of its Subsidiaries to,
at all times preserve and keep in full force and effect its corporate existence
and all rights and franchises material to its business.
2.5 Further Assurances.
------------------
(A) Each Borrower shall and shall cause each other Loan Party (other
than Foreign Subsidiaries) to, from time to time, execute such guaranties,
financing statements, documents, security agreements and reports as Agent or
Requisite Lenders at any time may reasonably request to evidence, perfect or
otherwise implement the guaranties and security for repayment of the Obligations
contemplated by the Loan Documents.
(B) At Agent's or Requisite Lenders' request, Borrowers shall cause
any Domestic Subsidiaries of Parent promptly to guaranty the Obligations and to
grant to Agent, for the benefit of Agent and Lenders, a security interest in the
real, personal and mixed property of such Subsidiary to secure the Obligations
provided neither Borrowers nor any Domestic Subsidiary shall be required to
comply with any foreign law requirements necessary to perfect a security
interest in property located outside the United States if such property is not
material. The documentation for such guaranty or security shall be
substantially similar to the Loan Documents executed concurrently herewith with
such modifications as are reasonably requested by Agent.
(C) At Agent's or Requisite Lenders' request, Borrowers shall engage,
or reimburse Agent or Requisite Lenders for the costs of, such legal counsel as
Agent or Requisite Lenders may request to provide opinions or such other advice
acceptable to them regarding the organization, valid existence and good standing
of Foreign Subsidiaries and the effectiveness of the pledge of the equity
securities of such Foreign Subsidiary.
2.6 Syndication Assurances. Notwithstanding anything to the
----------------------
contrary set forth in this Agreement, Agent may change pricing and make
structural changes to the Loans and this Agreement (without affecting the total
amount of commitments hereunder) if Agent determines that such changes are
reasonably required in order to ensure successful syndication of the Loans on
the terms which are acceptable to Agent and each Borrower agrees to execute such
amendments and agreements as Agent may request to effectuate the foregoing.
19
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2.7 Distributions. Each Borrower shall, and shall cause each of
-------------
its Subsidiaries to distribute, or cause to be distributed, not less frequently
than quarterly, to Borrowers all cash receipts, including operating cash flow,
sales proceeds and investment income, after payment of all expenses, other costs
permitted to be paid herein and after the funding of reasonable reserves and
setting aside of funds reasonably anticipated to be needed for Acquisitions
reasonably expected to be consummated and permitted hereunder.
SECTION 3
NEGATIVE COVENANTS
Each Borrower covenants and agrees that so long as the Revolving Loan
Commitment is in effect and until payment in full of all Obligations (other than
contingent indemnification obligations to the extent no unsatisfied claim giving
rise thereto has been asserted) and termination of all Lender Letters of Credit
and Risk Participation Agreements, unless Requisite Lenders shall otherwise give
their prior written consent, such Borrower shall perform and comply with, and
shall cause each of the other Loan Parties to perform and comply with, all
covenants in this Section 3 applicable to such Person.
3.1 Indebtedness. Each Borrower will not and will not permit any
------------
of its Subsidiaries directly or indirectly to create, incur, assume, or
otherwise become or remain directly or indirectly liable with respect to any
Indebtedness (other than pursuant to a Contingent Obligation) except, in each
instance below, to the extent permitted under the Subordinated Loan Agreement:
(A) the Obligations;
(B) intercompany Indebtedness from Parent to its Subsidiaries or from
a Domestic Subsidiary to other Subsidiaries provided the aggregate amount
of all Loans to Foreign Subsidiaries shall not exceed at any time
outstanding $6,500,000; provided, however, that upon the request of Agent
-------- -------
at any time, such Indebtedness shall be evidenced by promissory notes
having terms reasonably satisfactory to Agent and Requisite Lenders, the
sole originally executed counterparts of which shall be delivered to Agent,
for the benefit of Agent and Lenders, as security for the Obligations;
(C) unsecured subordinated Indebtedness of Parent to Subordinated
Lender in the aggregate amount not to exceed $15,000,000 evidenced by the
Subordinated Note issued pursuant to the Subordinated Loan Agreement;
(D) Indebtedness not to exceed $1,000,000 in the aggregate at any
time outstanding secured by purchase money Liens or incurred with respect
to capital leases;
20
<PAGE>
(E) Indebtedness not to exceed $8,700,000 in respect of the Macro
Earn-Out and $7,000,000 in respect of the ProTel Earn-Out; and
(F) unsecured Indebtedness not to exceed $1,000,000 in the aggregate
at any time outstanding.
3.2 Liens and Related Matters.
-------------------------
(A) No Liens. Each Borrower will not and will not permit any of its
--------
Subsidiaries directly or indirectly to create, incur, assume or permit to exist
any Lien on or with respect to any property or asset of such Borrower or any of
its Subsidiaries, whether now owned or hereafter acquired, or any income or
profits therefrom, except Permitted Encumbrances. "Permitted Encumbrances"
means the following, in each instance below, to the extent permitted under the
Subordinated Loan Agreement:
(1) Liens for taxes, assessments or other governmental charges
not yet due and payable;
(2) statutory Liens of landlords, carriers, warehousemen,
mechanics, materialmen and other similar liens imposed by law, which are
incurred in the ordinary course of business for sums not more than thirty
(30) days delinquent or which are being diligently contested in good faith
in a manner which stays enforcement of such Liens, provided that
appropriate provisions shall have been established therefor in accordance
with GAAP and the aggregate amount of liabilities secured by such Liens
does not exceed $250,000 at any time;
(3) Liens (other than any Lien imposed by the Employee
Retirement Income Security Act of 1974 or any rule or regulation
promulgated thereunder) incurred or deposits made in the ordinary course of
business in connection with workers' compensation, unemployment insurance
and other types of social security, or to secure the performance of
tenders, statutory obligations, surety, stay, customs and appeal bonds,
bids, leases, government contracts, trade contracts, performance and return
of money bonds and other similar obligations (exclusive of obligations for
the payment of borrowed money);
(4) deposits, in an aggregate amount not to exceed $200,000,
made in the ordinary course of business to secure liability to insurance
carriers;
(5) Liens for purchase money obligations; provided that: (a) the
--------
purchase of the asset subject to any such Lien is permitted under
subsection 4.1; (b) the Indebtedness secured by any such Lien is permitted
under subsection 3.1; and (c) any such Lien encumbers only the asset so
purchased and the proceeds resulting from the sale thereof;
21
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(6) any attachment or judgment Lien not constituting an Event
of Default under subsection 6.1(I);
(7) easements, rights of way, restrictions, and other similar
charges or encumbrances not interfering in any material respect with the
ordinary conduct of the business of such Borrower or any of its
Subsidiaries;
(8) any interest or title of a lessor or sublessor under any
lease not prohibited by this Agreement;
(9) Liens in favor of Agent, for the benefit of Agent and
Lenders; and
(10) Liens existing on the date hereof and renewals and
extensions thereof, which Liens are set forth on Schedule 3.2(A)(10)
hereto.
(B) No Negative Pledges. Each Borrower will not and will not permit
-------------------
any of its Subsidiaries directly or indirectly to enter into or assume any
agreement (other than the Loan Documents and the Subordinated Loan Agreement
(which shall expressly permit Permitted Encumbrances)) prohibiting the creation
or assumption of any Lien granted to Agent pursuant hereto and the other Loan
Documents, or to any Person upon refinancings, from time to time, upon its
properties or assets, whether now owned or hereafter acquired.
(C) No Restrictions on Subsidiary Distributions to Borrowers. Except
--------------------------------------------------------
as provided herein, each Borrower will not and will not permit any of its
Subsidiaries directly or indirectly to create or otherwise cause or suffer to
exist or become effective any consensual encumbrance or restriction of any kind
on the ability of any such Subsidiary to: (1) pay dividends or make any other
distribution on any of such Subsidiary's capital stock owned by such Borrower or
any Subsidiary of such Borrower; (2) pay any Indebtedness owed to such Borrower
or any other Subsidiary; (3) make loans or advances to such Borrower or any
other Subsidiary; or (4) transfer any of its property or assets to such Borrower
or any other Subsidiary.
3.3 Investments; Joint Ventures. Each Borrower will not and will
---------------------------
not permit any of its Subsidiaries directly or indirectly to make or own any
Investment in any Person except, in each instance below, to the extent permitted
by the Subordinated Loan Agreement:
(A) such Borrower and its Subsidiaries may make and own Investments
in Cash Equivalents; provided that such Cash Equivalents are not subject to
--------
setoff rights;
(B) such Borrower and its Subsidiaries may make intercompany loans to
the extent permitted under subsection 3.1;
22
<PAGE>
(C) such Borrower and its Subsidiaries may (i) make loans and
advances to employees in the ordinary course of business not to exceed
$150,000 in the aggregate at any time outstanding and (ii) permit to remain
outstanding existing loans (including extensions thereof) to officers not
to exceed $260,000 in the aggregate at any time outstanding;
(D) such Borrower and its Subsidiaries may consummate Acquisitions
consented to by Agent and Requisite Lenders; and
(E) such Borrower and its Subsidiaries may make capital contributions
to their Subsidiaries provided the aggregate amount of capital
contributions made after the Closing Date by Parent and its Domestic
Subsidiaries to Foreign Subsidiaries shall not exceed $1,000,000.
"Investment" means (i) any direct or indirect purchase or other
acquisition by a Borrower or any of its Subsidiaries of any beneficial interest
in, including stock, partnership interest or other equity securities of, or
ownership interest in, any other Person; and (ii) any direct or indirect loan,
advance or capital contribution by a Borrower or any of its Subsidiaries to any
other Person, including all indebtedness and accounts receivable from that other
Person that are not current assets or did not arise from sales to that other
Person in the ordinary course of business. The amount of any Investment shall
be the original cost of such Investment plus the cost of all additions thereto,
----
without any adjustments for increases or decreases in value, or write-ups,
write-downs or write-offs with respect to such Investment.
"Cash Equivalents" means: (i) marketable direct obligations issued or
unconditionally guaranteed by the United States Government or issued by any
agency thereof and backed by the full faith and credit of the United States, in
each case maturing within one (1) year from the date of acquisition thereof;
(ii) commercial paper maturing no more than one (1) year from the date issued
and, at the time of acquisition, having a rating of at least A-1 from Standard &
Poor's Corporation or at least P-1 from Moody's Investors Service, Inc.; (iii)
certificates of deposit or bankers' acceptances maturing within one (1) year
from the date of issuance thereof issued by, or overnight reverse repurchase
agreements from, any commercial bank organized under the laws of the United
States of America or any state thereof or the District of Columbia having
combined capital and surplus of not less than $500,000,000; (iv) time deposits
maturing no more than thirty (30) days from the date of creation thereof with
commercial banks having membership in the Federal Deposit Insurance Corporation
in amounts not exceeding the lesser of $100,000 or the maximum amount of
insurance applicable to the aggregate amount of Borrowers' deposits at such
institution; and (v) deposits or investments in mutual or similar funds offered
or sponsored by brokerage or other companies having membership in the Securities
Investor Protection Corporation in amounts not exceeding the lesser of $100,000
or the maximum amount of insurance applicable to the aggregate amount of
Borrowers' deposits at such institution.
3.4 Contingent Obligations. Each Borrower will not and will not
----------------------
permit any of its Subsidiaries directly or indirectly to create or become or be
liable with respect to any Contingent
23
<PAGE>
Obligation except, in each instance below, to the extent permitted under the
Subordinated Loan Agreement:
(A) Risk Participation Liability;
(B) those resulting from endorsement of negotiable instruments for
collection in the ordinary course of business;
(C) those existing on the Closing Date and described in Schedule 3.4
annexed hereto;
(D) those arising under indemnity agreements to title insurers to
cause such title insurers to issue to Agent mortgagee title insurance
policies;
(E) those arising with respect to customary indemnification
obligations incurred in connection with Asset Dispositions;
(F) those incurred in the ordinary course of business with respect to
surety and appeal bonds, performance and return-of-money bonds and other
similar obligations not exceeding at any time outstanding $250,000 in
aggregate liability;
(G) foreign exchange contracts and interest rate protection
agreements entered into in the ordinary course of business consistent with
past practices for bonafide hedging purposes and not for speculation; and
(H) those incurred with respect to Indebtedness permitted by
subsection 3.1;
(I) Contingent Obligations with respect to obligations or liabilities
of Subsidiaries of Borrowers incurred in the ordinary course of business
and not prohibited hereunder;
(J) those incurred in connection with guarantees by ORC and Domestic
Subsidiaries of obligations under the Subordinated Loan Agreement and
Subordinated Note; and
(K) any other Contingent Obligation not expressly permitted by
clauses (A) through (I) above, so long as any such other Contingent
Obligations, in the aggregate at any time outstanding, do not exceed
$100,000.
"Contingent Obligation", as applied to any Person, means any direct or
indirect liability of that Person: (i) with respect to any indebtedness, lease,
dividend or other obligation of another Person if the purpose or intent of the
Person incurring such liability, or the effect thereof, is to provide assurance
to the obligee of such liability that such liability will be paid or discharged,
24
<PAGE>
or that any agreements relating thereto will be complied with, or that the
holders of such liability will be protected (in whole or in part) against loss
with respect thereto; (ii) with respect to any letter of credit issued for the
account of that Person or as to which that Person is otherwise liable for
reimbursement of drawings; (iii) under any foreign exchange contract, currency
swap agreement, interest rate swap agreement or other similar agreement or
arrangement designed to alter the risks of that Person arising from fluctuations
in currency values or interest rates; (iv) to make take-or-pay or similar
payments if required regardless of nonperformance by any other party or parties
to an agreement, or (v) pursuant to any agreement to purchase, repurchase or
otherwise acquire any obligation or any property constituting security therefor,
to provide funds for the payment or discharge of such obligation or to maintain
the solvency, financial condition or any balance sheet item or level of income
of another. The amount of any Contingent Obligation shall be equal to the amount
of the obligation so guaranteed or otherwise supported or, if not a fixed and
determined amount, the maximum amount so guaranteed.
3.5 Restricted Junior Payments. Each Borrower will not and will
--------------------------
not permit any of its Subsidiaries directly or indirectly to declare, order,
pay, make or set apart any sum for any Restricted Junior Payment, except that:
(A) Parent may make non-accelerated scheduled payments of interest
only with respect to the Indebtedness evidenced by the Subordinated Note
provided all of the following conditions are satisfied:
(i) no Default or Event of Default exists at the time of any
such payment or would occur as a result thereof;
(ii) after giving effect to such payment, the Maximum Revolving
Loan Balance exceeds outstanding Revolving Loans by not
less than $2,000,000; and
(iii) after giving effect to such payment, Borrowers are in
compliance on a pro forma basis with the covenants set
forth in subsections 4.4 and 4.5; and
(B) Wholly-owned Subsidiaries of a Borrower may make Restricted
Junior Payments to a Borrower or to other wholly-owned Subsidiaries of a
Borrower; and
(C) Parent may redeem the Stock Options (as defined in Section
4(b)(ii) of the ProTel Purchase Agreement) in accordance with the terms of
the ProTel Purchase Agreement provided all of the following conditions are
satisfied:
(i) no Default or Event of Default exists at the time of any
such payment or would occur as a result thereof;
25
<PAGE>
(ii) after giving effect to such payment, the Maximum Revolving
Loan Balance exceeds outstanding Revolving Loans by not
less than $2,000,000;
(iii) the maximum aggregate amount of all redemptions shall not
exceed $2,000,000;
(iv) such redemption is permitted under the Subordinated Loan
Agreement; and
(v) Adjusted Fixed Charge Coverage Ratio computed on a proforma
basis for the twelve-month period ending on the most recent
calendar month for which financial statements are available
is not less than 1.0. Adjusted Fixed Charge Coverage Ratio
shall be calculated in the manner set forth on Schedule 3
to Exhibit 4.8(C).
"Restricted Junior Payment" means: (i) any dividend or other
distribution, direct or indirect, on account of any shares of any class of stock
or other equity security of, or ownership interest in, a Borrower or any of its
Subsidiaries now or hereafter outstanding, except a dividend payable solely in
shares of that class of stock to the holders of that class; (ii) any redemption,
conversion, exchange, retirement, sinking fund or similar payment, purchase or
other acquisition for value, direct or indirect, of any shares of any class of
stock or other equity security (including options) of, or ownership interest in,
a Borrower or any of its Subsidiaries now or hereafter outstanding; (iii) any
payment or prepayment of interest on, principal of, premium, if any, redemption,
conversion, exchange, purchase, retirement, defeasance, sinking fund or similar
payment with respect to, any Indebtedness subordinated to the Obligations,
including, without limitation, the Indebtedness evidenced by the Subordinated
Note; and (iv) any payment made to retire, or to obtain the surrender of, any
outstanding warrants, options or other rights to acquire shares of any class of
stock or other equity security of, or ownership interest in, a Borrower or any
of its Subsidiaries now or hereafter outstanding.
3.6 Restriction on Fundamental Changes . Each Borrower will not and
----------------------------------
will not permit any of its Subsidiaries directly or indirectly to: (a) amend,
modify or waive any term or provision of its organizational documents, including
without limitation its articles of incorporation, certificates of designations
pertaining to preferred stock, by-laws, partnership agreement or members'
agreement, in a manner adverse to, or which would reasonably be expected to be
adverse to, Agent or any Lender or which would, or would reasonably be expected
to, adversely affect a Borrower's or any of its Subsidiaries' ability to perform
their respective Obligations hereunder or under the other Loan Documents; (b)
enter into any transaction of merger or consolidation except, upon not less than
five (5) Business Days prior written notice to Agent and to the extent permitted
under the Subordinated Loan Agreement, any Subsidiary of Parent may be merged
with or into any Domestic Subsidiary of Parent and any Foreign Subsidiary may be
merged with or into any other Foreign Subsidiary; (c) except for ORC TeleService
Corp. or any Dormant Foreign Subsidiary (to
26
<PAGE>
the extent permitted under the Subordinated Loan Agreement), liquidate, wind-up
or dissolve itself (or suffer any liquidation or dissolution); or (d) acquire by
purchase or otherwise all or any substantial part of the business or assets of
any other Person, including Acquisitions, without the prior written consent of
Agent and Requisite Lenders.
3.7 Disposal of Assets or Subsidiary Stock. Each Borrower will not
--------------------------------------
and will not permit any of its Subsidiaries directly or indirectly to: convey,
sell, lease, sublease, transfer or otherwise dispose of, or grant any Person an
option to acquire, in one transaction or a series of transactions, any of its
property, business or assets, or the capital stock of or other equity interests
in any of its Subsidiaries, whether now owned or hereafter acquired, except for
(a) bona fide sales of inventory to customers for fair value in the ordinary
course of business and dispositions of obsolete equipment not used or useful in
the business and (b) Asset Dispositions if all of the following conditions are
met: (i) the market value of assets sold or otherwise disposed of in any single
transaction or series of related transactions does not exceed $500,000 and the
aggregate market value of assets sold or otherwise disposed of in any fiscal
year of Borrowers does not exceed $500,000; (ii) the consideration received is
at least equal to the fair market value of such assets as determined in the good
faith judgment of the Board of Directors of Parent; (iii) not less than the
greater of 75% of the sales price therefor and the amount of the mandatory
prepayment required pursuant to subsection 1.5(C) is received is cash; (iv) the
Net Proceeds of such Asset Disposition are applied as required by subsection
1.5(C); (v) after giving effect to the Asset Disposition and the repayment of
Indebtedness with the proceeds thereof, Borrowers are in compliance on a pro
forma basis with the covenants set forth in Section 4 recomputed for the most
recently ended calendar quarter for which information is available and is in
compliance with all other terms and conditions contained in this Agreement; and
(vi) no Default or Event of Default then exists or shall result from such Asset
Disposition.
3.8 Transactions with Affiliates. Each Borrower will not and will
----------------------------
not permit any of its Subsidiaries directly or indirectly to enter into or
permit to exist any transaction (including the purchase, sale, lease or exchange
of any property or the rendering of any management, consulting, investment
banking, advisory or other similar services) with any Affiliate or with any
director, officer or employee of any Loan Party, except, in each instance below,
to the extent permitted under the Subordinated Loan Agreement (a) as set forth
on Schedule 3.8, (b) transactions in the ordinary course of and pursuant to the
reasonable requirements of the business of a Borrower or any of its Subsidiaries
and upon fair and reasonable terms which are fully disclosed to Agent and are no
less favorable to such Borrower or such Subsidiary than would be obtained in a
comparable arm's length transaction with a Person that is not an Affiliate, (c)
payment of reasonable compensation to officers and employees for services
actually rendered to a Borrower or such Subsidiary and (d) payment of director's
fees not to exceed $500,000 in the aggregate for any fiscal year of Borrowers.
3.9 Conduct of Business. Each Borrower will not and will not
-------------------
permit any of its Subsidiaries directly or indirectly to engage in any business
other than businesses of the type described on Schedule 3.9.
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<PAGE>
3.10 Changes Relating to Indebtedness. Each Borrower will not and
--------------------------------
will not permit any of its Subsidiaries directly or indirectly to change or
amend the terms of any of its Indebtedness if the effect of such amendment is
to: (a) increase the interest rate on such Indebtedness; (b) change the dates
upon which payments of principal or interest are due on such Indebtedness; (c)
add or make more restrictive any event of default or any covenant with respect
to such Indebtedness; (d) change the prepayment provisions of such Indebtedness;
(e) change the subordination provisions thereof (or the subordination terms of
any guaranty thereof); (f) shorten the maturity date of such Indebtedness or
otherwise alter the repayment terms in a manner adverse to Borrower; or (g)
change or amend any other term if such change or amendment would materially
increase the obligations of the obligor or confer additional material rights on
the holder of such Indebtedness in a manner adverse to a Borrower, any of its
Subsidiaries or Lenders.
3.11 Fiscal Year. Neither any Borrower nor any Subsidiary of any
-----------
Borrower shall change its fiscal year; provided, however, Company may change its
fiscal year to a fiscal year ending December 31.
3.12 Press Release; Public Offering Materials. Each Borrower will
----------------------------------------
not and will not permit any of its Subsidiaries, unless required by law, to
disclose the name of Agent or any Lender in any press release (unless Agent or
such Lender has approved the content of any such disclosure) or in any
prospectus, proxy statement or other materials filed with any governmental
entity relating to a public offering of the capital stock of any Loan Party.
3.13 Subsidiaries. Each Borrower will not and will not permit any
------------
of its Subsidiaries directly or indirectly to establish, create or acquire any
new Subsidiary except in connection with an Acquisition consented to in writing
by Agent and Requisite Lenders.
3.14 Bank Accounts. Each Borrower will not and will not permit any
-------------
of its Subsidiaries to establish any new bank accounts without prior written
notice to Agent and, if requested by Agent, unless Agent and the bank at which
the account is to be opened enter into an agreement in form and substance
satisfactory to Agent regarding such bank account. Each Borrower will not and
will not permit any of its Subsidiaries to modify in any material respect, the
cash management system in effect on the Closing Date, including, without
limitation, the frequency with which funds are swept into Parent's concentration
accounts or the financial institutions at which such accounts are maintained.
3.15 Earn-Out. Each Borrower will not and will not permit any of
--------
its Subsidiaries to make any payment in respect of a Macro Earn-Out or the
ProTel Earn-Out unless the following conditions are satisfied:
(A) No Event of Default exists at the time of any such payment or
would occur as a result thereof;
(B) after giving effect to such payment, the Maximum Revolving Loan
Balance exceeds the outstanding Revolving Loans by not less than
$2,000,000; and
28
<PAGE>
(C) after giving effect to such payment, Borrowers are in compliance
on a pro forma basis with the covenants set forth in subsections 4.6 and
4.7, recomputed for the most recent quarter for which financial statements
are available.
SECTION 4
FINANCIAL COVENANTS/REPORTING
Each Borrower covenants and agrees that so long as the Revolving Loan
Commitment is in effect and until payment in full of all Obligations (other than
contingent indemnification obligations to the extent no unsatisfied claim giving
rise thereto has been asserted) and termination of all Lender Letters of Credit
and Risk Participation Agreements, unless Requisite Lenders shall otherwise give
their prior written consent, each Borrower shall perform and comply with, and
shall cause each of the other Loan Parties to perform and comply with, all
covenants in this Section 4 applicable to such Person.
4.1 Capital Expenditure Limits. The aggregate amount of all
--------------------------
Capital Expenditures of Parent and its Subsidiaries will not exceed $5,000,000
in the fiscal year ending December 31, 1999 or $3,000,000 in any fiscal year
thereafter, but in no event in excess of such lesser amount as may be permitted
under the Subordinated Loan Agreement (the "Capex Limit"). Notwithstanding the
foregoing, and to the extent permitted under the Subordinated Loan Agreement, in
the event Parent and its Subsidiaries do not expend the entire Capex Limit
permitted in any fiscal year, Parent and its Subsidiaries may carry forward to
the immediately succeeding fiscal year 50% of the unutilized portion of the
Capex Limit. All Capital Expenditures made by Parent and its Subsidiaries shall
first be applied to reduce the applicable Capex Limit and then to reduce the
carry forward from the previous fiscal year, if any. "Capital Expenditures" will
be calculated as illustrated on Exhibit 4.8(C).
4.2 [Intentionally Omitted.]
---------------------
4.3 EBITDA. Borrowers shall not permit EBITDA for any twelve (12)
month period ending on the date set forth below to be less than the amount set
forth below for such date.
Period Ending Amount
------------- ------
June 30, 1999 $14,000,000
September 30, 1999 14,500,000
December 31, 1999 15,000,000
March 31, 2000 15,000,000
June 30, 2000 15,500,000
September 30, 2000 15,500,000
December 31, 2000 15,750,000
March 31, 2001 15,750,000
29
<PAGE>
June 30, 2001 16,250,000
September 30, 2001 16,250,000
December 31, 2001 17,000,000
March 31, 2002 17,000,000
June 30, 2002 17,000,000
September 30, 2002 17,000,000
December 31, 2002 17,750,000
March 31, 2003 17,750,000
June 30, 2003 17,750,000
September 30, 2003 17,750,000
December 31, 2003 18,750,000
March 31, 2004 18,750,000
June 30, 2004 18,750,000
September 30, 2004 18,750,000
December 31, 2004 19,750,000
March 31, 2005 19,750,000
May 31, 2005 19,750,000
"EBITDA" will be calculated as illustrated on Exhibit 4.8(C).
4.4 Fixed Charge Coverage.
---------------------
(A) Borrowers shall not permit Fixed Charge Coverage for any period
set forth below to be less than the ratio set forth below for such period.
Period Ratio
------ -----
July 1, 1999 through September 30, 1999 1.15
July 1, 1999 through December 31, 1999 1.20
July 1, 1999 through March 31, 2000 1.20
30
<PAGE>
(B) Borrowers shall not permit Fixed Charge Coverage for any twelve
(12) month period ending on the last day of any calendar quarter,
commencing June 30, 2000, to be less than 1.20.
"Fixed Charge Coverage" will be calculated as illustrated on Exhibit 4.8(C).
4.5 Total Interest Coverage.
-----------------------
(A) Borrowers shall not permit Total Interest Coverage for any period
set forth below to be less than the ratio set forth below for such period.
Period Ratio
------ -----
July 1, 1999 through September 30, 1999 2.25
July 1, 1999 through December 31, 1999 2.25
July 1, 1999 through March 31, 2000 2.25
(B) Borrowers shall not permit Total Interest Coverage for any twelve
(12) month period ending on the last day of any calendar quarter ending on
the date set forth below to be less than the ratio set forth below for such
period.
Period Ending Ratio
------------- -----
June 30, 2000 2.50
September 30, 2000 2.75
December 31, 2000 2.75
March 31, 2001 & the last day
of each calendar quarter thereafter 3.00
"Total Interest Coverage" will be calculated as illustrated on Exhibit 4.8(C).
4.6 Senior Indebtedness to Adjusted EBITDA Ratio. Borrowers shall not
--------------------------------------------
permit the ratio of Senior Indebtedness calculated as of the last day of any
calendar quarter ending during any of the periods set forth below to Adjusted
EBITDA for the twelve (12) month period ending on such day to be greater than
the amount set forth below for such period.
Period Ending Amount
------------- ------
June 30, 1999 through September 30, 2000 3.00
December 31, 2000 through September 30, 2001 2.75
December 31, 2001 through September 30, 2002 2.50
December 31, 2002 and thereafter 2.25
"Senior Indebtedness" will be calculated as illustrated on Exhibit 4.8(C).
31
<PAGE>
4.7 Indebtedness to Adjusted EBITDA Ratio. Borrowers shall not permit
the ratio of Total any calendar quarter ending during any of the periods set
forth below to Adjusted EBITDA for the twelve (12) month period ending on such
day to be greater than the amount set forth below for such period.
Period Ending Amount
------------- ------
June 30, 1999 through September 30, 2000 4.00
December 31, 2000 through September 30, 2001 3.75
December 31, 2001 through September 30, 2002 3.50
December 31, 2002 and thereafter 3.25
"Total Indebtedness" will be calculated as illustrated on Exhibit 4.8(C).
4.8 Financial Statements and Other Reports. Each Borrower will
--------------------------------------
maintain, and cause each of its Subsidiaries to maintain, a system of accounting
established and administered in accordance with sound business practices to
permit preparation of financial statements in conformity with GAAP (it being
understood that monthly financial statements are not required to have footnote
disclosures). Borrowers will deliver each of the financial statements and other
reports described below to Agent (and each Lender in the case of the financial
statements and other reports described in subsections (A), (B), (C), (G), (I),
(J) and (K)).
(A) (1) Monthly Financials. As soon as available and in any event
------------------
within forty-five (45) days after the end of each month (including the last
month of Borrowers' fiscal year), Borrowers will deliver (a) the consolidated
and consolidating balance sheets of Parent and its Subsidiaries, as at the end
of such month, and the related consolidated and consolidating statements of
income and cash flow for such month and for the period from the beginning of the
then current fiscal year of Parent to the end of such month and (b) a schedule
of the outstanding Indebtedness for borrowed money of Parent and its
Subsidiaries describing in reasonable detail each such debt issue or loan
outstanding and the principal amount and amount of accrued and unpaid interest
with respect to each such debt issue or loan; provided, however, (i) the
financial statements described above for the month of December need not be
delivered until 60 days after the end of such month and (ii) Borrower shall
deliver, as soon as the earnings report for the year is released and in no event
later than February 28, a draft statement of income and schedule of capital
expenditures for the immediately preceding fiscal year.
(2) Quarterly Financials. As soon as available and in any event
--------------------
within forty-five (45) days after the end of each month (including the last
month of Borrowers' fiscal year), Borrowers will deliver (a) the consolidated
and consolidating balance sheets of Borrower and its Subsidiaries, as at the end
of such month, and the related consolidated and consolidating statements of
income, stockholders' equity and cash flow for such month and for the period
from the beginning of the then current fiscal year of Parent to the end of such
month and (b) a schedule of the
32
<PAGE>
outstanding Indebtedness for borrowed money of Parent and its Subsidiaries
describing in reasonable detail each such debt issue or loan outstanding and the
principal amount and amount of accrued and unpaid interest with respect to each
such debt issue or loan.
(B) Year-End Financials. As soon as available and in any event within
-------------------
ninety (90) days after the end of each fiscal year of Borrowers, Borrowers will
deliver (1) the consolidated and consolidating balance sheets of Parent and its
Subsidiaries, as at the end of such year, and the related consolidated and
consolidating statements of income, stockholders' equity and cash flow for such
fiscal year, (2) a schedule of the outstanding Indebtedness for borrowed money
of Parent and its Subsidiaries describing in reasonable detail each such debt
issue or loan outstanding and the principal amount and amount of accrued and
unpaid interest with respect to each such debt issue or loan and (3) a report
with respect to the consolidated financial statements from a firm of Certified
Public Accountants selected by Borrowers and reasonably acceptable to Agent (it
being agreed that any "Big 5" accounting firm is acceptable), which report shall
be prepared in accordance with Statement of Auditing Standards No. 58 (the
"Statement") entitled "Reports on Audited Financial Statements" and such report
shall be "Unqualified" (as such term is defined in such Statement).
(C) Compliance Certificate. Together with each delivery of financial
----------------------
statements of Parent and its Subsidiaries pursuant to subsections 4.8(A) and
4.8(B) above, Borrowers will deliver a fully and properly completed Compliance
Certificate (in substantially the same form as Exhibit 4.8(C)) signed on
Borrowers' behalf by their chief executive officer or chief financial officer.
(D) Accountants' Reports. Promptly upon receipt thereof, Borrowers
--------------------
will deliver copies of all significant reports submitted by Borrowers' firm of
certified public accountants in connection with each annual, interim or special
audit or review of any type of the financial statements or related internal
control systems of Borrowers made by such accountants, including any comment
letter submitted by such accountants to management in connection with their
services.
(E) Borrowing Base Certificate. As soon as available and in any
--------------------------
event within fifteen (15) Business Days after the end of each month, and from
time to time upon the request of Agent, Borrowers will deliver a Borrowing Base
Certificate (in substantially the same form as Exhibit 4.8(E)) as at the last
day of such period.
(F) Management Report. Together with each delivery of financial
-----------------
statements pursuant to subsections 4.8(A)(2) and 4.8(B), Borrowers will deliver
a management report (1) describing the operations and financial condition of
Parent and its Subsidiaries for the quarter then ended and the portion of the
current fiscal year then elapsed (or for the fiscal year then ended in the case
of year-end financials), (2) setting forth in comparative form the corresponding
figures for the corresponding periods of the previous fiscal year and the
corresponding figures from the most recent Projections for the current fiscal
year delivered pursuant to subsection 4.8(I) and (3) discussing the reasons for
any significant variations. The information above shall be presented in
reasonable detail and shall be certified on Borrowers' behalf by their chief
financial officers to the effect that such
33
<PAGE>
information fairly presents the results of operations and financial condition of
Parent and its Subsidiaries as at the dates and for the periods indicated.
(G) Collateral Value Report. Upon the request of Agent, which may be
-----------------------
made not more than once each year prior to an Event of Default and at any time
(but not more often than quarterly) while and so long as an Event of Default
shall be continuing, Borrowers will obtain and deliver to Agent a report of an
independent collateral auditor satisfactory to Agent (which may be, or be
affiliated with, a Lender) with respect to the accounts component and included
in the Borrowing Base, which report shall indicate whether or not the
information set forth in the Borrowing Base Certificate most recently delivered
is accurate and complete in all material respects based upon a review by such
auditors of the accounts (including verification with respect to the amount,
aging, identity and credit of the respective account debtors and the billing
practices of Borrowers) and inventory.
(H) Appraisals. From time to time, if Agent or any Lender determines
----------
that obtaining appraisals is necessary in order for Agent or such Lender to
comply with applicable laws or regulations, Agent will, at Borrowers' expense,
obtain appraisal reports in form and substance and from appraisers satisfactory
to Agent stating the then current fair market values of all or any portion of
the real estate owned by a Borrower or any of its Subsidiaries. In addition to
the foregoing, from time to time upon the occurrence and during the continuance
of a Default or Event of Default, Agent may require Borrowers to obtain and
deliver to Agent appraisal reports in form and substance and from appraisers
satisfactory to Agent stating the then current market values of all or any
portion of the real estate and personal property owned by a Borrower or any of
its Subsidiaries.
(I) Projections. As soon as available and in any event no later than
-----------
the last day of each of Borrowers' fiscal years, Borrowers will deliver
Projections of Parent and its Subsidiaries for the forthcoming three fiscal
years, year by year, and for the forthcoming fiscal year, quarter by quarter.
(J) SEC Filings and Press Releases. Promptly upon their becoming
------------------------------
available, Borrowers will deliver copies of (1) all financial statements,
reports, notices and proxy statements sent or made available by a Borrower or
any of its Subsidiaries to its security holders, (2) all regular and periodic
reports and all registration statements and prospectuses, if any, filed by a
Borrower or any of its Subsidiaries with any securities exchange or with the
Securities and Exchange Commission or any governmental or private regulatory
authority, and (3) all press releases and other statements made available by a
Borrower or any of its Subsidiaries to the public concerning developments in the
business of any such Person.
(K) Events of Default, Etc. Promptly upon any executive officer of a
----------------------
Borrower obtaining knowledge of any of the following events or conditions,
Borrowers shall (1) notify Agent, (2) deliver to Agent a certificate of
Borrowers' chief executive officer or chief financial officer specifying the
nature and period of existence of such event or condition and what action
Borrowers have taken, are taking and propose to take with respect thereto and
(3) deliver copies of all notices
34
<PAGE>
given or received by a Borrower with respect to any such event or condition: (a)
any condition or event that constitutes an Event of Default or Default; (b) any
notice that any Person has given to a Borrower or any of its Subsidiaries or any
other action taken with respect to a claimed default or event or condition of
the type referred to in subsection 6.1(B); (c) any event or condition that could
reasonably be expected to result in any Material Adverse Effect or (4) any
default or event of default under the Subordinated Loan Agreement.
(L) Litigation. Promptly upon any officer of a Borrower obtaining
----------
knowledge of (1) the institution of any action, suit, proceeding, governmental
investigation or arbitration against or affecting any Loan Party or any property
of any Loan Party not previously disclosed by Borrowers to Agent or (2) any
material development in any action, suit, proceeding, governmental investigation
or arbitration at any time pending against or affecting any Loan Party or any
property of any Loan Party which, in each case, could reasonably be expected to
have a Material Adverse Effect, Borrowers will promptly give notice thereof to
Agent and provide such other information as may be reasonably available to them
to enable Agent and its counsel to evaluate such matter.
(M) Notice of Corporate and other Changes. Borrowers shall provide
-------------------------------------
prompt written notice of (1) all jurisdictions in which a Loan Party becomes
qualified after the Closing Date to transact business, (2) any material change
after the Closing Date in the authorized and issued capital stock or other
equity interests of any Loan Party or any of their respective Subsidiaries or
any other material amendment to their charter, by-laws or other organization
documents, (3) any Subsidiary created or acquired by any Loan Party after the
Closing Date, such notice, in each case, to identify the applicable
jurisdictions, capital structures or Subsidiaries, as applicable, and (4) any
other event that occurs after the Closing Date which would cause any of the
representations and warranties in Section 5 of this Agreement or in any other
Loan Document to be untrue or misleading in any material respect.
(N) Other Information. With reasonable promptness, Borrowers will
-----------------
deliver such other information and data with respect to any Loan Party or any
Subsidiary of any Loan Party as from time to time may be reasonably requested by
Agent, including, without limitation, any statements, reports or notices
required to be delivered pursuant to the Subordinated Loan Agreement.
4.9 Accounting Terms; Utilization of GAAP for Purposes of
-----------------------------------------------------
Calculations Under Agreement. For purposes of this Agreement, all accounting
- ----------------------------
terms not otherwise defined herein shall have the meanings assigned to such
terms in conformity with GAAP. Financial statements and other information
furnished to Agent pursuant to subsection 4.8 shall be prepared in accordance
with GAAP as in effect at the time of such preparation. No "Accounting Changes"
(as defined below) shall affect financial covenants, standards or terms in this
Agreement; provided that Borrowers shall prepare footnotes to each Compliance
--------
Certificate and the financial statements required to be delivered hereunder that
show the differences between the financial statements delivered (which reflect
such Accounting Changes) and the basis for calculating financial covenant
compliance (without reflecting such Accounting Changes). "Accounting Changes"
means: (a) changes in accounting principles required by GAAP and implemented by
a Borrower; (b) changes in accounting
35
<PAGE>
principles recommended by Borrower's certified public accountants and
implemented by a Borrower; and (c) changes in carrying value of a Borrower's or
any of its Subsidiaries' assets, liabilities or equity accounts resulting from
(i) the application of purchase accounting principles (A.P.B. 16 and/or 17 and
EITF 88-16 and FASB 109) to the Related Transactions or (ii) as the result of
any other adjustments that, in each case in (i) and (ii), were applicable to,
but not included in, the Pro Forma. All such adjustments described in clause (c)
above resulting from expenditures made subsequent to the Closing Date
(including, but not limited to, capitalization of costs and expenses or payment
of pre-Closing Date liabilities) shall be treated as expenses in the period the
expenditures are made.
SECTION 5
REPRESENTATIONS AND WARRANTIES
To induce Agent and Lenders to enter into this Agreement, to make
Loans and to issue Lender Letters of Credit and Risk Participation Agreements,
each Borrower represents and warrants to Agent and each Lender that the
following statements are and, after giving effect to the Related Transactions,
will be true, correct and complete:
5.1 Disclosure. No representation or warranty of any Loan Party
----------
contained in this Agreement, the financial statements referred to in subsection
5.5, the other Related Transactions Documents or any other document, certificate
or written statement furnished to Agent or any Lender by or on behalf of any
such Person for use in connection with the Loan Documents or the Related
Transactions Documents contains any untrue statement of a material fact or
omitted, omits or will omit to state a material fact necessary in order to make
the statements contained herein or therein not misleading in light of the
circumstances in which the same were made.
5.2 No Material Adverse Effect. Since April 30, 1998 with respect
--------------------------
to Company and December 31, 1998 with respect to any other Loan Party, there
have been no events or changes in facts or circumstances affecting any such Loan
Party which individually or in the aggregate have had or could reasonably be
expected to have a Material Adverse Effect and that have not been disclosed
herein or in the attached Schedules.
5.3 No Default. The consummation of the Related Transactions does
----------
not and will not violate or conflict with any laws, rules, regulations or orders
of any governmental authority or violate, conflict with, result in a breach of,
or constitute a default (with due notice or lapse of time or both) under any
Contractual Obligation of any Loan Party except if such violations, conflicts,
breaches or defaults have either been waived on or before the Closing Date or
could not reasonably be expected to have, either individually or in the
aggregate, a Material Adverse Effect.
5.4 Organization, Powers, Capitalization and Good Standing.
------------------------------------------------------
36
<PAGE>
(A) Organization and Powers. Each of the Loan Parties (other than
-----------------------
Dormant Foreign Subsidiaries, as to which no representation is provided) is a
corporation or other entity duly organized, validly existing and in good
standing under the laws of its jurisdiction of incorporation or formation (which
jurisdiction is set forth on Schedule 5.4(A)). Each of the Loan Parties has all
requisite corporate power and authority to own and operate its properties, to
carry on its business as now conducted and proposed to be conducted, to enter
into each Related Transactions Document to which it is a party and to carry out
the Related Transactions.
(B) Capitalization. The authorized capital stock or other equity
--------------
securities of each of the Loan Parties (other than Dormant Foreign Subsidiaries,
as to which no representation is provided) is as set forth on Schedule 5.4(B).
All issued and outstanding shares of capital stock or other equity securities of
each of the Loan Parties are duly authorized and validly issued, fully paid,
nonassessable and such shares or securities were issued in compliance with all
applicable foreign, state and federal laws concerning the issuance of
securities. All issued and outstanding shares of capital stock or other equity
securities of Parent's Subsidiaries are free and clear of all Liens other than
those in favor of Agent, for the benefit of Agent and Lenders. The capital
stock of each of the Loan Parties, other than Parent, is owned by the
stockholders and in the amounts set forth on Schedule 5.4(B). No shares of the
capital stock or other equity securities of any Loan Party, other than those
described above, are issued and outstanding. Except as set forth on Schedule
5.4(B), there are no preemptive or other outstanding rights, options, warrants,
conversion rights or similar agreements or understandings for the purchase or
acquisition from any Loan Party, of any shares of capital stock or other
securities of any such entity.
(C) Binding Obligation. This Agreement is, and the other Related
------------------
Transactions Documents when executed and delivered will be, the legally valid
and binding obligations of the applicable parties thereto, each enforceable
against each of such parties, as applicable, in accordance with their respective
terms, except as such enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or other similar laws affecting the
enforcement of creditors' rights generally and by equitable principles.
(D) Qualification. Each of the Loan Parties (other than Dormant
-------------
Foreign Subsidiaries, as to which no representation is provided) is duly
qualified and in good standing wherever necessary to carry on its business and
operations, except in jurisdictions in which the failure to be qualified and in
good standing could not reasonably be expected to have a Material Adverse
Effect. All jurisdictions in which each Loan Party (other than Dormant Foreign
Subsidiaries, as to which no representation is provided) is qualified to do
business are set forth on Schedule 5.4(D).
5.5 Financial Statements and Projections. All financial statements
------------------------------------
concerning Company, Parent and its Subsidiaries which have been or will
hereafter be furnished to Agent pursuant to this Agreement, including those
listed below, have been or will be prepared in accordance with GAAP consistently
applied (except as disclosed therein) and do or will present fairly the
financial condition of the corporations covered thereby as at the dates thereof
and the results of their operations for the periods then ended.
37
<PAGE>
(A) The consolidated balance sheets at December 31, 1998 and the
related statement of income of Parent and its Subsidiaries, for the fiscal
year then ended, audited by Ernst & Young LLP.
(B) The consolidated balance sheet at March 31, 1999 and the related
statement of income of Parent and its Subsidiaries for the three (3) months
then ended.
(C) The consolidated balance sheets at April 30, 1998 and the related
statement of income of Company and its Subsidiaries, for the fiscal year
then ended, audited by Aronson, Fetridge & Weigle.
(D) The consolidated balance sheet at March 31, 1999 and the related
statement of income of Company and its Subsidiaries for the eleven (11)
months then ended.
The Projections delivered on or prior to the Closing Date and the updated
Projections delivered pursuant to subsection 4.8(I) represent and will represent
as of the date thereof the good faith estimate of Borrowers and their senior
management concerning the most probable course of its business, it being
recognized that Agent and Lenders acknowledge that projections as to future
events are not be viewed as facts and that actual results during the period or
periods covered thereby may differ from projected results.
5.6 Intellectual Property. Each Borrower and each of its
---------------------
Subsidiaries owns, is licensed to use or otherwise has the right to use, all
patents, trademarks, trade names, copyrights, technology, know-how and processes
used in or necessary for the conduct of its business as currently conducted that
are material to the condition (financial or other), business or operations of
such Borrower or its Subsidiaries (collectively called "Intellectual Property")
and all such Intellectual Property is identified on Schedule 5.6 and fully
protected and/or duly and properly registered, filed or issued in the
appropriate office and jurisdictions for such registrations, filings or
issuances. Except as disclosed in Schedule 5.6, the use of such Intellectual
Property by each Borrower and its Subsidiaries does not and has not been alleged
by any Person to infringe on the rights of any Person.
5.7 Investigations, Audits, Etc. Except as set forth on Schedule
---------------------------
5.7, neither Borrower nor any of its Subsidiaries, is the subject of any review
or audit by the Internal Revenue Service or any governmental investigation
concerning the violation or possible violation of any law.
5.8 Employee Matters. Except as set forth on Schedule 5.8, (a) no
----------------
Loan Party nor any of their respective employees is subject to any collective
bargaining agreement, (b) no petition for certification or union election is
pending with respect to the employees of any Loan Party and no union or
collective bargaining unit has sought such certification or recognition with
respect to the employees of any Loan Party and (c) there are no strikes,
slowdowns, work stoppages or
38
<PAGE>
controversies pending or, to the best knowledge of Borrowers after due inquiry,
threatened between any Loan Party and its respective employees, other than
employee grievances arising in the ordinary course of business which could not
reasonably be expected to have, either individually or in the aggregate, a
Material Adverse Effect. Except as set forth on Schedule 5.8, neither a Borrower
nor any of its Subsidiaries is party to an employment contract.
5.9 Solvency. Each Borrower: (a) owns and will own assets the
--------
fair saleable value of which are (i) greater than the total amount of
liabilities (including contingent liabilities) of such Borrower and (ii) greater
than the amount that will be required to pay the probable liabilities of such
Borrower's then existing debts as they become absolute and matured considering
all financing alternatives and potential asset sales reasonably available to
such Borrower; (b) has capital that is not unreasonably small in relation to its
business as presently conducted or after giving effect to any contemplated
transaction; and (c) does not intend to incur and does not believe that it will
incur debts beyond its ability to pay such debts as they become due.
5.10 Year 2000. Each Borrower has made an assessment of the
---------
microchip and computer-based systems and the software used in its business and
the business of its Subsidiaries and based upon such assessment believes that it
will be "Year 2000 Compliant" by January 1, 2000. For purposes of this
paragraph, "Year 2000 Compliant" means that all software, embedded microchips
and other processing capabilities utilized by, and material to the business
operations or financial condition of, such Borrower are able to interpret,
store, transmit, receive and manipulate data on and involving all calendar dates
correctly and without causing any abnormal ending scenarios in relation to dates
in and after the Year 2000. From time to time, at the request of Agent,
Borrowers shall provide to Lenders such updated information as is requested
regarding the status of its efforts to become Year 2000 Compliant.
5.11 Use of Proceeds; Margin Regulation. No Borrower is engaged
-----------------------------------
principally, or as one of its important activities, in the business of extending
credit for the purpose of purchasing or carrying margin stock (within the
meaning of Regulation U or X of the Board of Governors of the Federal Reserve
System) and no part of the proceeds of any Loan will be used to acquire any
margin stock.
5.12 Purchase Agreement and Subordinated Loan Agreement. As of the
--------------------------------------------------
Closing Date, all representations and warranties of Parent set forth in the
Purchase Agreement and in the Subordinated Loan Agreement and, to the best of
Borrowers' knowledge, of Seller in the Purchase Agreement, are true, correct and
complete in all material respects and are hereby incorporated herein by this
reference thereto as if fully set forth herein.
5.13 Dormant Foreign Subsidiaries. No Dormant Foreign Subsidiary
----------------------------
owns any assets, conducts any business or has any liabilities or obligations.
Neither a Borrower nor any Domestic Subsidiary has any liabilities or
obligations in respect of a Dormant Foreign Subsidiary.
39
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SECTION 6
DEFAULT, RIGHTS AND REMEDIES
6.1 Event of Default. "Event of Default" shall mean the occurrence
----------------
or existence of any one or more of the following:
(A) Payment. (1) Failure to pay any installment or other payment of
-------
principal of any Loan when due, or to repay Revolving Loans to reduce their
balance to the Maximum Revolving Loan Balance or to reimburse Agent for any
payment made by Agent under or in respect of any Lender Letters of Credit or
Risk Participation Agreements when due or (2) failure to pay, within five (5)
days after the due date, any interest on any Loan or (3) failure to pay, within
five (5) days after written notice from Agent or any Lender, any fees payable
pursuant to subsections 1.2(B) or 1.2(C) hereof, or any other amount due under
this Agreement or any of the other Loan Documents; or
(B) Default in Other Agreements. (1) Failure of a Borrower or any of
---------------------------
its Subsidiaries to pay when due or within any applicable grace period any
principal or interest on Indebtedness (other than the Loans) or any Contingent
Obligations or (2) breach or default of a Borrower or any of its Subsidiaries,
or the occurrence of any condition or event, with respect to any Indebtedness
(other than the Loans) or any Contingent Obligations, if the effect of such
failure to pay, breach, default or occurrence is to cause or to permit the
holder or holders then to cause (without regard to any intercreditor or
subordination provision), Indebtedness and/or Contingent Obligations having an
individual principal amount in excess of $400,000 or having an aggregate
principal amount in excess of $900,000 to become or be declared due prior to
their stated maturity; or
(C) Breach of Certain Provisions. Failure of a Borrower to perform or
----------------------------
comply with any term or condition contained in that portion of subsection 2.2
relating to a Borrower's obligation to maintain insurance, subsection 2.3,
subsection 2.6, Section 3 or Section 4; or
(D) Breach of Warranty. Any representation, warranty, certification
------------------
or other statement made by any Loan Party in any Loan Document or in any
statement or certificate at any time given by such Person in writing pursuant or
in connection with any Loan Document is false in any material respect on the
date made; or
(E) Other Defaults Under Loan Documents. A Borrower or any other
-----------------------------------
Loan Party defaults in the performance of or compliance with any term contained
in this Agreement or the other Loan Documents to which it is a party and such
default is not remedied or waived within thirty (30) days after receipt by
Borrowers of notice from Agent or Requisite Lenders of such default (other than
occurrences described in other provisions of this subsection 6.1 for which a
different grace or cure period is specified or which constitute immediate Events
of Default); or
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(F) Involuntary Bankruptcy; Appointment of Receiver, Etc. (1) A court
----------------------------------------------------
enters a decree or order for relief with respect to a Borrower or any of its
Subsidiaries (other than a Dormant Foreign Subsidiary) in an involuntary case
under the Bankruptcy Code, which decree or order is not stayed or other similar
relief is not granted under any applicable federal or state law; or (2) the
continuance of any of the following events for sixty (60) days unless dismissed,
bonded or discharged: (a) an involuntary case is commenced against a Borrower or
any of its Subsidiaries (other than a Dormant Foreign Subsidiary), under any
applicable bankruptcy, insolvency or other similar law now or hereafter in
effect; or (b) a decree or order of a court for the appointment of a receiver,
liquidator, sequestrator, trustee, custodian or other officer having similar
powers over a Borrower or any of its Subsidiaries (other than a Dormant Foreign
Subsidiary), or over all or a substantial part of its property, is entered; or
(c) an interim receiver, trustee or other custodian is appointed without the
consent of a Borrower or any of its Subsidiaries (other than a Dormant Foreign
Subsidiary), for all or a substantial part of the property of a Borrower or any
such Subsidiary; or
(G) Voluntary Bankruptcy; Appointment of Receiver, Etc. (1) A
--------------------------------------------------
Borrower or any of its Subsidiaries (other than a Dormant Foreign Subsidiary)
commences a voluntary case under the Bankruptcy Code, or consents to the entry
of an order for relief in an involuntary case or to the conversion of an
involuntary case to a voluntary case under any such law or consents to the
appointment of or taking possession by a receiver, trustee or other custodian
for all or a substantial part of its property; or (2) a Borrower or any of its
Subsidiaries (other than a Dormant Foreign Subsidiary) makes any assignment for
the benefit of creditors; or (3) the Board of Directors of a Borrower or any of
its Subsidiaries (other than a Dormant Foreign Subsidiary) adopts any resolution
or otherwise authorizes action to approve any of the actions referred to in this
subsection 6.1(G); or
(H) Judgment and Attachments. Any money judgment, writ or warrant of
------------------------
attachment, or similar process involving (1) an amount in any individual case in
excess of $1,000,000 or (2) an amount in the aggregate at any time in excess of
$3,000,000 (in either case to the extent not adequately covered by insurance as
to which the insurance company has acknowledged coverage) is entered or filed
against a Borrower or any of its Subsidiaries or any of their respective assets
and remains undischarged, unvacated, unbonded or unstayed for a period of thirty
(30) days or in any event later than five (5) Business Days prior to the date of
any proposed sale thereunder; or
(I) Dissolution. Any order, judgment or decree is entered against a
-----------
Borrower or any of its Subsidiaries (other than a Dormant Foreign Subsidiary)
decreeing the dissolution or split up of a Borrower or that Subsidiary and such
order remains undischarged or unstayed for a period in excess of fifteen (15)
days; or
(J) Solvency. A Borrower ceases to be solvent (as represented by
--------
Borrowers in subsection 5.9) or admits in writing its present or prospective
inability to pay its debts as they become due; or
41
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(K) Injunction. A Borrower or any of its Subsidiaries is enjoined,
----------
restrained or in any way prevented by the order of any court or any
administrative or regulatory agency from conducting all or any material part of
its business for more than fifteen (15) days; or
(L) ERISA; Pension Plans. (1) A Borrower or any of its Affiliates
--------------------
fails to make full payment when due of all amounts which, under the provisions
of any employee benefit plans or any applicable provisions of the IRC, any such
Person is required to pay as contributions thereto and such failure results in
or is likely to result in a Material Adverse Effect; or (2) an accumulated
funding deficiency in excess of $250,000 occurs or exists, whether or not
waived, with respect to any such employee benefit plans; or (3) any employee
benefit plan loses its status as a qualified plan under the IRC which results in
or could reasonably be expected to result in a Material Adverse Effect; or
(M) Environmental Matters. A Borrower or any of its Subsidiaries
---------------------
fails to: (1) obtain or maintain any operating licenses or permits required by
environmental authorities; (2) begin, continue or complete any remediation
activities as required by any environmental authorities; (3) store or dispose of
any hazardous materials in accordance with applicable environmental laws and
regulations; or (4) comply with any environmental laws; if any such failure,
individually or in the aggregate, could reasonably be expected to have a
Material Adverse Effect; or
(N) Invalidity of Loan Documents. Any of the Loan Documents for any
----------------------------
reason, other than a partial or full release in accordance with the terms
thereof, ceases to be in full force and effect or is declared to be null and
void, or any Loan Party denies that it has any further liability under any Loan
Documents to which it is party, or gives notice to such effect, other than a
termination in accordance with the terms thereof; or
(O) Damage; Strike; Casualty. Any material damage to, or loss, theft
------------------------
or destruction of, any Collateral, whether or not insured, or any strike,
lockout, labor dispute, embargo, condemnation, act of God or public enemy, or
other casualty which causes, for more than fifteen (15) consecutive days, the
cessation or substantial curtailment of revenue producing activities at any
facility of a Borrower or any of its Subsidiaries, if any such event or
circumstance could reasonably be expected to have a Material Adverse Effect; or
(P) Licenses and Permits. The loss, suspension or revocation of, or
--------------------
failure to renew, any license or permit now held or hereafter acquired by a
Borrower or any of its Subsidiaries, if such loss, suspension, revocation or
failure to renew could reasonably be expected to have a Material Adverse Effect;
or
(Q) Failure of Security. Agent, for the benefit of Agent and
-------------------
Lenders, does not have or ceases to have a valid and perfected first priority
security interest in any material portion of the Collateral (subject to
Permitted Encumbrances) or any substantial portion thereof, in each case, for
any reason other than the failure of Agent to take any action within its
control; or
42
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(R) Subordination. The subordination provisions of the Subordination
-------------
and Intercreditor Agreement among Agent, Borrowers and holders of the
Subordinated Note or any agreement or instrument governing any Subordinated
Indebtedness shall for any reason be revoked or invalidated, or otherwise cease
to be in full force and effect, or any Person shall contest in any manner the
validity or enforceability thereof or deny that it has any further liability or
obligation thereunder, or the Obligations shall for any reason shall not have
the priority contemplated by such Subordination and Intercreditor Agreement this
Agreement or such subordination provisions; or
(S) Change in Control. (1) Parent ceases to beneficially own and
-----------------
control, directly or indirectly, all of the issued and outstanding capital stock
or other equity securities of each Subsidiary of Parent (other than Company and
Subsidiaries thereof) or (2) Parent ceases to beneficially own and control,
directly or indirectly, at least 99.7% (or such greater percentage as Parent may
own) of the issued and outstanding capital stock or other equity securities of
Company and Subsidiaries thereof, free and clear of all Liens other than Liens
in favor of Agent or (3) a "Change in Control" or a "Transfer Affecting the
Company's Business" (as each is defined in the Subordinated Loan Agreement)
shall occur or (4) at any time on or after the fifth anniversary hereof, Parent
no longer has any of its securities registered under the Securities Exchange Act
of 1934.
6.2 Suspension of Commitments. Upon the occurrence of any Default
-------------------------
or Event of Default, Agent and each Lender without notice or demand, may
immediately cease making additional Loans and issuing Lender Letters of Credit
and Risk Participation Agreements and cause its obligation to lend its Pro Rata
Share of the Revolving Loan Commitment to be suspended; provided that, in the
--------
case of a Default, if the subject condition or event is waived, cured or removed
by Requisite Lenders within any applicable grace or cure period, any suspended
portion of the Revolving Loan Commitment shall be reinstated. Each Lender may
alternatively suspend only a portion of its obligation to lend its Pro Rata
Share of the Revolving Loan Commitment.
6.3 Acceleration. Upon the occurrence of any Event of Default
------------
described in the foregoing subsections 6.1(F) or 6.1(G), the unpaid principal
amount of and accrued interest and fees on the Term Loan and the Revolving
Loans, payments under the Lender Letters of Credit and Risk Participation
Agreements and all other Obligations shall automatically become immediately due
and payable, without presentment, demand, protest, notice of intent to
accelerate, notice of acceleration or other requirements of any kind, all of
which are hereby expressly waived by Borrowers, and the obligations of Agent and
Lenders to make Revolving Loans and issue Lender Letters of Credit and Risk
Participation Agreements shall thereupon terminate. Upon the occurrence and
during the continuance of any other Event of Default, Agent may, and upon
written demand by Requisite Lenders shall, by written notice to Borrowers (a)
declare all or any portion of the Loans and all or some of the other Obligations
to be, and the same shall forthwith become, immediately due and payable together
with accrued interest thereon, and the obligations of Agent and Lenders to make
Revolving Loans and issue Lender Letters of Credit and Risk Participation
Agreements shall thereupon terminate and (b) demand that Borrowers immediately
deposit with Agent an amount equal to the aggregate outstanding Risk
Participation Liability to enable Agent to make payments
43
<PAGE>
under the Lender Letters of Credit and Risk Participation Agreements when
required and such amount shall become immediately due and payable.
6.4 Performance by Agent. If a Borrower shall fail to perform any
--------------------
covenant, duty or agreement contained in any of the Loan Documents, Agent may
perform or attempt to perform such covenant, duty or agreement on behalf of
Borrowers after the expiration of any cure or grace periods set forth herein.
In such event, Borrowers shall, at the request of Agent, promptly pay any amount
reasonably expended by Agent in such performance or attempted performance to
Agent, together with interest thereon at the highest rate of interest in effect
upon the occurrence of an Event of Default as specified in subsection 1.2(E)
from the date of such expenditure until paid. Notwithstanding the foregoing, it
is expressly agreed that Agent shall not have any liability or responsibility
for the performance of any obligation of Borrowers under this Agreement or any
other Loan Document.
SECTION 7
CONDITIONS TO LOANS
The obligations of Lenders to make Loans and of Agent to issue Lender
Letters of Credit and Risk Participation Agreements are subject to satisfaction
of all of the applicable conditions set forth below.
7.1 Conditions to Initial Loans. The obligations of Lenders to
---------------------------
make the initial Loans and of Agent to issue any Lender Letters of Credit and
Risk Participation Agreements on the Closing Date are, in addition to the
conditions precedent specified in subsection 7.2, subject to the delivery of all
documents listed on Schedule 7.1, all in form and substance satisfactory to
Agent.
7.2 Conditions to All Loans. The obligations of Lenders to make
-----------------------
Loans and of Agent to issue Lender Letters of Credit and Risk Participation
Agreements on any date ("Funding Date") are subject to the further conditions
precedent set forth below.
(A) Agent shall have received, in accordance with the provisions of
subsection 1.1, a notice requesting an advance of a Revolving Loan or issuance
of a Lender Letter of Credit or Risk Participation Agreement.
(B) The representations and warranties contained in Section 5 of this
Agreement and elsewhere herein and in the Loan Documents shall be (and each
request by Borrowers for a Loan or a Lender Letters of Credit and Risk
Participation Agreement shall constitute a representation and warranty by
Borrowers that such representations and warranties are) true, correct and
complete in all material respects on and as of that Funding Date to the same
extent as though made on and as of that date, except for any representation or
warranty (i) limited by its terms to a specific date and taking into account any
amendments to the Schedules or Exhibits as a result of any disclosures made
44
<PAGE>
in writing by Borrower to Agent after the Closing Date and approved by Agent in
writing or (ii) not true and correct due to events or conditions, the occurrence
or existence of which are not prohibited by this Agreement or the other Loan
Documents and which do not in and of themselves constitute a Default or Event of
Default.
(C) No event shall have occurred and be continuing or would result
from the consummation of the borrowing contemplated (or notice requesting
issuance of a Lender Letters of Credit and Risk Participation Agreement) that
would constitute an Event of Default or a Default.
(D) No order, judgment or decree of any court, arbitrator or
governmental authority shall purport to enjoin or restrain any Lender from
making any Loan or Agent from issuing any Lender Letter of Credit or Risk
Participation Agreement.
SECTION 8
ASSIGNMENT AND PARTICIPATION
8.1 Assignments and Participations in Loans and Notes. Each Lender
-------------------------------------------------
(including Heller) may from time to time assign, subject to the terms of an
Assignment and Acceptance Agreement, its rights and delegate its obligations
under this Agreement to another Person, provided that (a) such Lender (excluding
--------
Heller) shall first obtain the written consent of Agent, which consent shall not
be unreasonably withheld and, provided no Default or Event of Default has
occurred and is continuing, Borrowers; provided Borrowers' consent shall not be
required with respect to an assignment by a Lender to an Affiliate thereof; (b)
the Pro Rata Share of the Revolving Loan Commitment and Term Loan being assigned
shall in no event be less than the lesser of (i) $5,000,000 and (ii) the entire
amount of the Pro Rata Share of the Revolving Loan Commitment and Term Loan of
the assigning Lender; and (c) upon the consummation of each such assignment the
assigning Lender shall pay Agent an administrative fee of $3,500. The
administrative fee referred to in clause (c) of the preceding sentence shall not
apply to an assignment from a Lender to an affiliate of such Lender. In the case
of an assignment authorized under this subsection 8.1, the assignee shall have,
to the extent of such assignment, the same rights, benefits and obligations as
it would if it were an initial Lender hereunder. The assigning Lender shall be
relieved of its obligations hereunder with respect to its Pro Rata Share of the
Revolving Loan Commitment or assigned portion thereof. Each Borrower hereby
acknowledges and agrees that any assignment will give rise to a direct
obligation of Borrowers to the assignee and that the assignee shall be
considered to be a "Lender".
Each Lender (including Heller) may sell participations in all or any
part of its Pro Rata Share of the Revolving Loan Commitment and the Term Loan to
another Person, provided that (a) such Lender (excluding Heller) shall first
--------
obtain the prior written consent of Agent, which consent shall not be
unreasonably withheld; and (b) any such participation shall be in a minimum
amount of $5,000,000, and provided, further, that all amounts payable by
-------- -------
Borrowers hereunder shall be determined as if that Lender had not sold such
participation and the holder of any such participation shall not be entitled to
require such Lender to take or omit to take any action hereunder
45
<PAGE>
except action directly effecting (i) any reduction in the principal amount,
interest rate or fees payable with respect to any Loan in which such holder
participates; (ii) any increase of the aggregate principal amount of the Loans;
(iii) any extension of the Expiry Date, any extension of the date on which any
Scheduled Installment is to be paid or any extension of any date fixed for any
payment of interest or fees payable with respect to any Loan in which such
holder participates; (iv) any change of the percentage of Lenders which shall be
required for Lenders or any of them to take any action hereunder; (v) any
release of Collateral (except if the sale, disposition or release of such
Collateral is permitted under subsection 3.7 or 8.2 or any other Loan Document);
(vi) any amendment or waiver of this subsection 8.1 or the definitions of the
terms used in this subsection 8.1 insofar as the definitions affect the
substance of this subsection 8.1; (vii) any consent to the assignment,
delegation or other transfer by any Loan Party of any of its rights and
obligations under any Loan Document; (viii) any change in the form in which
interest is required to be paid; and (ix) any increase in any advance rate set
forth in the Borrowing Base Certificate. Each Borrower hereby acknowledges and
agrees that any participation will give rise to a direct obligation of Borrowers
to the participant, and the participant shall for purposes of subsections 1.8,
1.9, 8.4 and 9.1 be considered to be a "Lender".
Except as otherwise provided in this subsection 8.1 no Lender shall,
as between Borrowers and that Lender, be relieved of any of its obligations
hereunder as a result of any sale, assignment, transfer or negotiation of, or
granting of a participation in, all or any part of the Loans, the Notes or other
Obligations owed to such Lender. Each Lender may furnish any information
concerning a Borrower and its Subsidiaries in the possession of that Lender from
time to time to assignees and participants (including prospective assignees and
participants), subject to the provisions of subsection 9.13.
Each Borrower agrees that it will use its best efforts to assist and
cooperate with Agent and any Lender in any manner reasonably requested by Agent
or such Lender to effect the sale of a participation or an assignment described
above, including without limitation assistance in the preparation of appropriate
disclosure documents or placement memoranda.
Agent shall provide Borrowers with written notice of the name and
address of any new Lender after the date hereof.
Notwithstanding anything contained in this Agreement to the contrary,
so long as the Requisite Lenders shall remain capable of making LIBOR Loans, no
Person shall become a "Lender" hereunder unless such Person shall also be
capable of making LIBOR Loans.
8.2 Agent.
-----
(A) Appointment. Each Lender hereby designates and appoints Heller
-----------
as its Agent under this Agreement and the other Loan Documents, and each Lender
hereby irrevocably authorizes Agent to take such action or to refrain from
taking such action on its behalf under the provisions of this Agreement and the
other Loan Documents and to exercise such powers as are set forth herein or
therein, together with such other powers as are reasonably incidental thereto.
Agent
46
<PAGE>
is authorized and empowered to amend, modify, or waive any provisions of this
Agreement or the other Loan Documents on behalf of Lenders subject to the
requirement that certain of Lenders' consent be obtained in certain instances as
provided in subsections 8.2, 8.3 and 9.2. Agent agrees to act as such on the
express conditions contained in this subsection 8.2. The provisions of this
subsection 8.2 are solely for the benefit of Agent and Lenders and neither
Borrowers nor any Loan Party shall have any rights as a third party beneficiary
of any of the provisions hereof. In performing its functions and duties under
this Agreement, Agent shall act solely as agent of Lenders and does not assume
and shall not be deemed to have assumed any obligation toward or relationship of
agency or trust with or for Borrowers or any other Loan Party. Agent may perform
any of its duties hereunder, or under the Loan Documents, by or through its
agents or employees.
(B) Nature of Duties. The duties of Agent shall be mechanical and
----------------
administrative in nature. Agent shall not have by reason of this Agreement a
fiduciary relationship in respect of any Lender. Nothing in this Agreement or
any of the Loan Documents, express or implied, is intended to or shall be
construed to impose upon Agent any obligations in respect of this Agreement or
any of the Loan Documents except as expressly set forth herein or therein. Each
Lender shall make its own independent investigation of the financial condition
and affairs of each Borrower in connection with the extension of credit
hereunder and shall make its own appraisal of the creditworthiness of Borrowers,
and Agent shall have no duty or responsibility, either initially or on a
continuing basis, to provide any Lender with any credit or other information
with respect thereto (other than as expressly required herein). If Agent seeks
the consent or approval of any Lenders to the taking or refraining from taking
any action hereunder, then Agent shall send notice thereof to each Lender. Agent
shall promptly notify each Lender any time that the Requisite Lenders have
instructed Agent to act or refrain from acting pursuant hereto.
(C) Rights, Exculpation, Etc. Neither Agent nor any of its officers,
-------------------------
directors, employees or agents shall be liable to any Lender for any action
taken or omitted by them hereunder or under any of the Loan Documents, or in
connection herewith or therewith, except that Agent shall be liable with respect
to its own gross negligence or willful misconduct. Agent shall not be liable for
any apportionment or distribution of payments made by it in good faith and if
any such apportionment or distribution is subsequently determined to have been
made in error the sole recourse of any Lender to whom payment was due but not
made, shall be to recover from other Lenders any payment in excess of the amount
to which they are determined to be entitled (and such other Lenders hereby agree
to return to such Lender any such erroneous payments received by them). In
performing its functions and duties hereunder, Agent shall exercise the same
care which it would in dealing with loans for its own account, but Agent shall
not be responsible to any Lender for any recitals, statements, representations
or warranties herein or for the execution, effectiveness, genuineness, validity,
enforceability, collectibility, or sufficiency of this Agreement or any of the
Loan Documents or the transactions contemplated thereby, or for the financial
condition of any Loan Party. Agent shall not be required to make any inquiry
concerning either the performance or observance of any of the terms, provisions
or conditions of this Agreement or any of the Loan Documents or the financial
condition of any Loan Party, or the existence or possible existence of any
Default or Event of Default. Agent may at any time request instructions from
Lenders with respect
47
<PAGE>
to any actions or approvals which by the terms of this Agreement or of any of
the Loan Documents Agent is permitted or required to take or to grant, and if
such instructions are promptly requested, Agent shall be absolutely entitled to
refrain from taking any action or to withhold any approval and shall not be
under any liability whatsoever to any Person for refraining from any action or
withholding any approval under any of the Loan Documents until it shall have
received such instructions from Requisite Lenders or all of the Lenders, as
applicable. Without limiting the foregoing, no Lender shall have any right of
action whatsoever against Agent as a result of Agent acting or refraining from
acting under this Agreement, the Notes, or any of the other Loan Documents in
accordance with the instructions of Requisite Lenders.
(D) Reliance. Agent shall be entitled to rely, and shall be fully
--------
protected in relying, upon any written or oral notices, statements,
certificates, orders or other documents or any telephone message or other
communication (including any writing, telex, telecopy or telegram) believed by
it in good faith to be genuine and correct and to have been signed, sent or made
by the proper Person, and with respect to all matters pertaining to this
Agreement or any of the Loan Documents and its duties hereunder or thereunder,
upon advice of counsel selected by it. Agent shall be entitled to rely upon the
advice of legal counsel, independent accountants, and other experts selected by
Agent in its sole discretion.
(E) Indemnification. Lenders will reimburse and indemnify Agent for
---------------
and against any and all liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses (including, without limitation,
attorneys' fees and expenses), advances or disbursements of any kind or nature
whatsoever which may be imposed on, incurred by, or asserted against Agent in
any way relating to or arising out of this Agreement or any of the Loan
Documents or any action taken or omitted by Agent under this Agreement or any of
the Loan Documents, in proportion to each Lender's Pro Rata Share, but only to
the extent that any of the foregoing is not reimbursed by Borrowers; provided,
--------
however, that no Lender shall be liable for any portion of such liabilities,
- -------
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses, advances or disbursements resulting from Agent's gross negligence or
willful misconduct. If any indemnity furnished to Agent for any purpose shall,
in the opinion of Agent, be insufficient or become impaired, Agent may call for
additional indemnity and cease, or not commence, to do the acts indemnified
against until such additional indemnity is furnished. The obligations of Lenders
under this subsection 8.2(E) shall survive the payment in full of the
Obligations and the termination of this Agreement.
(F) Heller Individually. With respect to its obligations under the
-------------------
Revolving Loan Commitment, the Loans made by it, and the Notes issued to it,
Heller shall have and may exercise the same rights and powers hereunder and is
subject to the same obligations and liabilities as and to the extent set forth
herein for any other Lender. The terms "Lenders" or "Requisite Lenders" or any
similar terms shall, unless the context clearly otherwise indicates, include
Heller in its individual capacity as a Lender or one of the Requisite Lenders.
Heller may lend money to, acquire equity or other ownership interests in, and
generally engage in any kind of banking, trust or other business with any Loan
Party as if it were not acting as Agent pursuant hereto.
48
<PAGE>
(G) Successor Agent.
---------------
(1) Resignation. Agent may resign from the performance of all its
-----------
agency functions and duties hereunder at any time by giving at least thirty (30)
Business Days' prior written notice to Borrowers and the Lenders. Such
resignation shall take effect upon the acceptance by a successor Agent of
appointment pursuant to clause (2) below or as otherwise provided below.
(2) Appointment of Successor. Upon any such notice of resignation
------------------------
pursuant to clause (1) above, Requisite Lenders shall, upon receipt of
Borrowers' prior consent which shall not be unreasonably withheld, appoint a
successor Agent. If a successor Agent shall not have been so appointed within
the thirty (30) Business Day period, referred to in clause (1) above, the
retiring Agent, upon notice to Borrowers, shall then appoint a successor Agent
who shall serve as Agent until such time, if any, as Requisite Lenders, upon
receipt of Borrowers' prior written consent which shall not be unreasonably
withheld, appoint a successor Agent as provided above.
(3) Successor Agent. Upon the acceptance of any appointment as
---------------
Agent under the Loan Documents by a successor Agent, such successor Agent shall
thereupon succeed to and become vested with all the rights, powers, privileges
and duties of the retiring Agent, and the retiring Agent shall be discharged
from its duties and obligations under the Loan Documents. After any retiring
Agent's resignation as Agent under the Loan Documents, the provisions of this
subsection 8.2 shall inure to its benefit as to any actions taken or omitted to
be taken by it while it was Agent under the Loan Documents.
(H) Collateral Matters.
------------------
(1) Release of Collateral. Lenders hereby irrevocably authorize
---------------------
Agent, at its option and in its discretion, to release any Lien granted to or
held by Agent upon any property covered by the Security Documents (i) upon
termination of the Revolving Loan Commitment and payment and satisfaction of all
Obligations (other than contingent indemnification obligations to the extent no
claims giving rise thereto have been asserted); (ii) constituting property being
sold or disposed of if Borrowers certify to Agent that the sale or disposition
is made in compliance with the provisions of this Agreement (and Agent may rely
in good faith conclusively on any such certificate, without further inquiry);
(iii) constituting property leased to a Borrower under a lease which has expired
or been terminated in a transaction permitted under this Agreement or is about
to expire and which has not been, and is not intended by such Borrower to be,
renewed or extended; or (iv) in accordance with the provisions of the succeeding
sentence. Agent may release or compromise any Collateral and the proceeds
thereof having a value not greater than ten percent (10%) of the total book
value of all Collateral, either in a single transaction or in a series of
related transactions, with the consent of Lenders owning an aggregate of at
least eighty percent (80%) of the Revolving Loan Commitment and the outstanding
Term Loan, provided that in no event will Agent, acting under the authority
--------
granted to it pursuant to this sentence, release or compromise Collateral or the
proceeds
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thereof having a total book value in excess of twenty percent (20%) of the book
value of all Collateral, as determined by Agent, during any calendar year.
(2) Confirmation of Authority; Execution of Releases. Without in any
------------------------------------------------
manner limiting Agent's authority to act without any specific or further
authorization or consent by Lenders (as set forth in subsection 8.2(H)(1)), each
Lender agrees to confirm in writing, upon request by Agent or Borrowers, the
authority to release any property covered by the Security Documents conferred
upon Agent under clauses (i) through (iii) of subsection 8.2(H)(1). Upon receipt
by Agent of confirmation from the requisite percentage of Lenders required by
subsection 8.2(H)(1), if any, of its authority to release or compromise any
particular item or types of property covered by the Security Documents, and upon
at least ten (10) Business Days prior written request by Borrowers, Agent shall
(and is hereby irrevocably authorized by Lenders to) execute such documents as
may be necessary to evidence the release or compromise of the Liens granted to
Agent, for the benefit of Agent and Lenders, upon such Collateral, provided that
--------
(i) Agent shall not be required to execute any such document on terms which, in
Agent's opinion, would expose Agent to liability or create any obligation or
entail any consequence other than the release or compromise of such Liens
without recourse or warranty, and (ii) such release or compromise shall not in
any manner discharge, affect or impair the Obligations or any Liens upon (or
obligations of any Loan Party, in respect of), all interests retained by any
Loan Party, including (without limitation) the proceeds of any sale, all of
which shall continue to constitute part of the property covered by the Security
Documents.
(3) Absence of Duty. Agent shall have no obligation whatsoever to any
---------------
Lender or any other Person to assure that the property covered by the Security
Documents exists or is owned by a Borrower or is cared for, protected or insured
or has been encumbered or that the Liens granted to Agent have been properly or
sufficiently or lawfully created, perfected, protected or enforced or are
entitled to any particular priority, or to exercise at all or in any particular
manner or under any duty of care, disclosure or fidelity, or to continue
exercising, any of the rights, authorities and powers granted or available to
Agent in this subsection 8.2(H) or in any of the Loan Documents, it being
understood and agreed that in respect of the property covered by the Security
Documents or any act, omission or event related thereto, Agent may act in any
manner it may deem appropriate, in its discretion, given Agent's own interest in
property covered by the Security Documents as one of the Lenders and that Agent
shall have no duty or liability whatsoever to any of the other Lenders, provided
--------
that Agent shall exercise the same care which it would in dealing with loans for
its own account.
(I) Agency for Perfection. Agent and each Lender hereby appoint each
---------------------
other Lender as agent for the purpose of perfecting Agent's security interest in
assets which, in accordance with Article 9 of the Uniform Commercial Code in any
---------
applicable jurisdiction, can be perfected only by possession. Should any Lender
(other than Agent) obtain possession of any such Collateral, such Lender shall
notify Agent thereof, and, promptly upon Agent's request therefor, shall deliver
such Collateral to Agent or in accordance with Agent's instructions. Each Lender
agrees that it will not have any right individually to enforce or seek to
enforce any Security Document or to realize upon any collateral security for the
Loans unless instructed to do so by Agent, it being understood and agreed that
such rights and remedies may be exercised only by Agent.
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(J) Dissemination of Information. Agent will use its best efforts to
----------------------------
provide Lenders with any information received by Agent from Borrowers or any
other Loan Party which is required to be provided to a Lender hereunder,
provided that Agent shall not be liable to Lenders for any failure to do so,
- --------
except to the extent that such failure is attributable to Agent's gross
negligence or willful misconduct.
8.3 Amendments, Consents and Waivers for Certain Actions.
----------------------------------------------------
(A) Except as otherwise provided in this subsection 8.3, in subsection
9.2 or in any Assignment and Acceptance Agreement and except as to matters set
forth in other subsections hereof or in any other Loan Document as requiring
only Agent's consent, the consent of Requisite Lenders and Borrowers will be
required to amend, modify, terminate, or waive any provision of this Agreement
or any of the other Loan Documents.
(B) In the event Agent requests the consent of a Lender and does not
receive a written consent or denial thereof within ten (10) Business Days after
such Lender's receipt of such request, then such Lender will be deemed to have
denied the giving of such consent.
(C) If, in connection with any proposed amendment, modification,
termination or waiver of any of the provisions of this Agreement as contemplated
by clauses (a) through (i) of the first proviso of subsection 9.2, the consent
of Requisite Lenders is obtained but the consent of one or more other Lenders
whose consent is required is not obtained, then Borrowers shall have the right,
so long as all non-consenting Lenders are treated as described in clauses (A) or
(B) below, to either (A) replace each such non-consenting Lender with one or
more Replacement Lenders pursuant to subsection 1.10(A) so long as each such
Replacement Lender consents to the proposed amendment, modification, termination
or waiver or (B) terminate such non-consenting Lender's Pro Rata Share of the
Revolving Loan Commitment and prepay in full its Obligations to such non-
consenting Lender, in accordance with subsection 1.10(B).
8.4 Set Off and Sharing of Payments. In addition to any rights now
-------------------------------
or hereafter granted under applicable law and not by way of limitation of any
such rights, during the continuance of any Event of Default, each Lender is
hereby authorized by Borrowers at any time or from time to time, with reasonably
prompt subsequent notice to Borrowers (any prior or contemporaneous notice being
hereby expressly waived) to set off and to appropriate and to apply any and all
(A) balances held by such Lender at any of its offices for the account of a
Borrower or any of its Subsidiaries (regardless of whether such balances are
then due to a Borrower or its Subsidiaries), and (B) other property at any time
held or owing by such Lender to or for the credit or for the account of a
Borrower or any of its Subsidiaries, against and on account of any of the
Obligations; except that no Lender shall exercise any such right without the
prior written consent of Agent. Any Lender exercising a right to set off shall,
to the extent the amount of any such set off exceeds its Pro Rata Share of the
amount set off, purchase for cash (and the other Lenders shall sell) interests
in each such other Lender's Pro Rata Share of the Obligations as would be
necessary to cause such Lender to share
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<PAGE>
such excess with each other Lender in accordance with their respective Pro Rata
Shares. Each Borrower agrees, to the fullest extent permitted by law, that any
Lender may exercise its right to set off with respect to amounts in excess of
its Pro Rata Share of the Obligations and upon doing so shall deliver such
excess to the Agent for the benefit of all Lenders in accordance with their Pro
Rata Shares.
8.5 Disbursement of Funds. Agent may, on behalf of Lenders, disburse
---------------------
funds to Borrowers for Loans requested. Each Lender shall reimburse Agent on
demand for all funds disbursed on its behalf by Agent, or if Agent so requests,
each Lender will remit to Agent its Pro Rata Share of any Loan before Agent
disburses same to Borrowers. If Agent elects to require that each Lender make
funds available to Agent, prior to a disbursement by Agent to Borrowers, Agent
shall advise each Lender by telephone or telecopy of the amount of such Lender's
Pro Rata Share of the Loan requested by Parent, on behalf of Borrowers, no later
than 1:00 p.m. Chicago time on the Funding Date applicable thereto, and each
such Lender shall pay Agent such Lender's Pro Rata Share of such requested Loan,
in same day funds, by wire transfer to Agent's account on such Funding Date. If
any Lender fails to pay the amount of its Pro Rata Share within one (1) Business
Day after Agent's demand, Agent shall promptly notify Borrowers, and Borrowers
shall immediately repay such amount to Agent. Any repayment required pursuant to
this subsection 8.5 shall be without premium or penalty. Nothing in this
subsection 8.5 or elsewhere in this Agreement or the other Loan Documents,
including without limitation the provisions of subsection 8.6, shall be deemed
to require Agent to advance funds on behalf of any Lender or to relieve any
Lender from its obligation to fulfill its commitments hereunder or to prejudice
any rights that Agent or Borrowers may have against any Lender as a result of
any default by such Lender hereunder.
8.6 Disbursements of Advances; Payment.
----------------------------------
(A) Revolving Loan Advances, Payments and Settlements; Interest and
---------------------------------------------------------------
Fee Payments.
- ------------
(1) The Revolving Loan balance may fluctuate from day to day
through Agent's disbursement of funds to, and receipt of funds from, Borrowers.
In order to minimize the frequency of transfers of funds between Agent and each
Lender notwithstanding terms to the contrary set forth in Section 1 or
subsection 8.5, Revolving Loan advances and payments will be settled among Agent
and Lenders according to the procedures described in this subsection 8.6.
Notwithstanding these procedures, each Lender's obligation to fund its portion
of any advances made by Agent to Borrowers will commence on the date such
advances are made by Agent. Such payments will be made by such Lender without
set-off, counterclaim or reduction of any kind.
(2) On the second (2nd) Business Day of each week, or more
frequently (including daily), if Agent so elects (each such day being a
"Settlement Date"), Agent will advise each Lender by telephone or telecopy of
the amount of each such Lender's Pro Rata Share of the Revolving Loan balance as
of the close of business of the (2nd) second Business Day immediately preceding
the Settlement Date. In the event that payments are necessary to adjust the
amount of such
52
<PAGE>
Lender's required Pro Rata Share of the Revolving Loan balance to such Lender's
actual Pro Rata Share of the Revolving Loan balance as of any Settlement Date,
the party from which such payment is due will pay the other, in same day funds,
by wire transfer to the other's account not later than 3:00 p.m. Chicago time on
the Business Day following the Settlement Date.
(3) For purposes of this subsection 8.6(A)(3), the following
terms and conditions will have the meanings indicated:
(a) "Daily Loan Balance" means an amount calculated as of the end
of each calendar day by subtracting (i) the cumulative principal amount
paid by Agent to a Lender on a Loan from the Closing Date through and
including such calendar day, from (ii) the cumulative principal amount on a
Loan advanced by such Lender to Agent on that Loan from the Closing Date
through and including such calendar day.
(b) "Daily Interest Rate" means an amount calculated by dividing
the interest rate payable to a Lender on a Loan (as set forth in subsection
1.2) as of each calendar day by three hundred sixty (360).
(c) "Daily Interest Amount" means an amount calculated by
multiplying the Daily Loan Balance of a Loan by the associated Daily
Interest Rate on that Loan.
(d) "Interest Ratio" means a number calculated by dividing the
total amount of the interest on a Loan received by Agent with respect to
the immediately preceding month by the total amount of interest on that
Loan due from Borrower during the immediately preceding month.
On the first (1st) Business Day of each month ("Interest Settlement Date"),
Agent will advise each Lender by telephone, telex, or telecopy of the amount of
such Lender's Pro Rata Share of interest and fees on each of the Loans as of the
end of the last day of the immediately preceding month. Provided that such
Lender has made all payments required to be made by it under this Agreement,
Agent will pay to such Lender, by wire transfer to such Lender's account (as
specified by such Lender on the signature page of this Agreement or the
applicable Assignment and Acceptance Agreement, as amended by such Lender from
time to time after the date hereof pursuant to the notice provisions contained
herein or in the applicable Assignment and Acceptance Agreement) not later than
3:00 p.m. Chicago time on the next Business Day following the Interest
Settlement Date, such Lender's Pro Rata Share of interest and fees on each of
the Loans. Such Lender's Pro Rata Share of interest on each Loan will be
calculated for that Loan by adding together the Daily Interest Amounts for each
calendar day of the prior month for that Loan and multiplying the total thereof
by the Interest Ratio for that Loan. Such Lender's Pro Rata Share of each of the
commitment fee described in subsection 1.2(B) and the Risk Participation
Liability fee described in subsection 1.2(C) shall be paid and
53
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calculated in a manner consistent with the payment and calculation of interest
as described in this subsection 8.6(A).
(B) Term Loan Principal Payments. Payments of principal of the Term
----------------------------
Loan will be settled on the date of receipt if received by Agent on the first
Business Day of a month and on the Business Day immediately following the date
of receipt if received by Agent on any day other than the first Business Day of
a month.
(C) Availability of Lender's Pro Rata Share.
---------------------------------------
(1) Unless Agent shall have received notice from a Lender prior
to a Funding Date that such Lender will not make available its Pro Rata Share of
a Loan requested by Parent, on behalf of Borrowers, Agent may assume that such
Lender has made such amount available to Agent on the Business Day following the
next Settlement Date. If a Lender has not in fact made its Pro Rata Share
available to the Agent on such date, then such Lender and Borrowers severally
agree to pay to Agent forthwith on demand such amount without set-off,
counterclaim or deduction of any kind, together with interest thereon, for each
day from and including the date such amount is made available to Agent by such
Lender to but excluding the date of payment to Agent, at (a) in the case of such
Lender, the greater of the Federal Funds Effective Rate and a rate determined by
Agent in accordance with banking industry rules on interbank compensation or (b)
in the case of Borrowers, the interest rate applicable under this Agreement with
respect to such Loan. Until any such amount is paid to Agent, Agent shall not be
obligated to submit to such Lender any payment made by Borrowers to Agent with
respect to any Loan or any fees or other payments with respect thereto.
(2) Nothing contained in this subsection 8.6(C) will be deemed
to relieve a Lender of its obligation to fulfill its commitments or to prejudice
any rights Agent or Borrowers may have against such Lender as a result of any
default by such Lender under this Agreement.
(3) Without limiting the generality of the foregoing, each
Lender shall be obligated to fund its Pro Rata Share of any Revolving Loan made
after any Event of Default or acceleration of the Obligations with respect to
any draw on a Lender Letter of Credit or a Risk Participation Agreement.
(D) Return of Payments
------------------
(1) If Agent pays an amount to a Lender under this Agreement in
the belief or expectation that a related payment has been or will be received by
Agent from Borrowers and such related payment is not received by Agent, then
Agent will be entitled to recover such amount from such Lender without set-off,
counterclaim or deduction of any kind together with interest thereon, for each
day from and including the date such amount is made available by Agent to such
Lender to but excluding the date of repayment to Agent, at the greater of the
Federal Funds Effective Rate and a rate determined by Agent in accordance with
banking industry rules on interbank compensation.
54
<PAGE>
(2) If Agent determines at any time that any amount received by
Agent under this Agreement must be returned to a Borrower or paid to any other
person pursuant to any requirement of law, court order or otherwise, then,
notwithstanding any other term or condition of this Agreement, Agent will not be
required to distribute any portion thereof to any Lender. In addition, each
Lender will repay to Agent on demand any portion of such amount that Agent has
distributed to such Lender, together with interest at such rate, if any, as
Agent is required to pay to a Borrower or such other Person, without set-off,
counterclaim or deduction of any kind.
SECTION 9
MISCELLANEOUS
9.1 Indemnities. Each Borrower agrees to indemnify, pay, and hold
-----------
Agent, each Lender and their respective officers, directors, employees, agents,
and attorneys (the "Indemnitees") harmless from and against any and all
liabilities, obligations, losses, damages, penalties, actions, judgments, suits
and claims of any kind or nature whatsoever that may be imposed on, incurred by,
or asserted against the Indemnitee as a result of its being a party to this
Agreement or the transactions consummated pursuant to this Agreement; provided
--------
that Borrowers shall have no obligation to an Indemnitee hereunder with respect
to liabilities arising from the gross negligence or willful misconduct of that
Indemnitee as determined by a court of competent jurisdiction. This subsection
and other indemnification provisions contained within the Loan Documents shall
survive the termination of this Agreement.
9.2 Amendments and Waivers. Except as otherwise provided herein, no
----------------------
amendment, modification, termination or waiver of any provision of this
Agreement, the Notes or any of the other Loan Documents, or consent to any
departure by any Loan Party therefrom, shall in any event be effective unless
the same shall be in writing and signed by Requisite Lenders (or Agent, if
expressly set forth herein, in any Note or in any other Loan Document) and the
applicable Loan Party; provided, that except to the extent permitted by the
--------
applicable Assignment and Acceptance Agreement, no amendment, modification,
termination or waiver shall, unless in writing and signed by all Lenders, do any
of the following: (a) increase any Lender's Pro Rata Share of the Revolving Loan
Commitment; (b) reduce the principal of, rate of interest on or fees payable
with respect to any Loan; (c) extend the Expiry Date, extend the date on which
any Scheduled Installment is to be paid or extend any date fixed for any payment
of interest or fees; (d) change the percentage of Lenders which shall be
required for Lenders or any of them to take any action hereunder; (e) release
Collateral (except if the sale, disposition or release of such Collateral is
permitted under subsection 3.7 or 8.2 or any other Loan Document); (f) amend or
waive this subsection 9.2 or the definitions of the terms used in this
subsection 9.2 insofar as the definitions affect the substance of this
subsection 9.2; (g) consent to the assignment, delegation or other transfer by
any Loan Party of any of its rights and obligations under any Loan Document; (h)
change the form in which interest is required to be paid; and (i) increase the
advance rates set forth in the Borrowing Base Certificate;
55
<PAGE>
and provided, further, that no amendment, modification, termination or waiver
-------- -------
affecting the rights or duties of Agent under any Loan Document shall in any
event be effective, unless in writing and signed by Agent, in addition to
Lenders required hereinabove to take such action. Each amendment, modification,
termination or waiver shall be effective only in the specific instance and for
the specific purpose for which it was given. No amendment, modification,
termination or waiver shall be required for Agent to take additional Collateral
pursuant to any Loan Document. No amendment, modification, termination or waiver
of any provision of any Note shall be effective without the written concurrence
of the holder of that Note. No notice to or demand on Borrowers or any other
Loan Party in any case shall entitle a Borrower or any other Loan Party to any
other or further notice or demand in similar or other circumstances. Any
amendment, modification, termination, waiver or consent effected in accordance
with this subsection 9.2 shall be binding upon each holder of the Notes at the
time outstanding, each future holder of the Notes, and, if signed by a Loan
Party, on such Loan Party.
9.3 Notices. Any notice or other communication required shall be
-------
in writing addressed to the respective party as set forth below and may be
personally served, telecopied, sent by overnight courier service or U.S. mail
and shall be deemed to have been given: (a) if delivered in person, when
delivered; (b) if delivered by telecopy, on the date of transmission if
transmitted on a Business Day before 4:00 p.m. Chicago time; (c) if delivered by
overnight courier, two (2) days after delivery to the courier properly
addressed; or (d) if delivered by U.S. mail, four (4) Business Days after
deposit with postage prepaid and properly addressed.
Notices shall be addressed as follows:
If to Borrowers or either of them: c/o OPINION RESEARCH CORPORATION
23 Orchard Road
Skillman, New Jersey 08558
ATTN: Chief Executive Officer
Telecopy: (908) 281-5103
With a copy to: WOLF, BLOCK, SCHORR AND
SOLIS-COHEN LLP
111 South Fifteenth Street
12/th/ floor
Philadelphia, Pennsylvania 19102-2678
ATTN: David Gitlin, Esq.
Telecopy: (215) 977-2740
[after July 4, 1999]:
56
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WOLF, BLOCK, SCHORR AND
SOLIS-COHEN LLP
1650 Arch Street
Philadelphia, Pennsylvania 19103
ATTN: David Gitlin, Esq.
Telecopy: (215) 977-2740
If to Agent or Heller: HELLER FINANCIAL, INC.
500 West Monroe Street
Chicago, Illinois 60661
ATTN: Account Manager
Corporate Finance
Telecopy: (312) 441-7367
With a copy to: HELLER FINANCIAL, INC.
500 West Monroe Street
Chicago, Illinois 60661
ATTN: Legal Services
Corporate Finance
Telecopy: (312) 441-6876
If to a Lender: To the address set forth on the
signature page hereto or in the applicable
Assignment and Acceptance Agreement
9.4 Failure or Indulgence Not Waiver; Remedies Cumulative. No
-----------------------------------------------------
failure or delay on the part of Agent or any Lender to exercise, nor any partial
exercise of, any power, right or privilege hereunder or under any other Loan
Documents shall impair such power, right, or privilege or be construed to be a
waiver of any Default or Event of Default. All rights and remedies existing
hereunder or under any other Loan Document are cumulative to and not exclusive
of any rights or remedies otherwise available.
9.5 Marshalling; Payments Set Aside. Neither Agent nor any Lender
-------------------------------
shall be under any obligation to marshall any assets in payment of any or all of
the Obligations. To the extent that a Borrower makes payment(s) or Agent
enforces its Liens or Agent or any Lender exercises its right of set-off, and
such payment(s) or the proceeds of such enforcement or set-off is subsequently
invalidated, declared to be fraudulent or preferential, set aside, or required
to be repaid by anyone, then to the extent of such recovery, the Obligations or
part thereof originally intended to be satisfied, and all Liens, rights and
remedies therefor, shall be revived and continued in full force and effect as if
such payment had not been made or such enforcement or set-off had not occurred.
57
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9.6 Severability. The invalidity, illegality, or unenforceability
------------
in any jurisdiction of any provision under the Loan Documents shall not affect
or impair the remaining provisions in the Loan Documents.
9.7 Lenders' Obligations Several; Independent Nature of Lenders'
------------------------------------------------------------
Rights. The obligation of each Lender hereunder is several and not joint and
- ------
no Lender shall be responsible for the obligation or commitment of any other
Lender hereunder. In the event that any Lender at any time should fail to make a
Loan as herein provided, the Lenders, or any of them, at their sole option, may
make the Loan that was to have been made by the Lender so failing to make such
Loan. Nothing contained in any Loan Document and no action taken by Agent or any
Lender pursuant hereto or thereto shall be deemed to constitute Lenders to be a
partnership, an association, a joint venture or any other kind of entity. The
amounts payable at any time hereunder to each Lender shall be a separate and
independent debt.
9.8 Headings. Section and subsection headings are included herein
--------
for convenience of reference only and shall not constitute a part of this
Agreement for any other purposes or be given substantive effect.
9.9 Applicable Law. THIS AGREEMENT SHALL BE GOVERNED BY AND SHALL
--------------
BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF
ILLINOIS, WITHOUT REGARD TO CONFLICTS OF LAW PRINCIPLES.
9.10 Successors and Assigns. This Agreement shall be binding upon
----------------------
and inure to the benefit of the parties hereto and their respective successors
and assigns except that no Borrower may assign its rights or obligations
hereunder without the written consent of all Lenders.
9.11 No Fiduciary Relationship. No provision in the Loan Documents
-------------------------
and no course of dealing between the parties shall be deemed to create any
fiduciary duty owing to a Borrower by Agent or any Lender.
9.12 Construction. Agent, each Lender and each Borrower acknowledge
------------
that each of them has had the benefit of legal counsel of its own choice and has
been afforded an opportunity to review the Loan Documents with its legal counsel
and that the Loan Documents shall be construed as if jointly drafted by Agent,
each Lender and each Borrower.
9.13 Confidentiality. Agent and each Lender agree to exercise their
---------------
best efforts to keep any non-public information delivered pursuant to the Loan
Documents confidential from Persons other than those employed by or engaged by
Agent or such Lender and those employed by or engaged by Agent's or such
Lender's assignees or participants, or potential assignees or participants. This
subsection shall not apply to disclosures required to be made by Agent or any
Lender to any regulatory or governmental agency or pursuant to legal process.
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9.14 CONSENT TO JURISDICTION. EACH BORROWER HEREBY CONSENTS TO THE
-----------------------
JURISDICTION OF ANY STATE OR FEDERAL COURT LOCATED WITHIN THE COUNTY OF COOK,
STATE OF ILLINOIS AND IRREVOCABLY AGREES THAT, SUBJECT TO AGENT'S ELECTION, ALL
ACTIONS OR PROCEEDINGS ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE OTHER
LOAN DOCUMENTS SHALL BE LITIGATED IN SUCH COURTS. EACH BORROWER EXPRESSLY
SUBMITS AND CONSENTS TO THE JURISDICTION OF THE AFORESAID COURTS AND WAIVES ANY
DEFENSE OF FORUM NON CONVENIENS. EACH BORROWER HEREBY WAIVES PERSONAL SERVICE OF
ANY AND ALL PROCESS AND AGREES THAT ALL SUCH SERVICE OF PROCESS MAY BE MADE UPON
A BORROWER BY CERTIFIED OR REGISTERED MAIL, RETURN RECEIPT REQUESTED, ADDRESSED
TO A BORROWER, AT THE ADDRESS SET FORTH IN THIS AGREEMENT AND SERVICE SO MADE
SHALL BE COMPLETE TEN (10) DAYS AFTER THE SAME HAS BEEN POSTED.
9.15 WAIVER OF JURY TRIAL. EACH BORROWER, AGENT AND EACH LENDER
--------------------
HEREBY WAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF
ACTION BASED UPON OR ARISING OUT OF THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS.
EACH BORROWER, AGENT AND EACH LENDER ACKNOWLEDGE THAT THIS WAIVER IS A MATERIAL
INDUCEMENT TO ENTER INTO A BUSINESS RELATIONSHIP, THAT EACH HAS RELIED ON THE
WAIVER IN ENTERING INTO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS AND THAT
EACH WILL CONTINUE TO RELY ON THE WAIVER IN THEIR RELATED FUTURE DEALINGS. EACH
BORROWER, AGENT AND EACH LENDER WARRANT AND REPRESENT THAT EACH HAS HAD THE
OPPORTUNITY OF REVIEWING THIS JURY WAIVER WITH LEGAL COUNSEL, AND THAT EACH
KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS.
9.16 Survival of Warranties and Certain Agreements. All agreements,
---------------------------------------------
representations and warranties made herein shall survive the execution and
delivery of this Agreement, the making of the Loans, issuances of Lender Letters
of Credit and Risk Participation Agreements and the execution and delivery of
the Notes. Notwithstanding anything in this Agreement or implied by law to the
contrary, the agreements of Borrowers set forth in subsections 1.3(C), 1.8, 1.9,
9.1 and 9.19 shall survive the payment of the Loans.
9.17 Entire Agreement. This Agreement, the Notes and the other Loan
----------------
Documents referred to herein embody the entire agreement among the parties
hereto and supersede all prior commitments, agreements, representations, and
understandings, whether oral or written, relating to the subject matter hereof,
and may not be contradicted or varied by evidence of prior, contemporaneous, or
subsequent oral agreements or discussions of the parties hereto.
9.18 Counterparts; Effectiveness. This Agreement and any amendments,
---------------------------
waivers, consents or supplements may be executed in any number of counterparts
and by different parties hereto in separate counterparts, each of which when so
executed and delivered shall be deemed an
59
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original, but all of which counterparts together shall constitute but one in the
same instrument. This Agreement shall become effective upon the execution of a
counterpart hereof by each of the parties hereto.
9.19 Joint and Several Liability of Borrowers. Each of the Borrowers
----------------------------------------
shall be jointly and severally liable hereunder and under each of the other Loan
Documents with respect to all Obligations, regardless of which of the Borrowers
actually receives the proceeds of the Loans or the benefit of any other
extensions of credit hereunder, or the manner in which Parent, the Borrowers,
the Agent or the Lenders account therefor in their respective books and records.
Notwithstanding the foregoing, (i) each Borrower's obligations and liabilities
with respect to proceeds of Loans which it receives or Letters of Credit or Risk
Participation Agreements issued for its account, and related fees, costs and
expenses, and (ii) each Borrower's obligations and liabilities arising as a
result of the joint and several liability of the Borrowers hereunder with
respect to proceeds of Loans received by, or Letters of Credit or Risk
Participation Agreements issued for the account of, any of the other Borrowers,
together with the related fees, costs and expenses, shall be separate and
distinct obligations, both of which are primary obligations of such Borrower.
Neither the joint and several liability of, nor the Liens granted to the Agent
under the Security Documents by, any of the Borrowers shall be impaired or
released by (A) the failure of the Agent or any Lender, any successors or
assigns thereof, or any holder of any Note or any of the Obligations to assert
any claim or demand or to exercise or enforce any right, power or remedy against
any Borrower, any Subsidiary of any Borrower, any other Person, the Collateral
or otherwise; (B) any extension or renewal for any period (whether or not longer
than the original period) or exchange of any of the Obligations or the release
or compromise of any obligation of any nature of any Person with respect
thereto; (C) the surrender, release or exchange of all or any part of any
property (including without limitation the Collateral) securing payment,
performance and/or observance of any of the Obligations or the compromise or
extension or renewal for any period (whether or not longer than the original
period) of any obligations of any nature of any Person with respect to any such
property; (D) any action or inaction on the part of the Agent or any Lender, or
any other event or condition with respect to any other Borrower, including any
such action or inaction or other event or condition, which might otherwise
constitute a defense available to, or a discharge of, such other Borrower, or a
guarantor or surety of or for any or all of the Obligations; and (E) any other
act, matter or thing (other than payment or performance of the Obligations)
which would or might, in the absence of this provision, operate to release,
discharge or otherwise prejudicially affect the obligations of such or any other
Borrower.
SECTION 10
DEFINITIONS
10.1 Certain Defined Terms. The terms defined below are used in this
---------------------
Agreement as so defined. Terms defined in the preamble and recitals to this
Agreement are used in this Agreement as so defined.
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<PAGE>
"Acquisition" means any transaction or series of related transactions
for the purpose of or resulting, directly or indirectly, in (a) the
acquisition of all or substantially all of the assets of a Person, or of
any business or division of a Person, (b) the acquisition in excess of
fifty percent (50%) of the capital stock, partnership interests or other
equity interests of any Person or otherwise causing any Person to become a
Subsidiary of the Borrower or (c) a merger or consolidation of any other
business combination with another Person.
"Affiliate" means any Person: (a) directly or indirectly controlling,
controlled by, or under common control with, a Borrower; (b) directly or
indirectly owning or holding five percent (5%) or more of any equity
interest in a Borrower; or (c) five percent (5%) or more of whose voting
stock or other equity interest is directly or indirectly owned or held by a
Borrower. For purposes of this definition, "control" (including with
correlative meanings, the terms "controlling", "controlled by" and "under
common control with") means the possession directly or indirectly of the
power to direct or cause the direction of the management and policies of a
Person, whether through the ownership of voting securities or by contract
or otherwise.
"Agent" means Heller in its capacity as agent for the Lenders under
this Agreement and each of the other Loan Documents and any successor in
such capacity appointed pursuant to subsection 8.2.
"Agreement" means this Credit Agreement (including all schedules and
exhibits hereto), as the same may from time to time be amended,
supplemented or otherwise modified.
"Asset Disposition" means the disposition whether by sale, lease,
transfer, loss, damage, destruction, condemnation or otherwise of any of
the following: (a) any of the capital stock or other equity or ownership
interest of any of a Borrower's Subsidiaries or (b) any or all of the
assets of a Borrower or any of its Subsidiaries other than (i) sales of
inventory in the ordinary course of business and (ii) sales by Company of
low income housing tax credits.
"Assignment and Acceptance Agreement" means an agreement among Agent,
a Lender and such Lender's assignee regarding their respective rights and
obligations with respect to assignments of the Loans, the Revolving Loan
Commitment and other interests under this Agreement and the other Loan
Documents.
"Bankruptcy Code" means Title 11 of the United States Code entitled
"Bankruptcy", as amended from time to time or any applicable bankruptcy,
insolvency or other similar law now or hereafter in effect and all rules
and regulations promulgated thereunder.
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<PAGE>
"Borrower" and "Borrowers" shall have the meaning ascribed to that
term in the preamble of this Agreement.
"Business Day" means (a) for all purposes other than as covered by
clause (b) below, any day excluding Saturday, Sunday and any day which is a
legal holiday under the laws of the Commonwealth of Pennsylvania or the
States of Illinois or New Jersey, or is a day on which banking institutions
located in any such states are closed, and (b) with respect to all notices,
determinations, fundings and payments in connection with Loans bearing
interest at the LIBOR, any day that is a Business Day described in clause
(a) above and that is also a day for trading by and between banks in Dollar
deposits in the applicable interbank LIBOR market.
"Capitalization/Acquisition Documents" means, collectively: (a) any or
all of the stock certificates, notes, debentures or other instruments
representing securities bought, sold or issued, or loans made, to
facilitate the consummation of the Related Transactions; (b) the indentures
or other documents pursuant to which such stock, notes, debentures or other
instruments are issued or to be issued including the Subordinated Loan
Agreement; (c) each document governing the issuance of, or setting forth
the terms of, such stock, notes, debentures or other instruments; (d) any
stockholders, registration or intercreditor agreement among or between the
holders of such stock, notes, debentures or other instruments; (e) the
Purchase Agreement; and (f) all other instruments, documents and agreements
executed in connection with the Macro Acquisition; but excluding all Loan
Documents.
"Closing Date" means May __, 1999.
"Collateral" means, collectively: (a) all capital stock and other
property pledged pursuant to the Security Documents; (b) all "Collateral"
as defined in the Security Documents; (c) all real property mortgaged
pursuant to the Security Documents; and (d) any property or interest
provided in addition to or in substitution for any of the foregoing.
"Default" means a condition or event that, after notice or lapse of
time or both, would constitute an Event of Default if that condition or
event were not cured or removed within any applicable grace or cure period.
"Domestic Subsidiary" means a Subsidiary of a Borrower organized under
the laws of a jurisdiction located in the United States.
"Dormant Foreign Subsidiary" means GSR/SIA Limited, Golden Simmons
Limited, C.de G. Research Limited, Macro International Sp. Z0.0, Macro
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<PAGE>
International Z.A.O. and Macro International Consulting Ltd. d/b/a Macro
International kft.
"Earn-Out Reserve" means as of any calculation date, the aggregate
amount calculated with respect to the Macro Earn-Out and ProTel Earn-Out as
set forth herein. Calculations of the Earn-Out Reserve shall be made as of
the earlier of (a) each date on which the amount of an earn-out payment
with respect to the Macro Earn-Out and/or ProTel Earn-Out is determinable
or (b) each date which is forty-five (45) days prior to the date on which
such payment is to be made. The Earn-Out Reserve shall equal the amount of
the earn-out payment to be made or, if the amount is in dispute, the
maximum amount which may be payable in respect of the Macro Earn-Out and
the ProTel Earn-Out. At such time as a payment is made in respect of the
Macro Earn-Out and/or ProTel Earn-Out, the Earn-Out Reserve shall be
reduced on a dollar for dollar basis.
"Expiry Date" means the earlier of (a) the suspension (subject to
reinstatement) of the Lenders' obligations to make Revolving Loans pursuant
to subsection 6.2, (b) the acceleration of the Obligations pursuant to
subsection 6.3 or (c) May 31, 2005.
"Federal Funds Effective Rate" means, for any day, the weighted
average (rounded upwards, if necessary, to the next 1/100th of 1%) of the
rates on overnight Federal funds transactions with members of the Federal
Reserve System arranged by Federal funds brokers, as published on the next
succeeding Business Day by the Federal Reserve Bank of New York, or, if
such rate is not so published for any day that is a Business Day, the
average (rounded upwards, if necessary, to the next 1/100th of 1%) of the
quotations for such day for such transactions received by Agent from three
Federal funds brokers of recognized standing selected by it.
"Foreign Subsidiary" means a Subsidiary of a Borrower which is not a
Domestic Subsidiary.
"GAAP" means generally accepted accounting principles as set forth in
statements from Auditing Standards No. 69 entitled "The Meaning of 'Present
Fairly in Conformance with Generally Accepted Accounting Principles in the
Independent Auditors Reports'" issued by the Auditing Standards Board of
the American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board that are
applicable to the circumstances as of the date of determination.
"Indebtedness" as applied to any Person, means, without duplication:
(a) all indebtedness for borrowed money; (b) that portion of obligations
with respect to capital leases that is properly classified as a liability
on a balance sheet in conformity
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<PAGE>
with GAAP; (c) notes payable and drafts accepted representing extensions of
credit whether or not representing obligations for borrowed money; (d) any
obligation owed for all or any part of the deferred purchase price of
property or services if the purchase price is due more than six (6) months
from the date the obligation is incurred or is evidenced by a note or
similar written instrument including the Macro Earn-Out and the ProTel
Earn-Out; and (e) all indebtedness secured by any Lien on any property or
asset owned or held by that Person regardless of whether the indebtedness
secured thereby shall have been assumed by that Person or is nonrecourse to
the credit of that Person.
"IRC" means the Internal Revenue Code of 1986, as amended from time to
time and all rules and regulations promulgated thereunder.
"Lender" or "Lenders" means Heller and each other financial
institution listed on the signature pages hereof together with their
successors and permitted assigns pursuant to subsection 8.1.
"Lien" means any lien, mortgage, pledge, security interest, charge,
encumbrance or governmental levy or assessment of any kind, whether
voluntary or involuntary (including any conditional sale or other title
retention agreement and any lease in the nature thereof), and any agreement
to give any lien, mortgage, pledge, security interest, charge or
encumbrance.
"Loan" or "Loans" means an advance or advances under the Revolving
Loan Commitment or the Term Loan.
"Loan Documents" means this Agreement, the Notes, the Security
Documents and all other instruments, documents and agreements executed by
or on behalf of any Loan Party and delivered concurrently herewith or at
any time hereafter to or for the benefit of Agent or any Lender in
connection with the Loans and other transactions contemplated by this
Agreement, all as amended, supplemented or modified from time to time; but
excluding all Capitalization/Acquisition Documents.
"Loan Party" means, collectively, a Borrower, a Borrower's
Subsidiaries and any other Person (other than Agent and each Lender) which
is or becomes a party to any Loan Document.
"Macro Earn-Out" means the amount, if any, required to be classified
on a balance sheet prepared in accordance with GAAP, on account of amounts
payable in accordance with Section 2(a)(iii) of the Purchase Agreement as
in effect on the date hereof.
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<PAGE>
"Material Adverse Effect" means (a) a material adverse effect upon the
business, operations, prospects, properties, assets or condition (financial
or otherwise) of a Borrower or any of its Subsidiaries or (b) the
impairment of the ability of any Loan Party to perform in any material
respect its obligations under any Loan Document to which it is a party or
of Agent or any Lender to enforce any Loan Document or collect any of the
Obligations. In determining whether any individual event would result in a
Material Adverse Effect, notwithstanding that such event does not of itself
have such effect, a Material Adverse Effect shall be deemed to have
occurred if the cumulative effect of such event and all other then existing
events would result in a Material Adverse Effect.
"Net Proceeds" means cash proceeds received by a Borrower or any of
its Subsidiaries from any Asset Disposition (including insurance proceeds,
awards of condemnation, and payments under notes or other debt securities
received in connection with any Asset Disposition), net of (a) the costs of
such sale, lease, transfer or other disposition (including taxes
attributable to such sale, lease or transfer) and (b) amounts applied to
repayment of Indebtedness (other than the Obligations) secured by a Lien on
the asset or property disposed.
"Note" or "Notes" means one or more of the notes of Borrowers
substantially in the form of Exhibit 10.1(A), or any combination thereof.
"Obligations" means all obligations, liabilities and indebtedness of
every nature of each Loan Party from time to time owed to Agent or any
Lender under the Loan Documents including the principal amount of all
debts, claims and indebtedness, accrued and unpaid interest and all fees,
costs and expenses, whether primary, secondary, direct, contingent, fixed
or otherwise, heretofore, now and/or from time to time hereafter owing, due
or payable whether before or after the filing of a proceeding under the
Bankruptcy Code by or against a Borrower, any of its Subsidiaries or any
other Loan Party.
"Person" means and includes natural persons, corporations, limited
liability companies, limited partnerships, limited liability partnerships,
general partnerships, joint stock companies, joint ventures, associations,
companies, trusts, banks, trust companies, land trusts, business trusts or
other organizations, whether or not legal entities, and governments and
agencies and political subdivisions thereof and their respective permitted
successors and assigns (or in the case of a governmental person, the
successor functional equivalent of such Person).
"Pro Forma" means the unaudited consolidated and consolidating balance
sheets of Parent and its Subsidiaries prepared in accordance with GAAP as
of the Closing Date after giving effect to the Related Transactions. The
Pro Forma is annexed hereto as Schedule 10.1(A).
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<PAGE>
"Pro Rata Share" means (a) with respect to a Lender's obligation to
lend a portion of the Term Loan and receive payments of interest and
principal with respect thereto, the percentage obtained by dividing (i)
such Lender's commitment to make a portion of the Term Loan, as set forth
on the signature page of this Agreement opposite such Lender's signature or
in the most recent Assignment and Acceptance Agreement, if any, executed by
such Lender, by (ii) all such commitments of all Lenders to make the Term
Loan, (b) with respect to a Lender's obligation to make Revolving Loans and
receive payments of interest and principal with respect thereto (and with
respect to the related commitment fee described in subsection 1.2(B)) and
with respect to a Lender's obligation to share in Risk Participation
Liability (and with respect to the related Risk Participation Liability fee
described in subsection 1.2(C)), the percentage obtained by dividing (i)
such Lender's commitment to make Revolving Loans, as set forth on the
signature page of this agreement opposite such Lender's signature or in the
most recent Assignment and Acceptance Agreement, if any, executed by such
Lender, by (ii) all such commitments of all Lenders to make Revolving Loans
and (c) with respect to all other matters (including without limitation the
indemnification obligations arising under subsection 8.2(E)), the
percentage obtained by dividing (i) the sum of the then outstanding portion
of the Term Loan which was funded by such Lender, plus the commitment of
----
such Lender to make Revolving Loans, as set forth on the signature page of
this Agreement opposite such Lender's signature or in the most recent
Assignment and Acceptance Agreement, if any, executed by such Lender, by
(ii) the sum of the then outstanding Term Loan, plus the aggregate
----
Revolving Loan Commitment.
"Projections" means Parent's forecasted consolidated and
consolidating: (a) balance sheets; (b) profit and loss statements; (c) cash
flow statements; and (d) capitalization statements, all prepared on a
Subsidiary by Subsidiary basis on a consistent basis with Parent's
historical financial statements, together with appropriate supporting
details and a statement of underlying assumptions.
"ProTel Earn-Out" means the amount, if any, required to be classified
on a balance sheet prepared in accordance with GAAP on account of amounts
payable in accordance with Section 4(c)(v), (vi) and (vii) of the ProTel
Purchase Agreement as in effect on the date hereof.
"ProTel Purchase Agreement" means the Asset Purchase Agreement dated
December 11, 1997 among ORC ProTel, Inc., Parent, ProTel Marketing, Inc.
and the individuals named therein as "Principals".
"Related Transactions" means the Macro Acquisition, the execution and
delivery of the Related Transactions Documents, the funding of all Loans on
the Closing Date, the funding of the Indebtedness evidenced by the
Subordinated Note,
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<PAGE>
the repayment of the Indebtedness identified on Schedule 10.1(B) which is
to be paid in full on the Closing Date, and the payment of all fees, costs
and expenses associated with all of the foregoing.
"Related Transactions Documents" means the Loan Documents, the
Capitalization/Acquisition Documents and all other agreements, instruments
and documents executed or delivered in connection with the Related
Transactions.
"Requisite Lenders" means Lenders having (a) sixty-six and two-thirds
percent (66-2/3%) or more of the sum of the Revolving Loan Commitment and
the outstanding principal balance of the Term Loan or, (b) if the Revolving
Loan Commitment has been terminated, sixty-six and two-thirds percent (66-
2/3%) or more of the aggregate outstanding principal balance of the Loans.
"Risk Participation Liability" means, as to each Lender Letter of
Credit and each Risk Participation Agreement, all reimbursement obligations
of Borrowers to the issuer of the Lender Letter of Credit or to the issuer
of the letter of credit with respect to the transaction for which the Risk
Participation Agreement was executed and delivered, consisting of (a) the
amount available to be drawn or which may become available to be drawn; (b)
all amounts which have been paid and made available by the issuing bank to
the extent not reimbursed by Borrowers, whether by the making of a
Revolving Loan or otherwise; and (c) all accrued and unpaid interest, fees
and expenses with respect thereto. For purposes of determining the
outstanding amount of Risk Participation Liability, the maximum amount
potentially owing under any Risk Participation Agreement will be considered
outstanding unless the bank which is the beneficiary of such Risk
Participation Agreement reports daily activity to Agent showing actual
outstanding letters of credit subject to such Risk Participation Agreement
in which event the outstanding amount of Risk Participation Liability shall
be the amount of such actual outstanding letters of credit from time to
time.
"Security Documents" means all instruments, documents and agreements
executed by or on behalf of any Person to guaranty or provide collateral
security with respect to the Obligations including, without limitation, any
security agreement or pledge agreement, any guaranty of the Obligations,
any mortgage or deed of trust, and all instruments, documents and
agreements executed pursuant to the terms of the foregoing.
"Subordinated Lender" means, collectively, Allied Capital Corporation,
a Maryland corporation, Allied Investment Corporation, a Maryland
corporation and their successors and assigns.
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<PAGE>
"Subordinated Loan Agreement" means the Investment Agreement of even
date herewith between Parent and Subordinated Lender, as in effect on the
date hereof and as the same may be amended or modified as permitted herein.
"Subordinated Note" means, collectively, that certain Subordinated
Debenture of even date herewith in the original principal amount of
$9,500,000 made by Parent to Allied Capital Corporation, that certain
Subordinated Debenture of even date herewith in the original principal
amount of $5,500,000 made by Parent to Allied Investment Corporation,
together with any subordinated debentures issued in exchange or
substitution therefor not prohibited herein.
"Subsidiary" means, with respect to any Person, any corporation,
partnership, association or other business entity of which more than fifty
percent (50%) of the total voting power of shares of stock (or equivalent
ownership or controlling interest) entitled (without regard to the
occurrence of any contingency) to vote in the election of directors,
managers or trustees thereof is at the time owned or controlled, directly
or indirectly, by that Person or one or more of the other Subsidiaries of
that Person or a combination thereof.
10.2 Other Definitional Provisions. References to "Sections",
-----------------------------
"subsections", "Exhibits" and "Schedules" shall be to Sections, subsections,
Exhibits and Schedules, respectively, of this Agreement unless otherwise
specifically provided. Any of the terms defined in subsection 10.1 may, unless
the context otherwise requires, be used in the singular or the plural depending
on the reference. In this Agreement, "hereof," "herein," "hereto," "hereunder"
and the like mean and refer to this Agreement as a whole and not merely to the
specific section, paragraph or clause in which the respective word appears;
words importing any gender include the other gender; references to "writing"
include printing, typing, lithography and other means of reproducing words in a
tangible visible form; the words "including," "includes" and "include" shall be
deemed to be followed by the words "without limitation"; references to
agreements and other contractual instruments shall be deemed to include
subsequent amendments, assignments, and other modifications thereto, but only to
the extent such amendments, assignments and other modifications are not
prohibited by the terms of this Agreement or any other Loan Document; references
to Persons include their respective permitted successors and assigns or, in the
case of governmental Persons, Persons succeeding to the relevant functions of
such Persons; and all references to statutes and related regulations shall
include any amendments of same and any successor statutes and regulations.
[Remainder of page left intentionally blank; signature page follows]
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<PAGE>
Witness the due execution hereof by the respective duly authorized
officers of the undersigned as of the date first written above.
OPINION RESEARCH CORPORATION, a Delaware
corporation
By: /s/ John F. Short
------------------------------------
Name: John F. Short
Title: President
ORC INC., a Delaware corporation
By: /s/ Douglas L. Cox
----------------------------------
Name: Douglas L. Cox
Title: Secretary
Commitment to make HELLER FINANCIAL, INC., as
Revolving Loans: Agent and a Lender
$20,000,000
Percentage of Revolving By: /s/ Karen Rode
-----------------------------------
Loan Commitment: Name: Karen Rode
100% Title: Vice President
Commitment to make
Term Loan:
$30,000,000
Percentage of Term Loan:
100%
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<PAGE>
LIST OF EXHIBITS AND SCHEDULES
- ------------------------------
<TABLE>
<CAPTION>
Exhibits
- --------
<S> <C>
Exhibit 1.2(G) - LIBOR Loan Request
Exhibit 1.5(B) - Excess Cash Flow Computation
Exhibit 4.8(C) - Compliance Certificate
Exhibit 4.8(E) - Borrowing Base Certificate
Exhibit 10.1(A) - Notes
Schedules
- ---------
Schedule 3.2(A)(10) - Liens
Schedule 3.4 - Contingent Obligations
Schedule 3.8 - Affiliate Transactions
Schedule 3.9 - Business Description
Schedule 5.4(A) - Jurisdictions of Organization
Schedule 5.4(B) - Capitalization
Schedule 5.4(D) - Foreign Qualifications
Schedule 5.6 - Intellectual Property
Schedule 5.7 - Investigations and Audits
Schedule 5.8 - Employee Matters
Schedule 7.1 - List of Closing Documents
Subschedule 1 - Litigation
Subschedule 2 - Employee Benefit Plan
Subschedule 3 - Closing Fees
Subschedule 4 - Investments
Subschedule 5 - Derivatives
Subschedule 6 - Bank Accounts
Schedule 10.1(A) - Pro Forma
Schedule 10.1(B) - Indebtedness to be Repaid
</TABLE>
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<PAGE>
EXHIBIT 1.2(G)
LIBOR RATE LOAN REQUEST
OPINION RESEARCH CORPORATION
__________, ____
Heller Financial, Inc., as Agent
500 West Monroe Street
Chicago, Illinois 60661
Attention: Portfolio Analyst
Corporate Finance Group
Ladies and Gentlemen:
We refer to the Credit Agreement dated as of May __, 1999 (as the same has
been or may hereafter be amended, modified or supplemented, the "Credit
Agreement") among the undersigned, ORC, Inc., a Delaware corporation, Heller
Financial, Inc., a Delaware corporation, as Agent and a Lender and the other
Lenders from time to time party thereto. Capitalized terms used but not defined
herein have the meanings given to them in the Credit Agreement.
Pursuant to subsection 1.2(G) of the Credit Agreement, Parent, on behalf of
Borrowers, hereby:
(1) gives notice that on ____________, _____ Borrowers desire to borrow an
aggregate principal amount of $_____________, which shall be a LIBOR Loan. The
LIBOR Loan shall have an Interest Period of __________ months [insert 1, 2, 3 or
6]; or
(2) makes a request to:
(a) convert $______________ [of presently outstanding [Base
Rate/LIBOR] Revolving Loans] [of the presently outstanding Term Loan, which is
presently a [Base Rate/LIBOR Rate]] [with an Interest Period expiration date of
___________, ____] to [Base Rate/LIBOR Loans] on ___________, ____. If
converting to LIBOR Loans, the Interest Period for such LIBOR Loans is requested
to be a [one/two/three/six] month period.
<PAGE>
(b) continue as LIBOR Loans $___________ of presently outstanding
LIBOR Loans constituting [Revolving Loans/a portion of the Term Loan] with an
Interest Period expiration date of ___________, ____. The Interest Period for
such LIBOR Loans is requested to be a [one/two/three/six] month period.
The undersigned hereby certifies that, both before and after giving effect
to the advance, conversion or continuation request above (i) all of the
representations and warranties contained in the Credit Agreement and the other
Loan Documents, together with all supplemental disclosures delivered to Agent
prior to the date hereof, are true, correct and complete in all material
respects as of the date hereof, and (ii) no Default or Event of Default has
occurred and is continuing on the date hereof.
Sincerely,
OPINION RESEARCH CORPORATION
By_____________________________
Its____________________________
<PAGE>
EXHIBIT 1.5(B)
EXCESS CASH FLOW CERTIFICATE
OPINION RESEARCH CORPORATION
Date: __________, ____
This certificate is given by OPINION RESEARCH CORPORATION ("Borrower")
pursuant to subsection 1.5(B) of that certain Credit Agreement dated as of May
__, 1999 among Borrower, the Lenders from time to time party thereto and HELLER
FINANCIAL, INC., as agent for Lenders (as such agreement may have been amended,
restated, supplemented or otherwise modified from time to time, the "Credit
Agreement"). Capitalized terms used herein without definition shall have the
meanings set forth in the Credit Agreement.
The officer executing this certificate is the Chief Financial Officer
[Chief Executive Officer] of Borrower and as such is duly authorized to execute
and deliver this certificate on behalf of Borrower. By executing this
certificate such officer hereby certifies to Heller that:
(a) set forth below is a schedule of Excess Cash Flow for the year
ended _______________, _____ and the calculation of the required
repayment of $________________;
(b) the schedule set forth below is based on the audited financial
statements which have been delivered to Agent in accordance with
subsection 4.8(B)
IN WITNESS WHEREOF, Borrower has caused this Certificate to be
executed by its Chief Financial Officer [Chief Executive Officer] this ____ day
of ___________, _____.
By_____________________________
Chief Financial Officer
[Chief Executive Officer]
<PAGE>
<TABLE>
<CAPTION>
Excess Cash Flow is defined as follows:
<S> <C>
EBITDA (as calculated on Exhibit 4.8(C) to the Credit Agreement
("Exhibit 4.8(C)") $__________
Less: Any provision for (or plus any benefit from) income or
franchise taxes included in the determination of net income __________
Unfinanced Capital Expenditures (as calculated on Exhibit 4.8(C))
__________
Other Capitalized Costs, defined as the gross amount
capitalized, for any fiscal period, as long-term assets (net
of cash received in respect of long-term assets), other than
(a) Capital Expenditures and (b) fees and expenses
capitalized with respect to the Related Transactions
__________
Scheduled principal payments with respect to Indebtedness
actually paid in cash (including the principal portion of
scheduled payments of capital lease obligations but excluding
(i) mandatory prepayments required by subsection 1.5, (ii)
excluding reductions of the Revolving Loan and (iii) payments
in respect of the Macro Earn-Out and/or ProTel Earn-Out) __________
Total Interest Expenses (as calculated on Exhibit 4.8(C))
__________
The aggregate of all voluntary prepayments of the Term Loan
made in accordance with subsection 1.5(A) of the Credit
Agreement __________
Restricted Junior Payments made in cash and permitted under
subsection 3.5 __________
Macro Earn-Out Adjustment Amount (as defined and calculated in
Schedule 1 hereto) ___________
ProTel Earn-Out Adjustment Amount (as defined and calculated
in Schedule 1 hereto) ___________
Total Deductions $===========
</TABLE>
<PAGE>
EXHIBIT 1.5(B)
(cont'd)
EXCESS CASH FLOW CERTIFICATE
OPINION RESEARCH CORPORATION
Date: __________, ____
<TABLE>
<CAPTION>
<S> <C>
Plus: Decrease (increase) in Working Capital (defined below) __________
Decreases (increases) in long term deferred tax assets __________
Increases (decreases) in long term deferred tax liabilities __________
Increases (decreases) in long term portion of accrued
liabilities and other long-term liabilities, excluding _________
Indebtedness
Total Addbacks $=========
Excess Cash Flow $=========
Required prepayment percentage 50%
Required prepayment amount $=========
</TABLE>
<PAGE>
EXHIBIT 1.5(B)
(cont'd)
EXCESS CASH FLOW CERTIFICATE
OPINION RESEARCH CORPORATION
Date: __________, ____
Decrease (increase) in Working Capital, for the purposes of the calculation of
Excess Cash Flow, means the following:
<TABLE>
<CAPTION>
Beg. of Period End of Period
<S> <C> <C>
Current assets: $____________ $____________
Less: Cash _____________ _____________
Cash Equivalents _____________ _____________
Amounts due from Affiliates _____________ _____________
Adjusted current assets: $============ =============
Current liabilities: $____________ $____________
Less: Revolving Loans _____________ _____________
Current portion of _____________ _____________
Indebtedness
Amounts due to Affiliates _____________ _____________
Adjusted current liabilities: $============ $============
Working Capital: $============ $============
Decrease (Increase) in Working Capital [Beginning of
period minus end of period working capital] $============
</TABLE>
<PAGE>
SCHEDULE 1
TO EXCESS CASH
FLOW CERTIFICATE
ProTel Earn-Out Adjustment Amount
- ---------------------------------
1. With respect to the calculation of Excess Cash Flow for the year ending
December 31, 1999:
(a) there shall be no deduction for any amounts paid during such year on
account of the ProTel Earn-Out;
(b) there shall be a deduction for, and equal to, amounts paid on March 1,
2000 pursuant to Sections 4(b)(iii) and (iv) of the ProTel Purchase
Agreement.
2. With respect to the calculation of Excess Cash Flow for the year ending
December 31, 2000:
(a) there shall be no deduction for any amounts paid during such year on
account of the ProTel Earn-Out;
(b) there shall be a deduction for, and equal to, amounts paid on March 1,
2001 pursuant to Sections 4(b)(v), (vi) and (vii) of the ProTel
Purchase Agreement.
3. With respect to the calculation of Excess Cash Flow for the year ending
December 31, 2001, there shall be no deduction for amounts paid during such
year on account of the ProTel Earn-Out.
Macro Earn-Out Adjustment Amount
- --------------------------------
1. With respect to the calculation of Excess Cash Flow for the year ending
December 31, 1999, there shall be deducted the amount of $3,200,000,
representing the maximum amount payable pursuant to Sections 2(a)(iii)(A)
and (B) of the Purchase Agreement provided, however, in the event Borrower
shall not be required to pay the maximum amount pursuant to said sections,
then, within five days after the date on which any such amount is paid
pursuant to such sections, Borrower shall pay to Agent 50% of the amount by
which $3,200,000 exceeds the actual amount paid by Borrower, for
application to the Loans in accordance with subsection 1.5(e) of the Credit
Agreement.
2. With respect to the calculation of Excess Cash Flow for the year ending
December 31, 2000, there shall be deducted the amount of $5,500,000,
representing the maximum amount payable pursuant to Sections 2(a)(iii)(C),
(D) and (E) provided, however, in the
<PAGE>
event Borrower shall not be required to pay the maximum amount pursuant to
said sections, then, within five days after the date on which any such
payment is made pursuant to such sections, Borrower shall pay to Agent 50%
of the amount by which $5,500,000 exceeds the actual amount paid by
Borrower, for application to the Loans in accordance with subsection 1.5(e)
of the Credit Agreement.
<PAGE>
EXHIBIT 4.8(C)
COMPLIANCE CERTIFICATE
OPINION RESEARCH CORPORATION
ORC INC.
Date: __________, _____
This certificate is given by OPINION RESEARCH CORPORATION ("Parent") and
ORC INC. (together with Parent, "Borrowers") pursuant to subsection 4.8(C) of
that certain Credit Agreement dated as of May __, 1999 among Borrowers, the
Lenders from time to time party thereto and HELLER FINANCIAL, INC., as agent for
the Lenders (as such agreement may have been amended, restated, supplemented or
otherwise modified from time to time, the "Credit Agreement"). Capitalized terms
used herein without definition shall have the meanings set forth in the Credit
Agreement.
The officer executing this certificate on behalf of each Borrower is the
Chief Financial Officer [Chief Executive Officer] of such Borrower and as such
is duly authorized to execute and deliver this certificate on behalf of such
Borrower. By executing this certificate, Borrowers hereby certify to Agent and
Lenders that:
(a) the financial statements delivered with this certificate in accordance
with subsection 4.8(A) and/or 4.8(B) of the Credit Agreement fairly present in
all material respects the results of operations and financial condition of
Borrowers and their Subsidiaries as of the dates of such financial statements;
(b) Borrowers have reviewed the terms of the Credit Agreement and the Notes
and have made, or caused to be made under the supervision of the officers
executing this certificate, a review in reasonable detail of the transactions
and conditions of Borrowers and their Subsidiaries during the accounting period
covered by such financial statements;
(c) such review has not disclosed the existence during or at the end of
such accounting period of any condition or event that constitutes a Default or
an Event of Default, except as set forth in Schedule 1 hereto which includes a
description of the nature and period of existence of such Default or an Event of
Default and what action Borrowers have taken, are undertaking and propose to
take with respect thereto;
(d) As of the last measurement date immediately preceding, or on, the date
hereof, Borrowers are in compliance with the covenants contained in Section 4 of
the Credit Agreement, as demonstrated by the calculation of such covenants
below, except as set forth below or described in Schedule 1 hereto; and
1
<PAGE>
(e) as of the most recent Adjustment Date, the Total Adjusted Indebtedness
to Adjusted EBITDA Ratio, for purposes of determining the applicable interest
rate margins pursuant to subsection 1.2(A) of the Credit Agreement, is ______,
as calculated in Schedule 2 hereto.
IN WITNESS WHEREOF, Borrowers have caused this Certificate to be executed
by its Chief Financial Officer [Chief Executive Officer] this ____ day of
___________, ____.
OPINION RESEARCH CORPORATION
By:____________________________
Chief Financial Officer
[Chief Executive Officer]
ORC INC.
By:____________________________
Chief Financial Officer
[Chief Executive Officer]
2
<PAGE>
EXHIBIT 4.8(C)
COMPLIANCE CERTIFICATE
OPINION RESEARCH CORPORATION
ORC INC.
Date: __________, _____
CAPITAL EXPENDITURES
--------------------
(subsection 4.1)
Capital Expenditures are defined as follows:
Amount capitalized as capital expenditures for the period, under
GAAP, as property, plant, and equipment or similar fixed asset
accounts $__________
Plus: deposits made in the period in connection with property,
plant, and equipment; less deposits of a prior period included
above __________
Less: Net Proceeds of Asset Dispositions which (i) Borrower is
permitted to reinvest under subsection 1.5(C) of the Credit
Agreement and (ii) are included in capital expenditures above __________
Capital Expenditures $==========
Permitted Capital Expenditures $__________
In Compliance Yes/No
Capital Expenditures (from above) $__________
Less: Portion of Capital Expenditures financed under capital
leases or other Indebtedness (Indebtedness, for this purpose,
does not include drawings under the Revolving Loan Commitment) __________
Unfinanced Capital Expenditures (used in calculation of Fixed
Charge Coverage and Excess Cash Flow) $==========
Note: All amounts in Exhibit 4.8(C) are without duplication and, unless
otherwise indicated, are calculated for Borrower and its Subsidiaries on a
consolidated basis
1
<PAGE>
EBITDA
------
(subsection 4.3)
EBITDA is defined as follows:
Net income (or loss) for the period of Borrower and its
Subsidiaries on a consolidated basis determined in
accordance with GAAP, but excluding: (a) the income (or
loss) of any Person (other than Subsidiaries of Borrower) in
which Borrower or any of its Subsidiaries has an ownership
interest unless received by Borrower or its Subsidiary in a
cash distribution; and (b) the income (or loss) of any
Person (other than Company, whose net income (or loss) shall
be included in the calculation of EBITDA) accrued prior to
the date it became a Subsidiary of Borrower or is
merged into or consolidated with Borrower $__________
Plus, without duplication:
Any provision for (or less any benefit from) income and
franchise taxes included in the determination of net income __________
Interest expense deducted in the determination of net income __________
Amortization and depreciation deducted in determining net
income __________
Losses (or less gains) from Asset Dispositions or other
non-cash items included in the determination of net income
(excluding sales, expenses or losses related to current
assets) __________
2
<PAGE>
Extraordinary losses (or less gains), as defined under
GAAP, net of related tax effects ___________
To the extent deducted in computing net income (loss),
one time severance expenses not to exceed $2,470,000 in ___________
the aggregate in connection with the termination of
employment of Michael Cooper
To the extent deducted in determining net income (or loss), ___________
(a) loss incurred by Company for closure of Eastern
Europe Operations not to exceed $350,000 in the
aggregate and (b) translation loss incurred in
connection with such closure, not to exceed $210,000 in
the aggregate
Less: Expenditures pursuant to the last sentence of
subsection 4.9 applicable to, but not included in, the
Pro Forma; including expenditures during the period
made in connection with the Related Transactions and
payment of liabilities existing on the Closing Date ___________
EBITDA $==========
Required EBITDA $==========
In Compliance Yes/No
3
<PAGE>
FIXED CHARGE COVERAGE
---------------------
(subsection 4.4)
Fixed Charge Coverage is defined as follows:
Fixed Charges:
Interest expense, net of interest income, included in the
determination of net income $__________
Less: Amortization of capitalized fees and expenses incurred
with respect to the Related Transactions included in
interest expense __________
Amortization of any original discount attributable to
any warrants included in interest expense __________
Interest paid in kind and included in interest expense
__________
Total Interest Expenses $==========
Plus: Any provision for (benefit from) income or franchise
taxes included in the determination of net income __________
Increases (decreases) in short-term and long-term
deferred tax assets __________
Decreases (increases) in short-term and long-term
deferred tax liabilities __________
Scheduled payments of principal with respect to all
Indebtedness (including the principal portion of
scheduled payments of capital lease obligations but
excluding (i) mandatory prepayments required by
subsection 1.5, (ii) reductions of the Revolving Loan
and (iii) payments in respect of the Macro Earn-Out
and ProTel Earn-Out) __________
Restricted Junior Payments made in cash (other than
Interest Expense and other than Restricted
Junior Payments described in subsection 3.5(C) of the
Credit Agreement paid prior to June 30, 2000) __________
Fixed Charges $==========
4
<PAGE>
Operating Cash Flow:
EBITDA for the period in question (calculated in the manner $__________
required by subsection 4.3)
Less: Unfinanced Capital Expenditures (calculated in the manner
required by subsection 4.1) __________
Other Capitalized Costs, defined as the gross amount
capitalized, for any fiscal period, as long term assets (net
of cash received in respect of long term assets), other than
(a) Capital Expenditures and (b) fees and expenses
capitalized with respect to the Related Transactions __________
Operating Cash Flow $==========
Fixed Charge Coverage (Operating Cash Flow divided by Fixed
Charges) __________
Required Fixed Charge Coverage __________
In Compliance Yes/No
5
<PAGE>
TOTAL INTEREST COVERAGE
-----------------------
(subsection 4.5)
Total Interest Expense (calculated in the manner required by
subsection 4.4) $__________
Operating Cash Flow for the period in question (calculated in the
manner required by subsection 4.4) $__________
Total Interest Coverage (Operating Cash Flow divided by Interest
Expenses) __________
Required Total Interest Coverage __________
In Compliance Yes/No
6
<PAGE>
SENIOR INDEBTEDNESS TO ADJUSTED EBITDA RATIO
--------------------------------------------
(subsection 4.6)
Senior Indebtedness:
Average daily principal balance of the Revolving Loans for the one
month period ending on the date set forth above $_________
Plus: Outstanding principal balance of the Term Loan _________
Outstanding principal balance of all other Indebtedness
(including Indebtedness in respect of the Macro Earn-Out and
ProTel Earn-Out), other than Indebtedness which is expressly _________
subordinated to the Obligations
Less: Unrestricted cash on hand of Borrower and its Domestic
Subsidiaries in immediately available funds, not to exceed the
amount of the Macro Earn-Out and ProTel Earn-Out included above _________
Senior Indebtedness $=========
EBITDA (calculated in the manner required by subsection 4.3) $=========
Plus: Pro Forma EBITDA/1/ $________
Equals: Adjusted EBITDA $_________
Senior Indebtedness to Adjusted EBITDA Ratio _________
1/ Pro Forma EBITDA means an amount equal to operating earnings before
- -
interest, taxes, depreciation and amortization for each Person acquired by a
Borrower in connection with an Acquisition permitted under the Credit
Agreement for the most recent 12 month period preceding such Acquisition,
which amount shall be calculated by Borrowers and shall be subject to the
approval of Agent and Requisite Lenders. After the closing of such
Acquisition, Pro Forma EBITDA with respect to each such Person shall equal
such 12 month number multiplied by a fraction, the numerator of which is
twelve minus the number of full calendar months such Person, or its assets,
have been owned by a Borrower for which Agent has received monthly financial
statements, and the denominator of which is 12.
7
<PAGE>
Maximum Senior Indebtedness to Adjusted EBITDA Ratio _________
In Compliance Yes/No
8
<PAGE>
TOTAL INDEBTEDNESS TO ADJUSTED EBITDA RATIO
-------------------------------------------
(subsection 4.7)
Total Indebtedness:
Average daily principal balance of the Revolving Loans for the one
month period ending on the date set forth above $_________
Plus: Outstanding principal balance of the Term Loan _________
Outstanding principal balance of all other Indebtedness _________
(including Indebtedness in respect of the Macro Earn-Out and
ProTel Earn-Out)
Less: Unrestricted cash on hand of Borrower and its Domestic
Subsidiaries in immediately available funds, not to exceed the
amount of the Macro Earn-Out and ProTel Earn-Out included above _________
Total Indebtedness $=========
Adjusted EBITDA (calculated in the manner required by subsection $=========
4.6)
Total Indebtedness to Adjusted EBITDA Ratio _________
Maximum Total Indebtedness to Adjusted EBITDA Ratio _________
In Compliance Yes/No
9
<PAGE>
SCHEDULE 1
TO EXHIBIT 4.8(C)
COMPLIANCE CERTIFICATE
OPINION RESEARCH CORPORATION
ORC INC.
Date: __________, ______
CONDITIONS OR EVENTS WHICH CONSTITUTE A DEFAULT OR
---------------------------------------------------
EVENT OF DEFAULT
----------------
[If any condition or event exists that constitutes a Default or Event of
Default, specify nature and period of existence and what action Borrower has
taken, is taking or proposes to take with respect thereto; if no condition or
event exists, state "None."]
10
<PAGE>
SCHEDULE 2 TO
EXHIBIT 4.8(C)
TOTAL ADJUSTED INDEBTEDNESS TO EBITDA RATIO
-------------------------------------------
Total Adjusted Indebtedness:
Average daily principal balance of the Revolving Loans for the one
month period ending on the date set forth above $__________
Plus: Outstanding principal balance of the Term Loan __________
Outstanding principal balance of all other Indebtedness __________
Less: To the extent included above, Indebtedness in respect of the
Macro Earn-Out and ProTel Earn-Out __________
Total Adjusted Indebtedness $==========
Adjusted EBITDA (calculated in the manner required by subsection $==========
4.6)
Total Adjusted Indebtedness to EBITDA Ratio __________
11
<PAGE>
SCHEDULE 3 TO
EXHIBIT 4.8(C)
ADJUSTED FIXED CHARGE COVERAGE
------------------------------
Adjusted Fixed Charge Coverage is defined as follows:
Adjusted Fixed Charges:
Interest expense, net of interest income, included in the
determination of net income $__________
Less: Amortization of capitalized fees and expenses incurred with
respect to the Related Transactions included in interest
expense __________
Amortization of any original discount attributable to any
warrants included in interest expense __________
Interest paid in kind and included in interest expense __________
Total Interest Expenses/1/ $==========
Plus: Any provision for (benefit from) income or franchise taxes
included in the determination of net income/1/ __________
Increases (decreases) in short-term and long-term deferred tax
assets __________
Decreases (increases) in short-term and long-term deferred tax
liabilities __________
Scheduled payments of principal with respect to all
Indebtedness (including the principal portion of scheduled
payments of capital lease obligations but excluding (i)
mandatory prepayments required by subsection 1.5, (ii)
reductions of the Revolving Loan
______________________
1/ Total Interest Expenses and Taxes shall equal Total Interest Expenses and
- -
provision for taxes for the period from July 1,1999 through the applicable
monthly testing date and then annualized.
12
<PAGE>
and (iii) payments in respect of the Macro Earn-Out and
ProTel Earn-Out)/2/ _________
Restricted Junior Payments made in cash (other than Interest _________
Expense)
Adjusted Fixed Charges $=========
Adjusted Operating Cash Flow:
EBITDA for the 12-month period ending on the determination date $_________
(calculated in the manner required by subsection 4.3)
Less: Unfinanced Capital Expenditures for such period (calculated
in the manner required by subsection 4.1) _________
Other Capitalized Costs, defined as the gross amount
capitalized, for such fiscal period, as long term assets (net
of cash received in respect of long term assets), other than
(a) Capital Expenditures and (b) fees and expenses
capitalized with respect to the Related Transactions _________
Adjusted Operating Cash Flow $=========
Adjusted Fixed Charge Coverage (Adjusted Operating Cash Flow
divided by Adjusted Fixed Charges) _________
Required Adjusted Fixed Charge Coverage 1.0
In Compliance Yes/No
________________________________________________________________________________
2/ Scheduled payments of principal with respect to all Indebtedness shall be
- -
deemed to be equal to $1,000,000.
13
<PAGE>
EXHIBIT 4.8(E)
BORROWING BASE CERTIFICATE
OPINION RESEARCH CORPORATION
ORC, INC.
Date: ___________, ______
This certificate is given by OPINION RESEARCH CORPORATION ("Parent"), on
behalf of Borrowers, pursuant to subsection 4.8(E) of that certain Credit
Agreement dated as of May __, 1999 among Borrowers, the Lenders from time to
time party thereto and HELLER FINANCIAL, INC., as agent for the Lenders (as such
agreement may have been amended, restated, supplemented or otherwise modified
from time to time the "Credit Agreement"). Capitalized terms used herein
without definition shall have the meanings set forth in the Credit Agreement.
The officer executing this certificate is the Chief Financial Officer
[Chief Executive Officer] of Parent and as such is duly authorized to execute
and deliver this certificate on behalf of Borrowers. By executing this
certificate Borrowers hereby certify to Agent and Lenders that:
(a) Attached hereto as Schedule 1 is a calculation of the Borrowing
Base for Borrowers as of the above date;
(b) based on such schedule, the Borrowing Base as the above date is:
$__________________
IN WITNESS WHEREOF, Parent has caused this Certificate to be executed
by its Chief Financial Officer [Chief Executive Officer] this ____ day of
___________, ____.
OPINION RESEARCH CORPORATION
By:_____________________________
Chief Financial Officer
[Chief Executive Officer]
<PAGE>
Schedule 1 to
Exhibit 4.8(E)
BORROWING BASE CALCULATION
--------------------------
OPINION RESEARCH CORPORATION
ORC, INC.
ACCOUNTS AVAILABILITY
- ---------------------
Accounts of the Borrower reflected on the Borrower's consolidated
balance sheet (as of the date above). Accounts means, on any date
of determination, the unpaid portion of the obligations as stated
on the respective invoices issued to a customer of Borrower or
any of its Subsidiaries with respect to services performed in the
ordinary course of business, net of any credits, rebates or
offsets owed by Borrower or any of its Subsidiaries to the
respective customer.
$_________
Less: Ineligible Accounts (without duplication):
Accounts which remain unpaid for more than sixty days after
the due date specified in the original invoice or for more than
ninety days after the invoice date if no due date was specified
__________
Accounts with respect to which the customer is an Affiliate of
Borrower or a director, officer, agent, stockholder, or employee of
Borrower or any of their Affiliates __________
Accounts with respect to which there is any unresolved dispute
with the respective customer but only to the extent of such dispute __________
Accounts with respect to which Agent does not have a valid,
first priority and fully perfected security interest and Accounts
subject to any Lien except those in favor of Agent and Permitted
Encumbrances; including Accounts evidenced by an instrument (as
defined in Article 9 of the UCC) not in the possession of Agent,
other than Accounts owing to a Foreign Subsidiary which shall not be
deemed to be ineligible as a result of this clause __________
2
<PAGE>
Accounts with respect to which the customer is the subject of
any bankruptcy or other insolvency proceedings __________
Accounts due from a customer (for purposes hereof, each
department, agency or instrumentality of the United States of
America shall be deemed a separate customer) to the extent
that such Accounts exceed in the aggregate an amount equal to
twenty percent of the aggregate of all Accounts at said date __________
Total Ineligible Accounts $=========
Total Eligible Accounts (Accounts less Total Ineligible Accounts) $=========
Advance Rate 85%
Accounts Availability $=========
<PAGE>
Schedule 1 to
Exhibit 4.8(E)
BORROWING BASE CALCULATION
--------------------------
OPINION RESEARCH CORPORATION
ORC, INC.
UNBILLED TIME INVENTORY AVAILABILITY
------------------------------------
On any date of determination, the unbilled amount of fees to be
charged to a customer of Borrower or any of its Subsidiaries with
respect to services performed in the ordinary course of business,
net of any credits, rebates or offsets owed by Borrower or any of
its Subsidiaries to the respective customer, which amounts shall
be calculated in accordance with past practices. $__________
Less: Ineligible Unbilled Amounts:
Unbilled amounts with respect to which the customer is an
Affiliate of Borrower or a director, officer, agent, stockholder,
or employee of Borrower or any of their Affiliates __________
Unbilled amounts with respect to which there is any
unresolved dispute with the respective customer but only to the
extent of such dispute __________
Unbilled amounts with respect to which Agent does not have
a valid, first priority and fully perfected security interest and
amounts subject to any Lien except those in favor of Agent and
Permitted Encumbrances, other than unbilled amounts to a customer
of a Foreign Subsidiary which shall not be deemed to be ineligible
as a result of this clause __________
Unbilled amounts with respect to which the customer is the
subject of any bankruptcy or other insolvency proceedings __________
<PAGE>
Unbilled amounts due, or to become due, from a customer (for
purposes hereof, each department, agency or instrumentality of the
United States of America shall be deemed a separate customer) to the
extent that such amounts exceed in the aggregate an amount equal to
twenty percent of the aggregate of all unbilled amounts at said date __________
Unbilled amounts due, or to become due, from a customer (for
purposes hereof, each department, agency or instrumentality of the
United States of America shall be deemed a separate customer) to
the extent that such amounts when combined with Accounts due from
such customer, exceed in the aggregate an amount equal to twenty
percent of the sum of the aggregate of all unbilled amounts plus
all Accounts at said date __________
<PAGE>
Schedule 1 To
Exhibit 4.8(E)
(cont'd)
BORROWING BASE CALCULATION
--------------------------
OPINION RESEARCH CORPORATION
ORC, INC.
Total Ineligible Unbilled Amounts $==========
Total Eligible Unbilled Amounts (Total Unbilled Amounts less Total $==========
Ineligible Unbilled Amounts)
Advance Rate 50%
Unbilled Time Inventory Availability $=========
Borrowing Base (Accounts Availability plus Unbilled Time Inventory
Availability) $=========
<PAGE>
EXHIBIT 10.1(A)
---------------
REVOLVING NOTE
$______________ May __, 1999
Chicago, Illinois
FOR VALUE RECEIVED, the undersigned, OPINION RESEARCH CORPORATION, a
Delaware corporation and ORC, INC., a Delaware corporation (together, the
"Borrowers"), hereby unconditionally promise to pay to the order of
____________________________, a _________ corporation ("Lender"), at Agent's
office at 500 West Monroe Street, Chicago, Illinois 60661, or at such other
place as the Agent may from time to time designate in writing, in lawful money
of the United States of America and in immediately available funds, the
principal sum of ___________________ AND NO/100 DOLLARS ($__________________),
or, if less, the aggregate unpaid principal amount of all advances made pursuant
to subsection 1.1(B) of the "Credit Agreement" (as hereinafter defined), at such
times as are specified in, and in accordance with the provisions of, the Credit
Agreement. This Revolving Note is referred to in and was executed and delivered
pursuant to that certain Credit Agreement of even date herewith (the "Credit
Agreement") among Borrowers, Heller Financial, Inc., as Agent for the benefit of
all lenders, and the other lenders who are parties thereto, to which reference
is hereby made for a statement of the terms and conditions under which the
Revolving Loan evidenced hereby was made and is to be repaid. All terms which
are capitalized and used herein (which are not otherwise specifically defined
herein) and which are defined in the Credit Agreement shall be used in this
Revolving Note as defined in the Credit Agreement. This Revolving Note is
secured by the Collateral.
Borrowers further promise to pay interest on the outstanding unpaid
principal amount hereof, as provided in the Credit Agreement, from the date
hereof until payment in full hereof at the applicable rate specified in
subsection 1.2(A) of the Credit Agreement; provided, however, that if Agent, or
Requisite Lenders, so elect, following the occurrence and during the continuance
of an Event of Default, Borrowers promise to pay to Lender interest on the
unpaid principal amount hereof at the applicable rate specified in subsection
1.2(E) of the Credit Agreement. Interest shall be payable in arrears on the
dates specified in subsection 1.2(D) of the Credit Agreement and at maturity,
whether by acceleration or otherwise. Interest shall be computed on the closing
daily principal balance in Borrowers' Loan Account with respect to Revolving
Loan on the basis of a 360 day year for the actual number of days elapsed in the
period during which it accrues.
If a payment hereunder becomes due and payable on a day that is not a
Business Day, the payment may be made on the next succeeding Business Day, and
such extension of time shall be included in the computation of the amount of
interest due on such succeeding Business Day. Checks, drafts or similar items of
payment received by Lender shall not constitute payment, but credit therefor
shall, solely for the purpose of computing interest earned by Lender, be given
in accordance with the Credit Agreement. In no contingency or event whatsoever
shall interest charged hereunder, however such interest may be characterized or
computed, exceed the highest rate
<PAGE>
permissible under any law which a court of competent jurisdiction determines is
applicable hereto. In the event of any such determination, the provisions of
subsection 1.2(F) of the Credit Agreement shall govern and control.
After the occurrence and during the continuance of an Event of Default,
Agent shall have the exclusive right to apply and to reapply any and all
payments hereunder against the Obligations of Borrowers in such manner as Agent
deems advisable notwithstanding any previous entry by Agent upon Borrowers' Loan
Account or any other books and records.
If any suit or action is instituted or attorneys are employed to collect
this Revolving Note or any part thereof, Borrowers hereby promise and agree to
pay all costs of collection, including attorneys' fees and court costs.
Each Borrower and each endorser, guarantor and surety of this Revolving
Note hereby waives presentment for payment, protest and demand, and notice of
demand, protest, dishonor and nonpayment of this Revolving Note. Except as
otherwise required pursuant to the Credit Agreement, each Borrower also waives
all rights to notice and hearing of any kind upon the occurrence of an Event of
Default and prior to the exercise by Agent of its rights to repossess the
Collateral without judicial process or to replevy, attach or levy upon the
Collateral without notice or hearing.
THIS REVOLVING NOTE HAS BEEN DELIVERED AT AND SHALL BE DEEMED TO HAVE BEEN
MADE AT CHICAGO, ILLINOIS AND SHALL BE INTERPRETED AND THE RIGHTS AND
LIABILITIES OF THE PARTIES HERETO SHALL BE DETERMINED IN ACCORDANCE WITH THE
INTERNAL LAWS AND DECISIONS OF THE STATE OF ILLINOIS WITHOUT REGARD TO CONFLICTS
OF LAW PROVISIONS. Whenever possible each provision of this Revolving Note shall
be interpreted in such manner as to be effective and valid under applicable law,
but if any provision of this Revolving Note shall be prohibited by or invalid
under applicable law, such provision shall be ineffective to the extent of such
prohibition or invalidity, without invalidating the remainder of such provision
or the remaining provisions of this Revolving Note. Whenever in this Revolving
Note reference is made to Agent, Lender or Borrowers, such reference shall be
deemed to include, as applicable, a reference to their respective successors and
assigns. The provisions of this Revolving Note shall be binding upon and shall
inure to the benefit of such successors and assigns. Each Borrower's successors
and assigns shall include, without limitation, a receiver, trustee or debtor in
possession of or for such Borrower. All obligations and agreements of Borrowers
hereunder are joint and several.
2
<PAGE>
IN WITNESS WHEREOF, Borrowers have executed this Revolving Note as of
the day and year first written above.
OPINION RESEARCH CORPORATION, a
Delaware corporation
By: _________________________
Title: ______________________
ORC, INC., a Delaware corporation
By: _________________________
Title: ______________________
3
<PAGE>
SCHEDULE 7.1
CONDITIONS TO INITIAL LOANS
---------------------------
(A) DELIVERIES. Any documents listed below shall be duly executed, in form
----------
and substance satisfactory to Agent, in quantities designated by Agent
(except for the Notes, of which only the originals shall be signed) and
shall be delivered to Agent on or before the Closing Date. Capitalized
terms used herein shall have the meanings set forth in the Credit
Agreement.
(1) Credit Agreement and all Schedules and Exhibits thereto.
(2) Term Notes and Revolving Notes.
(3) Security Agreements.
(4) Security Interests, UCC Filings and Stock Certificates.
(a) Evidence that, upon filing of applicable financing statements,
Agent will have a valid and perfected first priority security
interest in the Collateral, subject only to Permitted
Encumbrances.
(b) Executed documents (including financing statements under the
Uniform Commercial Code and other applicable documents under the
laws of any jurisdiction with respect to the perfection of Liens)
as Agent may deem necessary to perfect its security interests in
the Collateral.
(c) Certificates (which certificates shall be properly endorsed in
blank for transfer or accompanied by irrevocable undated stock
powers duly endorsed in blank) representing all of the capital
stock of each Domestic Subsidiary of Borrowers and sixty-five
percent of the capital stock of each Foreign Subsidiary pursuant
to each pledge agreement.
(5) Real Property.
(a) With respect to real property owned by a Borrower or any of its
Subsidiaries, real property mortgages and/or deeds of trust,
title insurance and surveys (with endorsements and certifications
acceptable to Agent), appraisals, required environmental
disclosure affidavits and such other documentation requested by
Agent.
<PAGE>
(b) With respect to real property leased by a Borrower or any of its
Subsidiaries, landlord waivers as requested by Agent.
(6) Intentionally Omitted.
(7) Notice of Borrowing and Letter of Direction. A letter of direction
from Borrowers to Agent describing the disbursement of the proceeds of
the Term Loan, the initial advance under the Revolving Loan and any
initial Lender Letter of Credit or Risk Participation Agreement.
(8) Insurance Policies and Endorsements. Copies of Borrowers' and their
Subsidiaries insurance policies together with endorsements naming
Agent and Lenders, as applicable, as lender's loss payee (with respect
to all property insurance), additional insured (with respect to all
liability insurance), assignee (with respect to all business
interruption insurance).
(9) Bank Agreements. Agreements for each bank designated by Agent at which
a Borrower or any of its Subsidiaries maintains depository accounts.
(10) Intentionally Omitted.
(11) Financial Statements. Financial statements referred to in subsection
5.5 of the Credit Agreement.
(12) Charter and Good Standing. Certified copies of the certificates or
articles of incorporation, or their equivalent of Borrowers, Company
and each other Loan Party together with good standing certificates
from the respective states of incorporation or organization and the
respective states in which the principal places of business of each is
located and from all states in which the activities of such Persons
require them to be qualified and/or licensed to do business, each to
be dated a recent date prior to the Closing Date.
(13) Bylaws. Copies of the bylaws, or their equivalent, of Borrowers,
Company and each other Loan Party certified as of the Closing Date by
its corporate secretary or an assistant secretary.
(14) Resolutions. Resolutions of the Boards of Directors of each Borrower,
Company and each other Loan Party executing Related Transaction
Documents authorizing and approving the execution, delivery and
performance of Related Transactions Documents to which such Person is
a party, certified as of the Closing Date by its corporate secretary
or an assistant secretary as being in full force and effect without
modification or amendment.
<PAGE>
(15) Incumbency Certificates. Signature and incumbency certificates of (a)
the officers of each Borrower executing the Loan Documents, (b) the
officers of Company executing the Purchase Agreement, Loan Document
and the Related Transactions Documents, and (c) the officers of each
other Loan Party executing the Loan Documents to which any of them is
a party.
(16) Subsidiary Guaranty.
(17) Pledge Agreements.
(18) Subordination and IntercreditorAgreement.
(19) Purchase Agreement. Certified copy of the final Purchase Agreement and
any amendments, modifications or waivers thereto, the material
obligations or covenants of which all parties to the Purchase
Agreement have performed or complied with on or before the Closing
Date; and all certificates, opinions and letters delivered in
connection with the Purchase Agreement, which shall be addressed to
Agent and Lenders or accompanied by a written authorization from the
person delivering such certificate, opinion or letter stating that
Agent and Lenders may rely on such document as though it were
addressed to them.
(20) Government Approvals. Evidence of the prior approval, if required, of
the Federal Trade Commission or U.S. Justice Department under the
Hart-Scott-Rodino Anti-Trust Improvements Act of the transactions
contemplated by the Purchase Agreement. Borrower hereby represents and
warrants to Agent and Lenders that no such approval is needed.
(21) Collateral Assignment of Representations, Warranties, Covenants and
Indemnities. Evidence reasonably satisfactory to Agent that all
representations warranties, covenants and indemnities set forth in the
Purchase Agreement have been collaterally assigned to Agent.
(22) Intentionally Omitted.
(23) Initial Borrowing Base Certificate. The initial Borrowing Base
Certificate dated not more than five days prior to the Closing Date.
(24) Opinions of Counsel. Written opinions of Wolf, Block, Schorr & Solis-
Cohen, counsel for Borrowers and the other Loan Parties, and such
other local counsel as Agent may request, in form and substance
satisfactory to Agent and its counsel, dated as of the Closing Date.
<PAGE>
(25) Termination of Prior Indebtedness Liens and Other Liens. Pay-off
letters from each holder of Indebtedness of each Borrower and each of
its Subsidiaries outstanding prior to consummation of the Related
Transactions, duly executed UCC-3 termination statements, mortgage
releases and such other instruments, in form and substance
satisfactory to Agent, as shall be necessary to terminate and satisfy
all Liens securing such Indebtedness and all other Liens except for
Permitted Encumbrances.
(26) Pre-closing Searches. UCC, tax and judgment search reports listing all
effective financing statements, tax liens and judgment liens that name
Company, a Borrower or any Subsidiary of a Borrower as debtor together
with copies of such financing statements, tax liens and judgment
liens, the contents of which shall be satisfactory to Agent.
(27) Capitalization/Acquisition Documents. Copies of all
Capitalization/Acquisition Documents (not already listed above)
reflecting that Parent has issued and sold Subordinated Indebtedness,
the gross cash proceeds of which are at least $15,000,000.
(28) Other Documents. Borrowers shall have delivered such other documents
as Agent may reasonably request.
(B) SUBSCHEDULES
(1) Litigation. List of any outstanding judgments, actions, charges,
claims, demands, suits, proceedings, petitions, governmental
investigations or arbitrations now pending or, to the best knowledge
of Borrowers after due inquiry, threatened against any Loan Party or
affecting any property of any Loan Party, along with status reports,
annexed hereto as Subschedule 1.
(2) Employee Benefit Plans. List of any employee benefit plans which any
Loan Party or any Affiliate maintains or contributes to, or has any
current or potential obligations under, and copies of IRS
Determination Letters for each such employee benefit plan, annexed
hereto as Subschedule 2.
(3) Closing Fees. List of any broker's, finder's, due diligence,
structuring, debt or equity placement fees, commissions or similar
compensation payable with respect to the consummation of the Related
Transactions, other than fees payable to Agent or Lenders, annexed
hereto as Subschedule 3.
(4) Investments. List of any Investments in any Person by a Borrower or
any of its Subsidiaries, annexed hereto as Subschedule 4.
<PAGE>
(5) Derivatives. List of any contracts or other relationships entered into
by a Borrower or any of its Subsidiaries which involve the exchange,
transfer or modification of risks associated with fluctuations in
interest rates, currency exchange rates or commodity prices or any
similar risks through caps, swaps, collars, futures contracts, forward
exchange contracts or any other type of derivative arrangement,
annexed hereto as Subschedule 5.
(6) Bank Accounts. List of bank accounts, setting forth for each such bank
account, the bank at which the account is maintained, the account
number, the purpose of the account and the maximum balance of the
account, annexed hereto as Subschedule 6.
The foregoing deliveries and subschedules are true, correct and
complete and are made and delivered this ____ day of May, 1999.
OPINION RESEARCH CORPORATION
By: /s/ John F. Short
------------------------------
Name: John F. Short
----------------------------
Its: President
-----------------------------
ORC, INC.
By: /s/ Douglas L. Cox
-------------------------------
Name: Douglas L. Cox
-----------------------------
Its: Secretary
------------------------------
<PAGE>
Exhibit 10.2
SECURITY AGREEMENT
This SECURITY AGREEMENT (this "Agreement") is dated as of May __, 1999
between OPINION RESEARCH CORPORATION, a Delaware corporation ("Parent"), and
ORC, INC., a Delaware corporation and wholly-owned subsidiary of Parent ("ORC";
Parent and ORC are sometimes referred to individually as a "Borrower" and
together as the "Borrowers"), and HELLER FINANCIAL, INC., a Delaware
corporation, as agent ("Agent") for the benefit of all Lenders.
W I T N E S S E T H :
- - - - - - - - - -
WHEREAS, Borrowers have entered into a Credit Agreement of even date
herewith (as the same may hereafter be amended, restated, supplemented or
otherwise modified from time to time, the "Credit Agreement") with the Lenders
and Agent, for the benefit of Agent and all Lenders thereunder, providing for
extensions of credit and other financial accommodations to be made to Borrowers
by Agent and Lenders; and
WHEREAS, it is a condition precedent to the obligations of Agent and the
Lenders under the Credit Agreement that Borrowers shall have granted the Liens
contemplated by this Agreement;
NOW, THEREFORE, in consideration of the foregoing and in order to induce
Agent and the Lenders to extend credit and make other financial accommodations
under the Credit Agreement, and for other good and valuable consideration, the
receipt and sufficiency of which hereby are acknowledged, each Borrower hereby
agrees with Agent, on behalf of and for the benefit of Agent and Lenders, as
follows:
SECTION 1. Definitions
-----------
1.1 Certain Defined Terms. Unless otherwise defined herein, all
---------------------
capitalized terms used herein shall have the respective meanings given to such
terms in the Credit Agreement. The following terms, as used herein, have the
meanings set forth below:
"Accounts" means, with respect to each Borrower, all "accounts" (as defined
in the UCC) now owned or hereafter created or acquired by such Borrower
including, without limitation, all of the following now owned or hereafter
created or acquired by such Borrower: (a) accounts receivable, contract rights,
book debts, notes, drafts, chattel paper and other obligations or indebtedness
owing to such Borrower arising from the sale, lease or exchange of goods or
other property and/or the performance of services; (b) such Borrower's rights
in, to and under all purchase orders for goods, services or other property; (c)
such Borrower's rights to any goods, services or other property represented by
any of the foregoing (including returned or repossessed goods and unpaid
sellers' rights of rescission, replevin, reclamation and rights of stoppage in
transit); (d) monies due to or to become due to such Borrower under all
contracts for the sale, lease or exchange of goods or
<PAGE>
other property and/or the performance of services (whether or not yet earned by
performance on the part of such Borrower); (e) uncertificated securities; and
(f) Proceeds of any of the foregoing and all collateral security and guaranties
of any kind given by any Person with respect to any of the foregoing.
"Blocked Accounts" has the meaning assigned to that term in Section 7.
"Collateral" has the meaning assigned to that term in Section 2.
"Collecting Banks" has the meaning assigned to that term in Section 7.
"Copyright License" means, with respect to each Borrower, any written
agreement now or hereafter in existence granting to such Borrower any right to
use any Copyright including, without limitation, the agreements described in
Schedule 1 of the Copyright Security Agreements.
"Copyrights" means, with respect to each Borrower, collectively, all of the
following: (a) all copyrights, rights and interests in copyrights, works that
may be protected by copyright, copyright registrations and copyright
applications now owned or hereafter created or acquired by such Borrower,
including, without limitation, those listed on Schedule 1 of such Borrower's
Copyright Security Agreement; (b) all renewals of any of the foregoing; (c) all
income, royalties, damages and payments now or hereafter due and/or payable
under any of the foregoing, including, without limitation, damages or payments
for past or future infringements of any of the foregoing; (d) the right to sue
for past, present and future infringements of any of the foregoing; (e) all
rights corresponding to any of the foregoing throughout the world; and (f) all
goodwill associated with and symbolized by any of the foregoing.
"Copyright Security Agreements" means, collectively, the copyright security
agreements to be executed and delivered by Borrowers to Agent, substantially in
the form of Exhibit A, as such agreement may hereafter be amended, supplemented
or otherwise modified from time to time.
"Depositary Account" has the meaning assigned to that term in Section 7.
"Documents" means, with respect to each Borrower, all "documents" (as
defined in the UCC) or other receipts covering, evidencing or representing goods
now owned or hereafter acquired by such Borrower.
"Equipment" means, with respect to each Borrower, all "equipment" (as
defined in the UCC) now owned or hereafter acquired by such Borrower including,
without limitation, all machinery, motor vehicles, trucks, trailers, vessels,
aircraft and rolling stock and all parts thereof and all additions and
accessions thereto and replacements therefor.
"Fixtures" means, with respect to each Borrower, all of the following now
owned or hereafter acquired by such Borrower: plant fixtures; business fixtures;
other fixtures and storage facilities, wherever located; and all additions and
accessions thereto and replacements therefor.
2
<PAGE>
"General Intangibles" means, with respect to each Borrower, all "general
intangibles" (as defined in the UCC) now owned or hereafter acquired by such
Borrower including, without limitation, all right, title and interest of such
Borrower in and to: (a) the Purchase Agreement and all other agreements, leases,
licenses and contracts to which such Borrower is or may become a party; (b) all
obligations or indebtedness owing to such Borrower (other than Accounts) from
whatever source arising; (c) all tax refunds; (d) Intellectual Property; and (e)
all trade secrets and other confidential information relating to the business of
such Borrower including by way of illustration and not limitation: systems and
techniques for the analysis, diagnosis and correction of malfunctions of
products used by such Borrower's customers; the names and addresses of, and
credit and other business information concerning, such Borrower's past, present
or future customers; the prices which such Borrower obtains for its services or
at which it sells or leases merchandise; estimating and cost procedures; profit
margins; policies and procedures pertaining to the sale and design of equipment,
components, devices and services furnished by such Borrower; information
concerning suppliers of Borrower; and information concerning the manner of
operation, business plans, pledges, projections, and all other information of
any kind or character, whether or not reduced to writing, with respect to the
conduct by such Borrower of its business not generally known by the public.
"Instruments" means, with respect to each Borrower, all "instruments",
"chattel paper" or "letters of credit" (each as defined in the UCC) including,
but not limited to, promissory notes, drafts, bills of exchange and trade
acceptances, now owned or hereafter acquired by such Borrower.
"Intellectual Property" shall mean, with respect to each Borrower,
collectively all of the following: Copyrights, Copyright Licenses, Patents,
Patent Licenses, Trademarks and Trademark Licenses now owned or hereafter
acquired by such Borrower.
"Inventory" means, with respect to each Borrower, all "inventory" (as
defined in the UCC), now owned or hereafter acquired by such Borrower, wherever
located including, without limitation, finished goods, raw materials, work in
process and other materials and supplies (including packaging and shipping
materials) used or consumed in the manufacture or production thereof and goods
which are returned to or repossessed by such Borrower.
"Investment Property" means, with respect to each Borrower, all "investment
property" (as defined in the UCC) now owned or hereafter acquired by such
Borrower.
"Patent License" means, with respect to each Borrower, any written
agreement now or hereafter in existence granting to such Borrower any right to
use any invention on which a Patent is in existence including, without
limitation, the agreements described in Schedule 1 of such Borrower's Patent
Security Agreement.
"Patents" means, with respect to each Borrower, collectively all of the
following: (a) all patents and patent applications now owned or hereafter
created or acquired by such Borrower including, without limitation, those listed
on Schedule 1 of such Borrower's Patent Security Agreement and the inventions
and improvements described and claimed therein; (b) the reissues,
3
<PAGE>
divisions, continuations, renewals, extensions and continuations-in-part of any
of the foregoing; (c) all patentable inventions now owned or hereafter created
or acquired by such Borrower; (d) all income, royalties, damages or payments now
and hereafter due and/or payable under any of the foregoing with respect to any
of the foregoing, including, without limitation, damages or payments for past or
future infringements of any of the foregoing; (e) the right to sue for past,
present and future infringements of any of the foregoing; (f) all rights
corresponding to any of the foregoing throughout the world; and (g) all goodwill
associated with any of the foregoing.
"Patent Security Agreements" means, collectively, the patent security
agreements executed and delivered by Borrowers to Agent, substantially in the
form of Exhibit B, as such agreement may hereafter be amended, supplemented or
otherwise modified from time to time.
"Proceeds" means all proceeds of, and all other profits, rentals or
receipts, in whatever form, arising from the collection, sale, lease, exchange,
assignment, licensing or other disposition of, or realization upon, any
Collateral including, without limitation, all claims of any Borrower against
third parties for loss of, damage to or destruction of, or for proceeds payable
under, or unearned premiums with respect to, policies of insurance with respect
to any Collateral, and any condemnation or requisition payments with respect to
any Collateral, in each case whether now existing or hereafter arising.
"Secured Obligations" has the meaning assigned to that term in Section 3.
"Security Interests" means the security interests granted pursuant to
Section 2, as well as all other security interests created or assigned as
additional security for the Secured Obligations pursuant to the provisions of
this Agreement.
"Trademark License" means, with respect to each Borrower, any written
agreement now or hereafter in existence granting to such Borrower any right to
use any Trademark, including, without limitation, the agreements described in
Schedule 1 of such Borrower's Trademark Security Agreement.
"Trademarks" means, with respect to any Borrower, collectively all of the
following now owned or hereafter created or acquired by such Borrower: (a) all
trademarks, trade names, corporate names, company names, business names,
fictitious business names, trade styles, service marks, logos, other business
identifiers, prints and labels on which any of the foregoing have appeared or
appear, all registrations and recordings thereof, and all applications in
connection therewith including registrations, recordings and applications in the
United States Patent and Trademark Office or in any similar office or agency of
the United States, any State thereof or any other country or any political
subdivision thereof, including, without limitation, those described in Schedule
1 of such Borrower's Trademark Security Agreement; (b) all reissues, extensions
or renewals thereof; (c) all income, royalties, damages and payments now or
hereafter due and/or payable under any of the foregoing or with respect to any
of the foregoing including damages or payments for past or future infringements
of any of the foregoing; (d) the right to sue for past, present and future
infringements of any of the
4
<PAGE>
foregoing; (e) all rights corresponding to any of the foregoing throughout the
world; and (f) all goodwill associated with and symbolized by any of the
foregoing.
"Trademark Security Agreements" means, collectively, the trademark security
agreements executed and delivered by Borrowers to Agent substantially in the
form of Exhibit C, as such agreement may hereafter be amended, supplemented or
otherwise modified from time to time.
"UCC" means the Uniform Commercial Code as in effect on the date hereof in
the State of Illinois, provided that if by reason of mandatory provisions of
--------
law, the perfection or the effect of perfection or non-perfection of the
Security Interests in any Collateral or the availability of any remedy hereunder
is governed by the Uniform Commercial Code as in effect on or after the date
hereof in any other jurisdiction, "UCC" means the Uniform Commercial Code as in
effect in such other jurisdiction for purposes of the provisions hereof relating
to such perfection or effect of perfection or non-perfection or availability of
such remedy.
1.2 Other Definition Provisions. References to "Subsections",
---------------------------
"subsections", "Exhibits" and "Schedules" shall be to Sections, subsections,
Exhibits and Schedules, respectively, of this Agreement unless otherwise
specifically provided. Any of the terms defined in subsection 1.1 may, unless
the context otherwise requires, be used in the singular or the plural depending
on the reference. All references to statutes and related regulations shall
include (unless otherwise specifically provided herein) any amendments of same
and any successor statutes and regulations.
SECTION 2. Grant of Security Interests
---------------------------
In order to secure the prompt and complete payment and performance of the
Secured Obligations in accordance with the terms thereof, each Borrower hereby
grants to Agent, for the benefit of Agent and the Lenders, a continuing security
interest in and to all right, title and interest of such Borrower in the
following property, whether now owned or existing or hereafter acquired or
arising and regardless of where located (all being collectively referred to as
the "Collateral"):
(A) Accounts;
(B) Inventory;
(C) General Intangibles, other than those agreements, leases,
licenses and contracts to which Borrower is or may be a party which by
their terms prohibit the assignment thereof without the consent of the
other party thereto to the extent any necessary consent shall not have been
obtained (collectively, "Non-Assignable Contracts");
(D) Documents;
(E) Instruments;
(F) Equipment, other than Equipment subject to purchase money Liens
permitted by the Credit Agreement which prohibit the granting of
subordinate Liens;
5
<PAGE>
(G) Fixtures;
(H) Investment Property;
(I) Any Depositary Account and all other deposit accounts of such
Borrower maintained with any bank or financial institution;
(J) All cash deposited therein from time to time and other monies
and property of Borrower in the possession or under the control of Agent or
any Lender;
(K) All books, records, ledger cards, files, correspondence,
computer programs, tapes, disks and related data processing software that
at any time evidence or contain information relating to any of the property
described in subparts (A) - (J) above or are otherwise necessary or helpful
in the collection thereof or realization thereon; and
(L) Proceeds of all or any of the property described in subparts
(A) - (K) above.
Notwithstanding the foregoing, so long as no Event of Default has occurred and
is continuing, each Borrower shall have the exclusive, non-transferable right
and license to use its Intellectual Property and the exclusive right to grant to
other Persons licenses and sublicenses with respect to the Intellectual
Property.
SECTION 3. Security for Secured Obligations
--------------------------------
This Agreement secures the prompt and complete payment and performance of
the Obligations and all obligations of Borrowers now or hereafter existing under
this Agreement and all renewals, extensions, restructurings and refinancings of
any of the above (all such debts, obligations and liabilities of Borrowers being
collectively referred to herein as the "Secured Obligations").
SECTION 4. Borrower Remains Liable
-----------------------
Anything herein to the contrary notwithstanding: (a) each Borrower shall
remain liable under the contracts and agreements included in the Collateral to
the extent set forth therein to perform all of its duties and obligations
thereunder to the same extent as if this Agreement had not been executed; (b)
the exercise by Agent of any of the rights granted hereunder shall not release
any Borrower from any of its duties or obligations under the contracts and
agreements included in the Collateral; and (c) Agent shall not have any
obligation or liability under the contracts and agreements included in the
Collateral by reason of this Agreement, nor shall Agent be obligated to perform
any of the obligations or duties of any Borrower thereunder or to take any
action to collect or enforce any claim for payment assigned hereunder.
SECTION 5. Representations and Warranties
------------------------------
6
<PAGE>
Each Borrower represents and warrants as follows:
5.1 Binding Obligation. This Agreement is the legally valid and binding
------------------
obligation of such Borrower, enforceable against such Borrower in accordance
with its terms, except as enforcement may be limited by bankruptcy, insolvency,
reorganization, moratorium, or similar laws or equitable principles relating to
or limiting creditor's rights generally.
5.2 Location of Equipment and Inventory. All of the Equipment and
-----------------------------------
Inventory of each Borrower is located at the places specified on Schedule I.
5.3 Ownership of Collateral. Except for the Permitted Encumbrances
-----------------------
disclosed on Schedule II and the Security Interests, each Borrower owns its
Collateral free and clear of any Lien. No effective financing statement or
other form of lien notice covering all or any part of the Collateral is on file
in any recording office, except for those in favor of Agent and as disclosed on
Schedule II or filed to perfect Permitted Encumbrances. Except as disclosed on
Schedule II, none of the Collateral is in the possession of any bailee,
warehouseman, agent, processor or consignee.
5.4 Office Locations; Fictitious Names. The chief place of business, the
----------------------------------
chief executive office and the office where each Borrower keeps its books and
records are located at the places specified on Schedule I. No Borrower does
business nor has it done business during the past five years under any trade-
name or fictitious business name except as disclosed on Schedule III.
5.5 Perfection. This Agreement, and the filing of appropriate financing
----------
statements and delivery of those documents and instruments required to perfect
the Liens granted hereunder, creates a valid, perfected and, except for the
Permitted Encumbrances, first priority security interest in the Collateral
located in the United States, securing the payment of the Secured Obligations,
and all filings and other actions necessary or desirable to perfect and protect
such security interest have been duly taken other than registering the Lien on
certificates of title for titled vehicles.
5.6 Governmental Authorizations; Consents. Except for the filing of the
-------------------------------------
financing statements referred to in Section 5.5 hereof and the registration of
Liens on certificates of title for titled vehicles, no authorization, approval
or other action by, and no notice to or filing with, any governmental authority
or regulatory body or consent of any other Person (including without limitation
any licensor of Intellectual Property or any party to the Purchase Agreement) is
required either (a) for the execution, delivery or performance of this Agreement
by Borrowers, (b) for the grant by Borrowers of the security interest granted
hereby or (c) for the perfection of such Security Interests in Collateral
located in the United States or the exercise by Agent of its rights and remedies
hereunder, other than as may be required by the Federal Assignment of Claims
Act.
5.7 Accounts. Each Account constitutes the legally valid and binding
--------
obligation of the customer obligated to pay the same. The amount represented by
any Borrower to Agent as owing by each customer is the correct amount actually
and unconditionally owing, except for normal cash
7
<PAGE>
discounts and allowances where applicable. No customer has any defense, set-off,
claim or counterclaim against any Borrower that can be asserted against Agent,
whether in any proceeding to enforce Agent's rights in the Collateral or
otherwise except defenses, set-offs, claims or counterclaims that are not, in
the aggregate, material to the value of the Accounts. None of the Accounts is
evidenced by a promissory note or other instrument other than a check.
5.8 Intellectual Property. The Copyrights, Copyright Licenses, Patents,
---------------------
Patent Licenses, Trademarks and Trademark Licenses listed on the respective
schedules to each of the Copyright Security Agreements, the Patent Security
Agreements and the Trademark Security Agreements constitute all of the
Intellectual Property owned by Borrowers. The execution, delivery and
performance of this Agreement by Borrowers will not violate or cause a default
under any of the Intellectual Property or any agreement in connection therewith.
5.9 Accurate Information. All information heretofore, herein or hereafter
--------------------
supplied to Agent by or on behalf of Borrowers with respect to the Collateral is
and will be accurate and complete in all material respects.
5.10 Credit Agreement Warranties. Each representation and warranty set
---------------------------
forth in the Credit Agreement is true and correct in all material respects and
such representations and warranties are hereby incorporated herein by this
reference with the same effect as though set forth in their entirety herein.
5.11 Non-Assignable Contracts. Failure to obtain consents to the
------------------------
assignment or granting of a security interest in the Non-Assignable Contracts
will not have, and would not reasonably be expected to have, a Material Adverse
Effect. The Non-Assignable Contracts are not material to Borrowers and their
Subsidiaries taken as a whole.
SECTION 6. Further Assurances; Covenants
-----------------------------
6.1 Other Documents and Actions. Subject to the provisions of
---------------------------
subsection 2.5 of the Credit Agreement, each Borrower will, from time to time,
at its expense, promptly execute and deliver all further instruments and
documents and take all further action that may be necessary or desirable, or
that Agent may reasonably request, in order to perfect and protect the Security
Interests granted or purported to be granted hereby or to enable Agent to
exercise and enforce its rights and remedies hereunder with respect to any
Collateral. Without limiting the generality of the foregoing, each Borrower
will: (a) execute and file such financing or continuation statements, or
amendments thereto, and such other instruments or notices, as may be necessary
or desirable, or as Agent may reasonably request, in order to perfect and
preserve the Security Interests granted or purported to be granted hereby; (b)
at any reasonable time, upon demand by Agent exhibit the Collateral to allow
inspection of the Collateral by Agent or persons designated by Agent; and (c)
upon Agent's request, appear in and defend any action or proceeding that may
affect any Borrower's title to or the Security Interests of the Agent in the
Collateral.
8
<PAGE>
6.2 Agent Authorized. Each Borrower hereby authorizes Agent to file one
----------------
or more financing or continuation statements, and amendments thereto, relating
to all or any part of the Collateral without the signature of any Borrower to
the extent permitted by law.
6.3 Corporate or Name Change. Each Borrower will notify Agent promptly
------------------------
in writing prior to any change in such Borrower's name, identity or corporate
structure.
6.4 Business Locations. Except for the sale of Inventory in the ordinary
------------------
course of business and dispositions expressly permitted in the Credit Agreement,
each Borrower will keep the Collateral at the locations specified for such
Borrower on Schedule I and those referred to in the next sentence. Each Borrower
will give Agent thirty (30) days prior written notice of any change in such
Borrower's chief place of business, of any new location of business, and of any
new location for any of its Collateral. With respect to any new location (which
in any event shall be within the continental United States), such Borrower will
execute such documents and take such actions as Agent deems necessary to perfect
and protect the Security Interests.
6.5 Bailees. If any Collateral is at any time in the possession or
-------
control of any warehouseman, bailee, consignee or any of any Borrower's agents
or processors, such Borrower shall, upon the request of Agent, notify such
warehouseman, bailee, consignee, agent or processor of the Security Interests
created hereby and shall instruct such Person to hold all such Collateral for
Agent's account subject to Agent's instructions.
6.6 Instruments. Each Borrower will deliver and pledge to Agent all
-----------
Instruments duly endorsed and accompanied by duly executed instruments of
transfer or assignment, all in form and substance satisfactory to Agent. Each
Borrower will mark conspicuously all chattel paper with a legend, in form and
substance satisfactory to Agent, indicating that such chattel paper is subject
to the Security Interests and will, upon Agent's request from time to time,
deliver possession thereof to Agent, for the benefit of Agent and the Lenders.
6.7 Certificates of Title. Upon Agent's request, each Borrower shall
---------------------
promptly deliver to Agent any and all certificates of title, applications for
title or similar evidence of ownership of all Equipment and shall cause Agent to
be named as lienholder on any such certificate of title or other evidence of
ownership. Each Borrower shall promptly inform Agent of any acquisitions or
dispositions of Equipment and shall not permit any Equipment to become a fixture
to real estate other than real estate encumbered by the Mortgages.
6.8 Account Covenants. Except as otherwise provided in this subsection
-----------------
6.8, each Borrower shall continue to collect, at its own expense, all amounts
due or to become due such Borrower under the Accounts. In connection with such
collections, each Borrower may take (and, after the occurrence and during the
continuance of an Event of Default at Agent's direction, shall take) such action
as such Borrower or Agent may deem necessary or advisable to enforce collection
of the Accounts; provided, that Agent shall have the right at any time after the
--------
occurrence of a Default or an Event of Default to: (a) notify the customers or
obligors under any Account of the
9
<PAGE>
assignment of such Account to Agent, for the benefit of Agent and the Lenders,
and to direct such customers or obligors to make payment of all amounts due or
to become due directly to Agent; (b) enforce collection of any such Accounts;
and (c) adjust, settle or compromise the amount or payment of such Accounts.
After the occurrence of an Event of Default (i) all amounts and proceeds
(including Instruments) received by any Borrower with respect to the Accounts
shall be received in trust for the benefit of Agent (on behalf of Lenders),
shall be segregated from other funds of such or any Borrower and shall be
forthwith paid over to Agent in the same form as so received (with any necessary
endorsement) pursuant to Section 7 and (ii) no Borrower shall adjust, settle or
compromise the amount or payment of any Account, or release wholly or partially
any customer or obligor thereof, or allow any credit or discount thereon without
the prior consent of Agent.
6.9 Intellectual Property Covenants. Each Borrower shall concurrently
-------------------------------
herewith deliver to Agent its Copyright Security Agreement, its Patent Security
Agreement and its Trademark Security Agreement and all other documents,
instruments and other items as may be necessary for Agent to file such
agreements with the United States Copyright Office, United States Patent and
Trademark Office and any similar domestic or foreign office, department or
agency. If, before the Secured Obligations are paid in full, any Borrower
obtains any new Intellectual Property or rights thereto or becomes entitled to
the benefit of any Intellectual Property not listed on the respective schedules
to such security agreements, such Borrower shall give to Agent prompt written
notice thereof, and shall amend the respective security agreement to include any
such new Intellectual Property. Each Borrower shall: (a) prosecute diligently
any copyright, patent, trademark or license application at any time pending; (b)
make application on all new copyrights, patents and trademarks as reasonably
deemed appropriate by such Borrower; (c) preserve and maintain all rights in its
Intellectual Property including, without limitation, the prosecution of
infringement actions with respect to its Intellectual Property; and (d) use its
best efforts to obtain any consents, waivers or agreements necessary to enable
Agent to exercise its remedies with respect to the Intellectual Property. No
Borrower shall abandon any right to file a copyright, patent or trademark
application nor shall any Borrower abandon any pending copyright, patent or
trademark application, or Copyright, Copyright License, Patent, Patent License,
Trademark or Trademark License without the prior written consent of Agent.
Notwithstanding the foregoing, this Section 6.9 shall not apply to any
Intellectual Property which is not material to the operation or financial
condition of a Borrower's business.
6.10 Equipment Covenants. Each Borrower shall cause Equipment which is
-------------------
material the operations and business of such Borrower to be maintained and
preserved in the same condition, repair and working order as when new, ordinary
wear and tear excepted, and in accordance with any manufacturer's manual, and
shall promptly make or cause to be made all repairs, replacements, and other
improvements in connection therewith that are necessary or desirable to such
end.
6.11 Insurance. Each Borrower shall maintain insurance with respect to
---------
the Collateral in accordance with the terms of the Credit Agreement.
10
<PAGE>
6.12 Taxes and Claims. Each Borrower will pay promptly when due all
----------------
property and other taxes, assessments and governmental charges or levies imposed
upon, and all claims against, the Collateral (including claims for labor,
materials and supplies), except to the extent the validity thereof is being
contested in good faith.
6.13 Collateral Description. Each Borrower will furnish to Agent, from
----------------------
time to time, statements and schedules further identifying and describing the
Collateral and such other reports in connection with the Collateral as Agent may
reasonably request, all in reasonable detail.
6.14 Use of Collateral. No Borrower will use or permit any Collateral to
-----------------
be used unlawfully or in violation of any provision of this Agreement or any
applicable statute, regulation or ordinance or any policy of insurance covering
any of the Collateral.
6.15 Records of Collateral. Each Borrower shall keep full and accurate
---------------------
books and records relating to the Collateral and shall stamp or otherwise mark
such books and records in such manner as Agent may reasonably request indicating
that the Collateral is subject to the Security Interests.
6.16 Other Information. Each Borrower will, promptly upon Agent's
-----------------
reasonable request, provide to Agent all information and evidence it may
reasonably request concerning the Collateral, and in particular the Accounts, to
enable Agent to enforce the provisions of this Agreement.
SECTION 7. Bank Accounts; Collection of Accounts and Payments
--------------------------------------------------
On or prior to the Closing Date, Agent and each Borrower shall, at Agent's
request, enter into an Assignment of Deposit Accounts and Bank Agency Agreement
with each financial institution with which such Borrower maintains from time to
time any deposit accounts (general or special). Pursuant to the Assignment of
Deposit Accounts and Bank Agency Agreement(s) and pursuant hereto, each Borrower
grants, sells, conveys, assigns, transfers, pledges and sets over unto Agent,
for the benefit of Agent and the Lenders, all of such Borrower's right, title
and interest in and to such accounts and all funds at any time paid, deposited,
credited or held in such accounts (whether for collection, provisionally or
otherwise) or otherwise in the possession of such financial institutions, and
each such financial institution shall act as agent and pledgee-in-possession for
Agent in connection therewith. Following the Closing Date, no Borrower shall
establish any deposit account with any financial institution except in
accordance with the terms of the Credit Agreement.
Upon the request of Agent from time to time after the occurrence and during
the continuance of an Event of Default, each Borrower shall promptly establish
lock box or blocked accounts (collectively, "Blocked Accounts") in such
Borrower's name with such banks as are acceptable to Agent ("Collecting Banks"),
subject to irrevocable instructions in the form of Exhibit D hereto, to which
the obligors on all Accounts shall directly remit all payments on Accounts and
in which such Borrower will immediately deposit all cash payments made for
Inventory or in respect of Accounts or other cash payments constituting proceeds
of Collateral in the identical form in which such
11
<PAGE>
payment was made, whether by cash or check. In addition, Agent, for the benefit
of Agent and the Lenders, may establish one or more depository accounts at each
Collecting Bank or at a centrally located bank (collectively, the "Depository
Account"). Without limitation of the terms and provisions of the Assignment of
Deposit Accounts and Bank Agency Agreement(s), from and after receipt by any
Collecting Bank of written notice from Agent to such Collecting Bank that an
Event of Default has occurred, all amounts held or deposited in the Blocked
Accounts held by such Collecting Bank shall be transferred to the Depository
Account; provided that, prior to such Collecting Bank's receipt of such notice,
such amounts shall be automatically transferred to such Borrower's operating
account for unrestricted use by such Borrower, provided that any such use is not
prohibited by the Credit Agreement. Subject to the foregoing, each Borrower
hereby agrees that all payments received by Agent or any Lender, whether by
cash, check, wire transfer or any other instrument, whether made to such Blocked
Accounts or otherwise received by Agent or any Lender and whether representing
payments on the Accounts or proceeds of other Collateral, will be the sole and
exclusive property of Agent for the benefit of Lenders. Each Borrower, and any
of its Affiliates, employees, agents or other Persons acting for or in concert
with such Borrower, shall, acting as trustee for Agent and Lenders, receive, as
the sole and exclusive property of Lenders, any monies, checks, notes, drafts or
any other payments relating to and/or representing proceeds of Accounts or other
Collateral which come into the possession or under the control of such Borrower
or any Affiliates, employees, agents or other Persons acting for or in concert
with such Borrower, and immediately upon receipt thereof, such Borrower or such
Persons shall deposit the same or cause the same to be deposited, in kind, in a
Blocked Account. Notwithstanding the foregoing, any amounts contained in Agent's
Depository Account or the Blocked Accounts or otherwise received by Agent in
excess of the Secured Obligations then due and payable shall be the property of
the relevant Borrower and shall promptly be paid over to such Borrower.
SECTION 8. Agent Appointed Attorney-in-Fact
--------------------------------
Each Borrower hereby irrevocably appoints Agent as such Borrower's
attorney-in-fact, with full authority in the place and stead of such Borrower
and in the name of such Borrower, Agent or otherwise, from time to time after
the occurrence and continuance of an Event of Default in Agent's discretion to
take any action and to execute any instrument that Agent may deem necessary or
advisable to accomplish the purposes of this Agreement, including, without
limitation:
(a) to obtain and adjust insurance required to be paid to Agent;
(b) to ask, demand, collect, sue for, recover, compound, receive
and give acquittance and receipts for moneys due and to become due under or
in respect of any of the Collateral;
(c) to receive, endorse, and collect any drafts or other
instruments, documents and chattel paper, in connection with clauses (a)
and (b) above;
12
<PAGE>
(d) to file any claims or take any action or institute any
proceedings that Agent may deem necessary or desirable for the collection
of any of the Collateral or otherwise to enforce the rights of Agent with
respect to any of the Collateral;
(e) to pay or discharge taxes or Liens, levied or placed upon or
threatened against the Collateral, the legality or validity thereof and the
amounts necessary to discharge the same to be determined by Agent in its
sole discretion;
(f) to sign and endorse any invoices, freight or express bills,
bills of lading, storage or warehouse receipts, assignments, verifications
and notices in connection with Accounts and other documents (including
without limitation financing statements, continuation statements and other
documents necessary or advisable to perfect the Security Interests)
relating to the Collateral; and
(g) generally to sell, transfer, pledge, make any agreement with
respect to or otherwise deal with any of the Collateral as fully and
completely as though Agent were the absolute owner thereof for all
purposes, and to do, at Agent's option and Borrowers' expense, at any time
or from time to time, all acts and things that Agent deems necessary to
protect, preserve or realize upon the Collateral.
Each Borrower hereby ratifies and approves all acts of Agent made or taken
pursuant to this Section 8. Neither Agent nor any person designated by Agent
shall be liable for any acts or omissions or for any error of judgment or
mistake of fact or law. This power, being coupled with an interest, is
irrevocable so long as this Agreement shall remain in force.
SECTION 9. Transfers and Other Liens
-------------------------
Except as otherwise permitted by the Credit Agreement, no Borrower shall:
(a) sell, assign (by operation of law or otherwise) or otherwise
dispose of, or grant any option with respect to, any of the Collateral,
except that a Borrower may sell Inventory in the ordinary course of
business; or
(b) create or suffer to exist any lien, security interest or other
charge or encumbrance upon or with respect to any of the Collateral to
secure indebtedness of any Person except for the Security Interests created
by this Agreement and Permitted Encumbrances disclosed on Schedule II.
SECTION 10. Remedies
--------
If any Event of Default shall have occurred and be continuing, Agent may
exercise in respect of the Collateral, in addition to all other rights and
remedies provided for herein or otherwise available to it, all the rights and
remedies of a secured party on default under the UCC (whether or not the UCC
applies to the affected Collateral) and also may: (a) require any Borrower to,
and each
13
<PAGE>
Borrower hereby agrees that it will, at its expense and upon request of Agent
forthwith, assemble all or part of the Collateral as directed by Agent and make
it available to Agent at a place to be designated by Agent which is reasonably
convenient to both parties; (b) withdraw all cash in any of any Borrower's
accounts and apply such monies in payment of the Secured Obligations in the
manner provided in Section 14; (c) without notice or demand or legal process,
enter upon any premises of any Borrower and take possession of the Collateral;
and (d) without notice except as specified below, sell the Collateral or any
part thereof in one or more parcels at public or private sale, at any of the
Agent's offices or elsewhere, at such time or times, for cash, on credit or for
future delivery, and at such price or prices and upon such other terms as Agent
may deem commercially reasonable. Each Borrower agrees that, to the extent
notice of sale shall be required by law, at least ten days notice to Borrowers
of the time and place of any public sale or the time after which any private
sale is to be made shall constitute commercially reasonable notification. At any
sale of the Collateral, if permitted by law, Agent may bid (which bid may be, in
whole or in part, in the form of cancellation of indebtedness) for the purchase
of the Collateral or any portion thereof for the account of Agent (on behalf of
Agent and the Lenders). Agent shall not be obligated to make any sale of
Collateral regardless of notice of sale having been given. Agent may adjourn any
public or private sale from time to time by announcement at the time and place
fixed therefor, and such sale may, without further notice, be made at the time
and place to which it was so adjourned. To the extent permitted by law, each
Borrower hereby specifically waives all rights of redemption, stay or appraisal
which it has or may have under any law now existing or hereafter enacted.
SECTION 11. License of Intellectual Property
--------------------------------
Each Borrower hereby assigns, transfers and conveys to Agent, effective
upon the occurrence and continuance of any Event of Default hereunder, the
nonexclusive right and license to use all Intellectual Property owned or used by
such Borrower together with any goodwill associated therewith, all to the extent
necessary to enable Agent to realize on the Collateral and any successor or
assign to enjoy the benefits of the Collateral. This right and license shall
inure to the benefit of Agent and all of its successors, assigns and
transferees, whether by voluntary conveyance, operation of law, assignment,
transfer, foreclosure, deed in lieu of foreclosure or otherwise. Such right and
license is granted free of charge, without requirement that any monetary payment
whatsoever be made to any Borrower by Agent.
SECTION 12. Acquisition Documents
---------------------
If an Event of Default has occurred and is continuing, each Borrower hereby
irrevocably authorizes and empowers Agent to assert, either directly or on
behalf of such Borrower, any claims such Borrower may have, from time to time,
against any other party to the Acquisition Documents or to otherwise exercise
any right or remedy of any Borrower under the Acquisition Documents (including,
without limitation, the right to enforce directly against any party to the
Acquisition Documents all of any Borrower's rights thereunder), and to make all
demands and give all notices and to make all requests required or permitted to
be made by any Borrower under the Acquisition Documents.
14
<PAGE>
SECTION 13. Limitation on Duty of Agent with Respect to Collateral
------------------------------------------------------
Beyond the safe custody thereof, Agent shall have no duty with respect to
any Collateral in its possession or control (or in the possession or control of
any agent or bailee of Agent) or with respect to any income thereon or the
preservation of rights against prior parties or any other rights pertaining
thereto. Agent shall be deemed to have exercised reasonable care in the custody
and preservation of the Collateral in its possession if the Collateral is
accorded treatment substantially equal to that which it accords its own
property. Agent shall not be liable or responsible for any loss or damage to
any of the Collateral, or for any diminution in the value thereof, by reason of
the act or omission of any warehouseman, carrier, forwarding agency, consignee
or other agent or bailee selected by Agent in good faith.
SECTION 14. Application of Proceeds
-----------------------
Upon the occurrence and during the continuance of an Event of Default, the
proceeds of any sale of, or other realization upon, all or any part of the
Collateral and any cash held in any of any Borrower's accounts shall be applied:
first, to all fees, costs and expenses incurred by Agent or any Lender with
- -----
respect to the Credit Agreement, the other Loan Documents or the Collateral
including, without limitation, those described in subsections 1.3(C), 6.4 and
9.1 of the Credit Agreement and in Section 15 hereof; second, to accrued and
------
unpaid interest on the Secured Obligations (including any interest which but for
the provisions of the Bankruptcy Code, would have accrued on such amounts);
third, to the principal amounts of the Secured Obligations outstanding; and
- -----
fourth, to any other indebtedness or obligations of any Borrower owing to Agent
- ------
or any Lender.
SECTION 15. Expenses
--------
Each Borrower shall pay all insurance expenses and all expenses of
protecting, storing, warehousing, appraising, insuring, handling, maintaining
and shipping the Collateral, all costs, fees and expenses of perfecting and
maintaining the Security Interests, and any and all excise, property, sales and
use taxes imposed by any state, federal or local authority on any of the
Collateral, or with respect to periodic appraisals and inspections of the
Collateral, or with respect to the sale or other disposition thereof. If any
Borrower fails promptly to pay any portion of the above expenses when due or to
perform any other obligation of any Borrower under this Agreement, Agent or any
other Lender may, at its option, but shall not be required to, pay or perform
the same and charge any Borrower's account for all costs and expenses incurred
therefor and shall provide subsequent notice to such Borrower or Parent of any
amounts so paid, and each Borrower agrees, jointly and severally, to reimburse
Agent or such Lender therefor on demand. All sums so paid or incurred by Agent
or any other Lender for any of the foregoing, any and all other sums for which
any Borrower may become liable hereunder and all costs and expenses (including
attorneys' fees, legal expenses and court costs) incurred by Agent or any other
Lender in enforcing or protecting the Security Interests or any of their rights
or remedies under this Agreement shall be payable on demand, shall constitute
Secured Obligations, shall bear interest until paid at the highest rate provided
in the Credit Agreement and shall be secured by the Collateral.
15
<PAGE>
SECTION 16. Termination of Security Interests; Release of Collateral
--------------------------------------------------------
Upon payment in full of all Secured Obligations (other than contingent
indemnification obligations to the extent no unsatisfied claim giving rise
thereto has been asserted) and the termination of all Commitments, Risk
Participation Agreements and Lender Letters of Credit, the Security Interests
shall terminate and all rights to the Collateral shall revert to Borrowers.
Upon such termination of the Security Interests or release of any Collateral,
Agent will, at the expense of Borrowers, execute and deliver to the relevant
Borrower such documents as such Borrower shall reasonably request to evidence
the termination of the Security Interests or the release of such Collateral, as
the case may be.
SECTION 17. Notices
-------
All notices, approvals, requests, demands and other communications
hereunder shall be given in accordance with the notice provisions of the Credit
Agreement.
SECTION 18. Waivers, Non-Exclusive Remedies
-------------------------------
No failure on the part of Agent to exercise, and no delay in exercising and
no course of dealing with respect to, any right under the Credit Agreement or
this Agreement shall operate as a waiver thereof; nor shall any single or
partial exercise by Agent of any right under the Credit Agreement or this
Agreement preclude any other or further exercise thereof or the exercise of any
other right. The rights in this Agreement and the Credit Agreement are
cumulative and are not exclusive of any other remedies provided by law.
SECTION 19. Successors and Assigns
----------------------
This Agreement is for the benefit of Agent and Lenders and their successors
and assigns, and in the event of an assignment of all or any of the Secured
Obligations, the rights hereunder, to the extent applicable to the Secured
Obligations so assigned, may be transferred with such Secured Obligations. This
Agreement shall be binding on Borrowers and their respective successors and
assigns.
SECTION 20. Changes in Writing
------------------
No amendment, modification, termination or waiver of any provision of this
Agreement or consent to any departure by any Borrower therefrom, shall in any
event be effective without the written concurrence of Agent and Borrowers.
SECTION 21. Applicable Law
--------------
THIS AGREEMENT SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN
ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF ILLINOIS, WITHOUT REGARD TO
CONFLICTS OF LAWS PRINCIPLES.
16
<PAGE>
SECTION 22. Failure or Indulgence Not Waiver; Remedies Cumulative
-----------------------------------------------------
No failure or delay on the part of Agent or any Lender in the exercise of
any power, right or privilege hereunder shall impair such power, right or
privilege or be construed to be a waiver of any default or acquiescence therein,
nor shall any single or partial exercise of any such power, right or privilege
preclude other or further exercise thereof or any other right, power or
privilege. All rights and remedies existing under this Agreement are cumulative
to, and not exclusive of, any rights or remedies otherwise available.
17
<PAGE>
SECTION 23. Headings
--------
Section and subsection headings in this Agreement are included herein for
convenience of reference only and shall not constitute a part of this Agreement
for any other purpose or be given any substantive effect.
SECTION 24. Counterparts
------------
This Agreement may be executed in any number of counterparts, all of which
taken together shall constitute one and the same instrument and any of the
parties hereto may execute this Agreement by signing any such counterpart.
[remainder of this page intentionally left blank]
18
<PAGE>
Witness the due execution hereof by the respective duly authorized officers
of the undersigned as of the day first above written.
OPINION RESEARCH CORPORATION
By: /s/ John F. Short
----------------------------------
Name: John F. Short
Title: President
FEIN: 22-3118960
ORC INC.
By: /s/ Douglas L. Cox
----------------------------------
Name: Douglas L. Cox
Title: Secretary
FEIN: 52-1809336
--------------------------------
HELLER FINANCIAL, INC., as Agent
By: /s/ Karen E. Rode
----------------------------------
Name: Karen Rode
Title: Vice President
<PAGE>
SCHEDULE I
Locations of Equipment, Inventory, Books and
Records, Chief Executive Office, Other Locations
<PAGE>
SCHEDULE II
Other Liens, Security Interests and
Financing Statements; Bailees
1. Permitted Encumbrance as defined in the Credit Agreement.
<PAGE>
SCHEDULE III
Trade-names and Fictitious Names
(Present and Past Five Years)
<PAGE>
EXHIBIT A
COPYRIGHT SECURITY AGREEMENT
----------------------------
WHEREAS, OPINION RESEARCH CORPORATION, a Delaware corporation ("Grantor")
owns the Copyright registrations and Copyright applications listed on Schedule 1
annexed hereto, and is a party to the Copyright Licenses listed on Schedule 1
annexed hereto; and
WHEREAS, Grantor has entered into a Credit Agreement dated as of May __,
1999 (as the same may be amended, restated, supplemented or otherwise modified
from time to time, the "Credit Agreement") with Heller Financial, Inc., as agent
("Agent") for the benefit of all financial institutions that from time to time
become lenders under the Credit Agreement ("Lenders"), and the Lenders parties
thereto, providing for extensions of credit and other financial accommodations
to be made to Grantor by Agent and the Lenders; and
WHEREAS, pursuant to the terms of a Security Agreement dated as of May __,
1999 (as the same may be amended, restated, supplemented or otherwise modified
from time to time, the "Security Agreement"), between Grantor and Agent (in such
capacity, "Grantee"), Grantor has granted to Grantee, for the benefit of Agent
and the Lenders a security interest in substantially all the assets of Grantor
including all right, title and interest of Grantor in, to and under all now
owned and hereafter acquired Copyrights (as defined in the Security Agreement),
Copyright registrations, Copyright applications and Copyright Licenses (as
defined in the Security Agreement), together with the goodwill of the business
symbolized by Grantor's Copyrights and all proceeds thereof, to secure the
payment of all amounts owing by Grantor under the Credit Agreement;
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Grantor does hereby grant to
Grantee, for the benefit of Grantee and the Lenders a continuing security
interest in all of Grantor's right, title and interest in, to and under the
following (all of the following items or types of property being herein
collectively referred to as the "Copyright Collateral"), whether presently
existing or hereafter created or acquired:
(1) each Copyright, Copyright application and Copyright registration,
together with any reissues, extensions or renewals thereof, including,
without limitation, the Copyright, Copyright registrations and Copyright
applications referred to in Schedule 1 annexed hereto, and all of the
goodwill of the business connected with the use of, and symbolized by, each
Copyright, Copyright registration and Copyright application;
(2) each Copyright License and all of the goodwill of the business
connected with the use of, and symbolized by, each Copyright License; and
(3) all products and proceeds of the foregoing, including, without
limitation, any claim by Grantor against third parties for past, present or
future (a) infringement or dilution of any Copyright or Copyright
registration including, without limitation, the Copyright and
<PAGE>
Copyright registrations referred to in Schedule 1 annexed hereto, the
Copyright registrations issued with respect to the Copyright applications
referred in Schedule 1 and the Copyright licensed under the Copyright
License, or (b) injury to the goodwill associated with any Copyright,
Copyright registration or Copyright licensed under any Copyright License.
This security interest is granted in conjunction with the security interests
granted to Grantee pursuant to the Security Agreement. Grantor hereby
acknowledges and affirms that the rights and remedies of Grantee with respect to
the security interest in the Copyright Collateral made and granted hereby are
more fully set forth in the Security Agreement, the terms and provisions of
which are incorporated by reference herein as if fully set forth herein.
IN WITNESS WHEREOF, Grantor has caused this Copyright Security Agreement to
be duly executed by its duly authorized officer as of the ______ day of ______,
1999.
Acknowledged:
HELLER FINANCIAL, INC., OPINION RESEARCH CORPORATION
as Agent
By:___________________________ By:________________________
Title:_________ Vice President Title: ___________________
2
<PAGE>
ACKNOWLEDGEMENT
STATE OF ______________ )
) ss.
COUNTY OF ____________ )
On the ____ day of _________, 1999 before me personally appeared
______________, to me personally known or proved to me on the basis of
satisfactory evidence to be the person described in and who executed the
foregoing instrument as _____________ of OPINION RESEARCH CORPORATION, who being
by me duly sworn, did depose and say that he is ______________ of OPINION
RESEARCH CORPORATION, the corporation described in and which executed the
foregoing instrument; that the said instrument was signed on behalf of said
corporation by order of its Board of Directors; and that he acknowledged said
instrument to be the free act and deed of said corporation.
________________________
Notary Public
{Seal}
My commission expires:
_____________________
3
<PAGE>
Schedule 1
to Copyright
Security Agreement
------------------
COPYRIGHT REGISTRATIONS
-----------------------
REG. NO. DATE
-------- ----
COPYRIGHT APPLICATIONS
----------------------
COPYRIGHT LICENSES
------------------
Name of Agreement Parties Date of Agreement
- ----------------- ------- -----------------
<PAGE>
EXHIBIT B
PATENT SECURITY AGREEMENT
-------------------------
WHEREAS, OPINION RESEARCH CORPORATION, a Delaware corporation ("Grantor")
owns the Patents and Patent Applications listed on Schedule 1 annexed hereto,
and is a party to the Patent Licenses listed on Schedule 1 annexed hereto; and
WHEREAS, Grantor has entered into a Credit Agreement dated as of May __,
1999 (as the same may be amended, restated, supplemented or otherwise modified
from time to time, the "Credit Agreement") with Heller Financial, Inc., as agent
("Agent") for the benefit of all financial institutions that from time to time
become lenders under the Credit Agreement ("Lenders"), as the Lenders parties
thereto, providing for extensions of credit and other financial accommodations
to be made to Grantor by Agent and the Lenders; and
WHEREAS, pursuant to the terms of a Security Agreement dated as of May __,
1999 (as the same may be amended, restated, supplemented or otherwise modified
from time to time, the "Security Agreement"), between Grantor and Agent (in such
capacity, together with its successors in such capacity, the "Grantee"), Grantor
has granted to Grantee, for the benefit of Agent and the Lenders a security
interest in substantially all the assets of Grantor including all right, title
and interest of Grantor in, to and under all now owned and hereafter acquired
Patents (as defined in the Security Agreement), Patent applications and Patent
Licenses (as defined in the Security Agreement), and all products and proceeds
thereof, to secure the payment of all amounts owing by Grantor under the Credit
Agreement;
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Grantor does hereby grant to
Grantee, for the benefit of Grantee and the Lenders a continuing security
interest in all of Grantor's right, title and interest in, to and under the
following (all of the following items or types of property being herein
collectively referred to as the "Patent Collateral"), whether presently existing
or hereafter created or acquired:
(1) each Patent and Patent application, including, without limitation,
each Patent and Patent application referred to in Schedule 1 annexed
hereto, together with any reissues, continuations or extensions thereof;
(2) each Patent License, including, without limitation, each Patent
License listed on Schedule 1 annexed hereto; and
<PAGE>
(3) all products and proceeds of the foregoing, including, without
limitation, any claim by Grantor against third parties for past, present or
future infringement of any Patent, including, without limitation, any
Patent referred to in Schedule 1 annexed hereto, any Patent issued pursuant
to a Patent Applications referred to in Schedule 1 and any Patent licensed
under any Patent License listed on Schedule 1 annexed hereto.
This security interest is granted in conjunction with the security
interests granted to Grantee pursuant to the Security Agreement. Grantor hereby
acknowledges and affirms that the rights and remedies of Grantee with respect to
the security interest in the Patent Collateral made and granted hereby are more
fully set forth in the Security Agreement, the terms and provision of which are
incorporated by reference herein as if fully set forth herein.
IN WITNESS WHEREOF, Grantor has caused this Patent Security Agreement to be
duly executed by its duly authorized officer thereunto as of the ______ day of
______, 1999.
Acknowledged:
HELLER FINANCIAL, INC., OPINION RESEARCH CORPORATION
as Agent
By:___________________________ By:_______________________
Title:________ Vice President Title:____________________
2
<PAGE>
ACKNOWLEDGEMENT
STATE OF ______________ )
) ss.
COUNTY OF _____________ )
On the ____ day of ____________, 199_ before me personally appeared
______________, to me personally known or proved to me on the basis of
satisfactory evidence to be the person described in and who executed the
foregoing instrument as _____________ of OPINION RESEARCH CORPORATION, who being
by me duly sworn, did depose and say that he is ______________ of OPINION
RESEARCH CORPORATION, the corporation described in and which executed the
foregoing instrument; that the said instrument was signed on behalf of said
corporation by order of its Board of Directors; and that he acknowledged said
instrument to be the free act and deed of said corporation.
________________________
Notary Public
{Seal}
My commission expires:
_____________________
3
<PAGE>
Schedule 1
to Patent
Security Agreement
------------------
PATENTS
-------
U.S. Patent No. Date Issued Related Foreign Patents
- --------------- ----------- -----------------------
PATENT APPLICATIONS
-------------------
PATENT LICENSES
---------------
Name of Agreement Parties Date of Agreement
- ----------------- ------- -----------------
<PAGE>
EXHIBIT C
TRADEMARK SECURITY AGREEMENT
----------------------------
WHEREAS, OPINION RESEARCH CORPORATION, a Delaware corporation ("Grantor"),
owns the Trademarks, Trademark registrations, and Trademark applications listed
on Schedule 1 annexed hereto, and is a party to the Trademark Licenses listed on
Schedule 1 annexed hereto; and
WHEREAS, Grantor has entered into a Credit Agreement dated as of May __,
1999 (as the same may be amended, restated, supplemented or otherwise modified
from time to time, the "Credit Agreement") with Heller Financial, Inc., as agent
("Agent") for the benefit of all financial institutions that from time to time
become lenders under the Credit Agreement ("Lenders"), and the Lenders parties
thereto, providing for extensions of credit and other financial accommodations
to be made to Grantor by Agent and the Lenders; and
WHEREAS, pursuant to the terms of a Security Agreement dated as of May __,
1999 (as the same may be amended, restated, supplemented or otherwise modified
from time to time, the "Security Agreement"), between Grantor and Agent (in such
capacity, "Grantee"), Grantor has granted to Grantee, for the benefit of Agent
and the Lenders a security interest in substantially all the assets of Grantor
including all right, title and interest of Grantor in, to and under all now
owned and hereafter acquired Trademarks (as defined in the Security Agreement),
Trademark registrations, Trademark applications and Trademark Licenses (as
defined in the Security Agreement), together with the goodwill of the business
symbolized by Grantor's Trademarks, and all proceeds thereof, to secure the
payment of all amounts owing by Grantor under the Credit Agreement;
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Grantor does hereby grant to
Grantee, for the benefit of Grantee and the Lenders a continuing security
interest in all of Grantor's right, title and interest in, to and under the
following (all of the following items or types of property being herein
collectively referred to as the "Trademark Collateral"), whether presently
existing or hereafter created or acquired:
(1) each Trademark, Trademark registration and Trademark application,
including, without limitation, the Trademarks, Trademark registrations
(together with any reissues, continuations or extensions thereof) and
Trademark applications referred to in Schedule 1 annexed hereto, and all of
the goodwill of the business connected with the use of, and symbolized by,
each Trademark, Trademark registration and Trademark application;
(2) each Trademark License and all of the goodwill of the business
connected with the use of, and symbolized by, each Trademark License; and
(3) all products and proceeds of the foregoing, including, without
limitation, any claim by Grantor against third parties for past, present or
future (a) infringement or dilution of any
<PAGE>
Trademark or Trademark registration including, without limitation, the
Trademarks and Trademark registrations referred to in Schedule 1 annexed
hereto, the Trademark registrations issued with respect to the Trademark
applications referred in Schedule 1 and the Trademarks licensed under any
Trademark License, or (b) injury to the goodwill associated with any
Trademark, Trademark registration or Trademark licensed under any Trademark
License.
This security interest is granted in conjunction with the security interests
granted to Grantee pursuant to the Security Agreement. Grantor hereby
acknowledges and affirms that the rights and remedies of Grantee with respect to
the security interest in the Trademark Collateral made and granted hereby are
more fully set forth in the Security Agreement, the terms and provisions of
which are incorporated by reference herein as if fully set forth herein.
IN WITNESS WHEREOF, Grantor has caused this Trademark Security Agreement to
be duly executed by its duly authorized officer thereunto as of the ____ day of
___________, 199_.
Acknowledged:
HELLER FINANCIAL, INC., OPINION RESEARCH CORPORATION
as Agent
By:_________________________ By:________________________________
Title:________ Vice President Title:____________________
2
<PAGE>
ACKNOWLEDGMENT
STATE OF ______________ )
) ss.
COUNTY OF _____________ )
On the ____ day of ____________, 199_ before me personally appeared
______________, to me personally known or proved to me on the basis of
satisfactory evidence to be the person described in and who executed the
foregoing instrument as _____________ of OPINION RESEARCH CORPORATION, who being
by me duly sworn, did depose and say that he is ______________ of OPINION
RESEARCH CORPORATION, the corporation described in and which executed the
foregoing instrument; that the said instrument was signed on behalf of said
corporation by order of its Board of Directors; and that he acknowledged said
instrument to be the free act and deed of said corporation.
________________________
Notary Public
{Seal}
My commission expires:
_____________________
3
<PAGE>
Schedule 1
to Trademark
Security Agreement
------------------
TRADEMARK REGISTRATIONS
-----------------------
MARK REG. NO. DATE
---- -------- ----
TRADEMARK APPLICATIONS
----------------------
TRADEMARK LICENSES
------------------
Name of Agreement Parties Date of Agreement
- ----------------- ------- -----------------
<PAGE>
EXHIBIT D
[FORM OF LOCKBOX LETTER]
______________________, 19___
[Name and Address of
Lockbox Bank]
RE: Opinion Research Corporation
Gentlemen:
We hereby notify you that effective ____________________, 19___, we have
transferred to Heller Financial, Inc., a Delaware corporation, as Agent for the
benefit of our Lenders ("Agent"), exclusive ownership and control of our lock-
box account No. ____________________ (the "Lockbox Account") maintained with you
under the terms of the Lockbox Agreement attached hereto as Exhibit A.
We hereby irrevocably instruct you to make all payments to be made by you
out of or in connection with the Lockbox Account as you may be instructed by
Agent.
We also hereby notify you that Agent shall be irrevocably entitled to
exercise any and all rights and to receive from you all information requested by
Agent in respect of or in connection with the Lockbox Account, including,
without limitation, the right to specify when payments are to be made out of or
in connection with the Lockbox Account.
<PAGE>
All funds deposited into the Lockbox Account will not be subject to any
deduction, set-off, banker's lien or any other right in favor of any person
other than Agent, except that you may set-off against the Lockbox Account the
face amount of any check deposited in and credited to such Lockbox Account which
is subsequently returned for any reason. Your compensation for providing the
services contemplated herein shall be as mutually agreed between you and us from
time to time and we will continue to pay such compensation.
Please confirm your acknowledgment of and agreement to the foregoing
instructions by signing in the space provided below.
Sincerely yours, Acknowledged and Agreed:
OPINION RESEARCH CORPORATION [BANK]
By:_________________________ By:_________________________
Title:______________________ Title:______________________
<PAGE>
Exhibit 10.3
(SUBSIDIARY) GUARANTY
---------------------
GUARANTY dated as of this __ day of May, 1999, by ORC TELESERVICE CORP., a
Delaware corporation ("TeleServices"), ORC PROTEL, INC., a Delaware corporation
("ProTel"), MACRO INTERNATIONAL INC., a Delaware corporation ("Macro"), QUANTUM
RESEARCH CORPORATION, a Maryland corporation ("Quantum") (TeleServices, ProTel,
Macro and Quantum are sometimes referred to individually as a "Guarantor" and
collectively as the "Guarantors"), for the benefit of HELLER FINANCIAL, INC., a
Delaware corporation, as agent ("Agent") for the benefit of the Agent and
Lenders (as defined in the Credit Agreement described below).
RECITALS:
WHEREAS, Opinion Research Corporation, a Delaware corporation
("Parent") is the legal and beneficial owner, directly or indirectly, of all of
the issued and outstanding capital stock of Guarantors; and
WHEREAS, Parent and ORC Inc., a Delaware corporation ("ORC") (ORC and
Parent are sometimes referred to individually as a "Borrower" and together as
the "Borrowers") have entered into a certain Credit Agreement of even date
herewith (as the same may hereafter be amended, supplemented, restated or
otherwise modified from time to time, the "Credit Agreement") with Agent for the
benefit of all Lenders thereunder, and the Lenders from time to time parties
thereto; and
WHEREAS, each Borrower has received, and may hereafter receive, loans
and other financial accommodations from Agent and the Lenders (including Agent
in its individual capacity) under the Credit Agreement, as a result of which it
has incurred, and expects simultaneously with the delivery of this Agreement to,
and will hereafter, incur, "Obligations" (as that term is defined in the Credit
Agreement) to the Lenders; and
WHEREAS, each Guarantor acknowledges that, as a wholly owned
subsidiary of Parent, it will receive substantial direct and indirect benefits
by reason of the making of loans to Borrowers as provided in the Credit
Agreement; and
WHEREAS, one of the conditions precedent to the obligation of Agent
and the Lenders to extend loans to Borrowers is the execution by Guarantors of
this Guaranty and the performance by Guarantors of their obligations hereunder;
NOW, THEREFORE, in consideration of the premises and in order to
induce the Lenders to make the loans under the Credit Agreement and for other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, each Guarantor hereby agrees with Agent, on behalf of and for the
benefit of the Agent and Lenders, as follows:
<PAGE>
1. Incorporation of Recitals; Defined Terms. The foregoing recitals are
----------------------------------------
incorporated herein by this reference. Terms that are capitalized but which are
not defined herein shall have the meanings ascribed to such terms in the Credit
Agreement.
2. Guaranty of Payment and Performance. (a) Each Guarantor hereby
-----------------------------------
unconditionally and irrevocably, jointly and severally, guaranties to Agent and
the Lenders the punctual payment and performance when due, whether at stated
maturity or by acceleration or otherwise, of the Obligations. Each Guarantor
agrees that this Guaranty is a present and continuing guaranty of payment and
not of collectibility, and that the Lenders shall not be required to prosecute
collection, enforcement or other remedies against a Borrower, any other
guarantor of the Obligations or any other Person, or to enforce or resort to any
of the Collateral or other rights or remedies pertaining thereto, before calling
on any Guarantor for payment. Each Guarantor agrees that if, for any reason, a
Borrower or any other guarantor of the Obligations shall fail or be unable to
pay, punctually and fully, any of the Obligations, such Guarantor shall pay such
obligations to the Lenders in full immediately upon demand. Each Guarantor
agrees that one or more successive actions may be brought against any Guarantor,
as often as the Lenders deem advisable, until all of the Obligations are paid
and performed in full.
(b) Notwithstanding any provision in this Guaranty to the contrary,
it is intended that this Guaranty, and any interests, liens and security
interests granted by the each Guarantor as security for its obligations under
this Guaranty, not constitute a "Fraudulent Conveyance" (as defined below) in
the event that this Guaranty or such interest is subject to the Bankruptcy Code
or any applicable fraudulent conveyance or fraudulent transfer law or similar
law of any state. Consequently, each Guarantor and Agent agree that if this
Guaranty, or any such interests, liens or security interests securing this
Guaranty, would, but for the application of this sentence, constitute a
Fraudulent Conveyance, this Guaranty and each such lien and security interest
shall be valid and enforceable only to the maximum extent that would not cause
this Guaranty or such interest, lien or security interest to constitute a
Fraudulent Conveyance, and this Guaranty shall automatically be deemed to have
been amended accordingly at all relevant times. For purposes hereof, "Fraudulent
Conveyance" means a fraudulent conveyance under Section 548 of the Bankruptcy
Code or a fraudulent conveyance or fraudulent transfer under the provisions of
the applicable fraudulent conveyance or fraudulent transfer law or similar law
of any state, as in effect from time to time.
3. Continuing Guaranty. Each Guarantor agrees that the obligations of
-------------------
Guarantor pursuant to Section 2 above and any other provision of any of the Loan
Documents to which Guarantor is a party shall be primary obligations, shall not
be subject to any counterclaim, set-off, abatement, deferment or defense based
upon any claim that any Guarantor may have against Agent, the Lenders, a
Borrower, any other guarantor of the Obligations or any other Person, and shall
remain in full force and effect without regard to, and shall not be released,
discharged or affected in any way by any circumstance or condition (whether or
not Guarantor shall have any knowledge thereof), including without limitation:
(a) any lack of validity or enforceability of any of the Loan
Documents;
-2-
<PAGE>
(b) any termination, amendment, modification or other change in any
of the Loan Documents;
(c) any furnishing, exchange, substitution or release of any
Collateral, or any failure to perfect any Lien in any of the Collateral;
(d) any failure, omission or delay on the part of a Borrower, any
Guarantor, any other guarantor of the Obligations, Agent or the Lenders to
conform or comply with any term of any of the Loan Documents or any failure
of Agent or the Lenders to give notice of any Default or Event of Default;
(e) any waiver, compromise, release, settlement or extension of time
of payment or performance or observance of any of the obligations or
agreements contained in any of the Loan Documents;
(f) any action or inaction by Agent or the Lenders under or in
respect of any of the Loan Documents, any failure, lack of diligence,
omission or delay on the part of Agent or the Lenders to enforce, assert or
exercise any right, power or remedy conferred on it in any of the Loan
Documents, or any other action or inaction on the part of Agent or the
Lenders;
(g) any dissolution of any Guarantor or any voluntary or involuntary
bankruptcy, insolvency, reorganization, arrangement, readjustment,
assignment for the benefit of creditors, composition, receivership,
liquidation, marshalling of assets and liabilities or similar events or
proceedings with respect to a Borrower, any Guarantor or any other
guarantor of the Obligations, as applicable, or any of their respective
property or creditors, or any action taken by any trustee or receiver or by
any court in any such proceeding;
(h) any merger or consolidation of a Borrower, any Guarantor or any
other guarantor of the Obligations into or with any Person, or any sale,
lease or transfer of any of the assets of Borrower, any Guarantor or any
other guarantor of the Obligations to any other Person;
(i) any change in the ownership of the capital stock of any
Guarantor, a Borrower or any other guarantor of the Obligations or any
change in the relationship between a Borrower, any Guarantor or any other
guarantor of the Obligations, or any termination of any such relationship;
(j) any release or discharge by operation of law of a Borrower, any
Guarantor or any other guarantor of the Obligations from any obligation or
agreement contained in any of the Loan Documents; or
(k) any other occurrence, circumstance, happening or event, whether
similar or dissimilar to the foregoing and whether foreseen or unforeseen,
which otherwise might
-3-
<PAGE>
constitute a legal or equitable defense or discharge of the liabilities of
a guarantor or surety or which otherwise might limit recourse against a
Borrower or any Guarantor.
4. Waivers. Each Guarantor unconditionally waives, to the extent
-------
permitted by law, (i) notice of any of the matters referred to in Section 3
above, (ii) all notices which may be required by statute, rule of law or
otherwise, now or hereafter in effect, to preserve intact any rights against any
Guarantor, including, without limitation, any demand, presentment and protest,
proof of notice of non-payment under any of the Loan Documents and notice of any
Default or any Event of Default or any failure on the part of a Borrower, any
Guarantor or any other guarantor of the Obligations to perform or comply with
any covenant, agreement, term or condition of any of the Loan Documents, (iii)
any right to the enforcement, assertion or exercise against a Borrower, any
Guarantor or any other guarantor of the Obligations of any right or remedy
conferred under any of the Loan Documents, (iv) any requirement of diligence on
the part of any Person, (v) any requirement to exhaust any remedies or to
mitigate the damages resulting from any default under any of the Loan Documents,
and (vi) any notice of any sale, transfer or other disposition of any right,
title or interest of Agent or the Lenders under any of the Loan Documents.
5. Representations and Warranties. Each Guarantor represents and warrants
------------------------------
to Agent and the Lenders as follows:
(a) Organization and Qualification. Such Guarantor is a corporation
------------------------------
duly organized, validly existing and in good standing under the laws of the
State of its organization, has all requisite corporate power and authority
to own its property and to carry on its business as now conducted and as
proposed to be conducted, and is in good standing and authorized to do
business in each jurisdiction in which the failure so to qualify would have
a Material Adverse Effect.
(b) Power and Authority. Such Guarantor has the corporate power and
-------------------
authority to enter into, execute, deliver and carry out the terms of this
Guaranty and the other Loan Documents to which it is a party and to incur
the obligations provided for herein and therein, all of which have been
duly authorized by all proper and necessary action and are not prohibited
by the organizational instruments of such Guarantor.
(c) Binding Obligation. This Guaranty and the other Loan Documents to
------------------
which such Guarantor is a party, when executed and delivered, will
constitute the valid and legally binding obligations of such Guarantor,
enforceable against such Guarantor in accordance with their respective
terms, except as such enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or other similar laws
affecting the enforcement of creditors' rights generally and equitable
principles.
(d) No Conflict. The execution, delivery and performance by such
-----------
Guarantor of this Guaranty and each of the other Loan Documents to which it
is a party and the consummation of the transactions contemplated thereby do
not and will not: (1) violate any provision of law applicable to such
Guarantor, the certificate of incorporation or bylaws of
-4-
<PAGE>
such Guarantor, or any order, judgment or decree of any court or other
agency of government binding on such Guarantor; (2) conflict with, result
in a breach of or constitute (with due notice or lapse of time or both) a
default under any Contractual Obligation of such Guarantor; (3) result in
or require the creation or imposition of any material Lien upon any of the
properties or assets of such Guarantor (other than Liens in favor of
Agent); or (4) require any approval or consent of any Person under any
Contractual Obligation of such Guarantor, except for (a) such approvals or
consents obtained on or before the Closing Date and (b) such violations,
conflicts, breaches, Liens and defaults which would not have, and such
approvals and consents the absence of which would not have, either
individually or in the aggregate, a Material Adverse Effect.
(e) Governmental Consents. The execution, delivery and performance by
---------------------
such Guarantor of this Guaranty and each of the other Loan Documents to
which it is a party, and the consummation of the transactions contemplated
thereby do not and will not require any registration with, consent or
approval of, or notice to, or other action to, with or by, any federal,
state or other governmental authority or regulatory body except filings
required in connection with the perfection of security interests granted
pursuant to the Loan Documents, and other filings, authorizations, consents
and approvals, all of which have been made or obtained or the absence of
which would not have, either individually or in the aggregate, a Material
Adverse Effect.
(f) Litigation; Adverse Facts. Except as set forth on subschedule 1
-------------------------
to Schedule 7.1 to the Credit Agreement, there are no judgments outstanding
against such Guarantor or affecting any of its property nor is there any
action, charge, claim, demand, suit, proceeding, petition, governmental
investigation or arbitration now pending or, to the best knowledge of such
Guarantor after due inquiry, threatened against or affecting such Guarantor
and/or any of its property. Such Guarantor has not received any opinion or
memorandum or legal advice from legal counsel to the effect that it is
exposed to any liability or disadvantage which could reasonably be expected
to result in any Material Adverse Effect. The actions, charges, claims,
demand, suits, proceedings, petitions, investigations and arbitrations set
forth on such subschedule will not, if adversely determined, either
individually or in the aggregate, result in any Material Adverse Effect and
do not relate to and will not affect the consummation of the transactions
contemplated by the Loan Documents to which such Guarantor is a party.
(g) Payment of Taxes. All material tax returns and reports required
----------------
to be filed by such Guarantor have been timely filed, and all taxes,
assessments, fees and other governmental charges upon such Guarantor and
upon its properties, assets, income and franchises which are shown on such
returns as due and payable have been paid when due and payable. None of the
United States income tax returns of such Guarantor are under audit. No tax
liens have been filed and no claims are being asserted with respect to any
such taxes. The charges, accruals and reserves on the books of such
Guarantor in respect of any taxes or other governmental charges are in
accordance with GAAP.
-5-
<PAGE>
(h) Burdensome Obligations; Solvency. After giving effect to the
--------------------------------
transactions contemplated by this Guaranty and the other Loan Documents to
which such Guarantor is a party and after giving effect to the provisions
of Section 2(b) hereof, such Guarantor (i) will not be a party to or be
bound by any franchise, agreement, deed, lease or other instrument, or be
subject to any restriction, which is so unusual or burdensome, so as to
cause, in the foreseeable future, a Material Adverse Effect, (ii) does not
intend to incur, and does not believe that it will incur, debts beyond its
ability to pay such debts as they become due, (iii) owns and will own
property, the fair saleable value of which is (I) greater than the total
amount of its liabilities (including contingent liabilities) and (II)
greater than the amount that will be required to pay the probable
liabilities of its then existing debts as they become absolute and matured,
and (iv) has and will have capital that is not unreasonably small in
relation to its business as presently conducted and as proposed to be
conducted. Such Guarantor does not presently anticipate that future
expenditures needed to meet the provisions of federal or state statutes,
orders, rules or regulations will be so burdensome so as to have, either
individually or in the aggregate, a Material Adverse Effect.
6. Subordination. Each Guarantor agrees that any and all present and
-------------
future debts and obligations of a Borrower to such Guarantor hereby are
subordinated to the claims of Agent and the Lenders and hereby are assigned by
such Guarantor to Agent for the benefit of the Lenders as security for its
obligations hereunder.
7. Reinstatement. The obligations of each Guarantor pursuant to this
-------------
Guaranty shall continue to be effective or automatically be reinstated, as the
case may be, if at any time payment of any of the Obligations is rescinded or
otherwise must be restored or returned by Agent or the Lenders upon the
insolvency, bankruptcy, dissolution, liquidation or reorganization of any
Guarantor, a Borrower or any other guarantor of the Obligations or otherwise,
all as though such payment had not been made.
8. Successors and Assigns. This Guaranty shall inure to the benefit of
----------------------
Agent, the Lenders, and their successors and assigns. This Guaranty shall be
binding on each Guarantor, its successors and assigns, and shall continue in
full force and effect until all of the Obligations are paid and performed in
full.
9. No Waiver of Rights. No delay or failure on the part of Agent or the
-------------------
Lenders to exercise any right, power or privilege under this Guaranty or any of
the other Loan Documents shall operate as a waiver thereof, and no single or
partial exercise of any right, power or privilege shall preclude any other or
further exercise thereof or the exercise of any other power or right, or be
deemed to establish a custom or course of dealing or performance between the
parties hereto. The rights and remedies herein provided are cumulative and not
exclusive of any rights or remedies provided by law. No notice to or demand on
any Guarantor in any case shall entitle any Guarantor to any other or further
notice or demand in the same, similar or other circumstance.
-6-
<PAGE>
10. Modification. The terms of this Guaranty may be waived, discharged,
------------
or terminated only by an instrument in writing signed by the party against which
enforcement of the change, waiver, discharge or termination is sought. No
amendment, modification, waiver or other change of any of the terms of this
Guaranty shall be effective without the prior written consent of all of the
Lenders.
11. Costs and Expenses. Each Guarantor agrees to pay on demand all costs
------------------
and expenses incurred by or on behalf of Agent and the Lenders (including,
without limitation, attorneys' fees and expenses) in enforcing the obligations
of such Guarantor under this Guaranty.
12. Joinder. Each Guarantor agrees that any action to enforce this
-------
Guaranty may, to the extent permitted by law, be brought against Guarantor
without any reimbursement or joinder of a Borrower or any other guarantor of the
Obligations in such action.
13. Security. The obligations of such Guarantor hereunder are secured by
--------
the portion of the Collateral pledged by such Guarantor to Agent, for the
benefit of the Lenders, pursuant to the terms of that certain Security Agreement
of even date herewith among Guarantors and Agent.
14. Severability. If any provision of this Guaranty is deemed to be
------------
invalid by reason of the operation of any law, or by reason of the
interpretation placed thereon by any court or other governmental authority, this
Guaranty shall be construed as not containing such provision and the invalidity
of such provision shall not affect the validity of any other provision hereof,
and any and all other provisions hereof which otherwise are lawful and valid
shall remain in full force and effect.
15. Notices.
-------
Unless otherwise specifically provided herein, any notice or other
communication required or permitted to be given shall be in writing addressed to
the respective party as set forth below and may be personally served,
telecopied, telexed or sent by overnight courier service or United States mail
and shall be deemed to have been given: (a) if delivered in person, when
delivered; (b) if delivered by telecopy or telex, on the date of transmission if
transmitted on a Business Day before 4:00 p.m. (Chicago time) or, if not, on the
next succeeding Business Day; (c) if delivered by overnight courier, two days
after delivery to such courier properly addressed; or (d) if by U.S. Mail, four
Business Days after depositing in the United States mail, with postage prepaid
and properly addressed.
Notices shall be addressed as follows:
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<PAGE>
If to Guarantor: c/o OPINION RESEARCH CORPORATION
23 Orchard Road
Skillman, New Jersey 08542-0183
ATTN: Chief Executive Officer
Telecopy: (908) 281-5103
With a copy to: WOLF, BLOCK, SCHORR AND
SOLIS-COHEN LLP
111 South Fifteenth Street
12/th/ floor
Philadelphia, Pennsylvania 19102-2678
Telecopy: (215) 977-2740
[after July 4, 1999]
WOLF, BLOCK, SCHORR AND
SOLIS-COHEN LLP
1650 Arch Street
Philadelphia, Pennsylvania 19103
Telecopy: (215) 977-2740
If to Agent: HELLER FINANCIAL, INC.
500 West Monroe Street
Chicago, Illinois 60661
ATTN: Account Manager
Corporate Finance
Telecopy: (312) 441-7367
With a copy to: HELLER FINANCIAL, INC.
500 West Monroe Street
Chicago, Illinois 60661
ATTN: Legal Services
Corporate Finance
Telecopy: (312) 441-6876
or to such other address as the party addressed shall have previously designated
by written notice to the serving party, given in accordance with this Section
15. A notice not given as provided above shall, if it is in writing, be deemed
given if and when actually received by the party to whom given.
16. APPLICABLE LAW. THIS GUARANTY SHALL BE GOVERNED BY, AND SHALL BE
--------------
CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE INTERNAL
-8-
<PAGE>
LAWS OF THE STATE OF ILLINOIS, WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES.
17. CONSENT TO JURISDICTION. EACH GUARANTOR CONSENTS TO THE JURISDICTION
-----------------------
OF ANY STATE OR FEDERAL COURT LOCATED WITHIN THE COUNTY OF COOK, STATE OF
ILLINOIS AND IRREVOCABLY AGREES THAT, SUBJECT TO AGENT'S ELECTION, ALL ACTIONS
OR PROCEEDINGS ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE OTHER LOAN
DOCUMENTS SHALL BE LITIGATED IN SUCH COURTS. EACH GUARANTOR EXPRESSLY SUBMITS
AND CONSENTS TO THE JURISDICTION OF THE AFORESAID COURTS AND WAIVES ANY DEFENSE
OF FORUM NON CONVENIENS. EACH GUARANTOR HEREBY WAIVES PERSONAL SERVICE OF ANY
AND ALL PROCESS AND AGREES THAT ALL SUCH SERVICE OF PROCESS MAY BE MADE UPON
SUCH GUARANTOR BY CERTIFIED OR REGISTERED MAIL, RETURN RECEIPT REQUESTED,
ADDRESSED TO SUCH GUARANTOR, AT THE ADDRESS SET FORTH IN THIS AGREEMENT AND
SERVICE SO MADE SHALL BE COMPLETE TEN (10) DAYS AFTER THE SAME HAS BEEN POSTED.
18. WAIVER OF JURY TRIAL. EACH GUARANTOR, AGENT AND EACH LENDER HEREBY
--------------------
WAIVES THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION
BASED UPON OR ARISING OUT OF THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS. EACH
GUARANTOR, AGENT AND EACH LENDER ACKNOWLEDGE THAT THIS WAIVER IS A MATERIAL
INDUCEMENT TO ENTER INTO A BUSINESS RELATIONSHIP, THAT EACH HAS RELIED ON THE
WAIVER IN ENTERING INTO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS AND THAT
EACH WILL CONTINUE TO RELY ON THE WAIVER OF THEIR RELATED FUTURE DEALINGS. EACH
GUARANTOR, AGENT AND EACH LENDER WARRANT AND REPRESENT THAT EACH HAS HAD THE
OPPORTUNITY OF REVIEWING THIS JURY WAIVER WITH LEGAL COUNSEL, AND THAT EACH
KNOWINGLY AN VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS.
19. WAIVER OF RIGHTS AGAINST BORROWERS. NOTWITHSTANDING ANYTHING TO THE
----------------------------------
CONTRARY WHICH MAY BE CONTAINED HEREIN, EACH GUARANTOR HEREBY UNCONDITIONALLY
AND IRREVOCABLY AGREES THAT SUCH GUARANTOR (I) WILL NOT ASSERT AGAINST ANY
BORROWER ANY RIGHT OR CLAIM, AT LAW OR IN EQUITY, TO INDEMNIFICATION,
REIMBURSEMENT, CONTRIBUTION, RESTITUTION OR PAYMENT FOR OR WITH RESPECT TO ANY
AND ALL AMOUNTS SUCH GUARANTOR MAY PAY OR BE OBLIGATED TO PAY TO THE LENDERS,
INCLUDING, WITHOUT LIMITATION, THE OBLIGATIONS, AND ANY AND ALL OTHER
OBLIGATIONS WHICH SUCH GUARANTOR MAY PERFORM, SATISFY OR DISCHARGE, UNDER OR
WITH RESPECT TO THIS GUARANTY, (II) WAIVES AND RELEASES ALL SUCH RIGHTS AND
CLAIMS, AT LAW OR IN EQUITY, TO INDEMNIFICATION, REIMBURSEMENT, CONTRIBUTION,
RESTITUTION OR PAYMENT WHICH SUCH GUARANTOR MAY HAVE NOW OR AT ANY TIME
-9-
<PAGE>
AGAINST ANY BORROWER AND (III) WILL NOT ASSIGN OR OTHERWISE TRANSFER ANY SUCH
RIGHT OR CLAIMS TO ANY OTHER PERSON. EACH GUARANTOR FURTHER UNCONDITIONALLY AND
IRREVOCABLY AGREES THAT SUCH GUARANTOR SHALL HAVE NO RIGHT OF SUBROGATION, AND
WAIVES ANY RIGHT TO ENFORCE ANY REMEDY WHICH THE LENDERS NOW HAVE OR HEREAFTER
MAY HAVE AGAINST ANY BORROWER AND WAIVES ANY DEFENSE BASED UPON AN ELECTION OF
REMEDIES BY THE LENDERS, WHICH DESTROYS OR OTHERWISE IMPAIRS ANY SUBROGATION
RIGHTS OF SUCH GUARANTOR AND/OR THE RIGHT OF SUCH GUARANTOR TO PROCEED AGAINST
ANY BORROWER FOR REIMBURSEMENT.
[Remainder of page left intentionally blank; signature page follows]
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<PAGE>
IN WITNESS WHEREOF, Guarantors have executed this Guaranty as of the
date first above written.
ORC TELESERVICE CORP., a Delaware
corporation
By: /s/ John F. Short
-----------------------
Name: John F. Short
Title: President
ORC PROTEL, INC., a Delaware corporation
By: /s/ John F. Short
-----------------------
Name: John F. Short
Title: President
MACRO INTERNATIONAL INC., a Delaware
corporation
By: /s/ Douglas L. Cox
-----------------------
Name: Douglas L. Cox
Title: Vice President
QUANTUM RESEARCH CORPORATION, a Maryland
corporation
By: /s/ Douglas L. Cox
-----------------------
Name: Douglas L. Cox
Title: Vice President
<PAGE>
Exhibit 10.4
SUBSIDIARY SECURITY AGREEMENT
This SECURITY AGREEMENT (this "Agreement") is dated as of _________, 1999
among ORC TELESERVICE CORP., a Delaware corporation ("TeleServices"), ORC
PROTEL, INC., a Delaware corporation ("ProTel"), MACRO INTERNATIONAL, INC., a
Delaware corporation ("Macro") , QUANTUM RESEARCH CORPORATION, a Maryland
corporation ("Quantum") and HELLER FINANCIAL, INC., a Delaware corporation, as
agent ("Agent") for the benefit of all Lenders. TeleServices, ProTel, Macro and
Quantum are sometimes individually referred to herein as a "Debtor" and
collectively as the "Debtors".
W I T N E S S E T H :
- - - - - - - - - -
WHEREAS, Opinion Research Corporation, a Delaware corporation ("Parent")
has entered into a Credit Agreement of even date herewith (as the same may
hereafter be amended, restated, supplemented or otherwise modified from time to
time, the "Credit Agreement") with ORC Inc., the Lenders and Agent, for the
benefit of Agent and all Lenders thereunder, providing for extensions of credit
and other financial accommodations to be made to Parent and ORC, Inc. by Agent
and Lenders; and
WHEREAS, Parent is the legal and beneficial owner, directly or indirectly,
of all of the issued and outstanding capital stock of each Debtor (other than
Macro, with respect to which Parent owns at least 99.7% of the issued and
outstanding capital stock); and
WHEREAS, each Debtor acknowledges that as such a subsidiary of Parent, it
will receive substantial direct and indirect benefits by reason of the making of
Loans to Parent and ORC, Inc. as provided in the Credit Agreement; and
WHEREAS, each Debtor has guaranteed the Obligations pursuant to that
certain Guaranty of even date herewith (the "Guaranty") made by Debtors to
Agent, for the benefit of Agent and Lenders; and
WHEREAS, it is a condition precedent to the obligations of Agent and the
Lenders under the Credit Agreement that Debtors shall have granted the Liens
contemplated by this Agreement;
NOW, THEREFORE, in consideration of the foregoing and in order to induce
Agent and the Lenders to extend credit and make other financial accommodations
under the Credit Agreement, and for other good and valuable consideration, the
receipt and sufficiency of which hereby are acknowledged, each Debtor hereby
agrees with Agent, on behalf of and for the benefit of Agent and Lenders, as
follows:
SECTION 1. Definitions
-----------
<PAGE>
1.1 Certain Defined Terms. Unless otherwise defined herein, all
---------------------
capitalized terms used herein shall have the respective meanings given to such
terms in the Credit Agreement. The following terms, as used herein, have the
meanings set forth below:
"Accounts" means all "accounts" (as defined in the UCC) now owned or
hereafter created or acquired by each Debtor including, without limitation, all
of the following now owned or hereafter created or acquired by each Debtor: (a)
accounts receivable, contract rights, book debts, notes, drafts, chattel paper
and other obligations or indebtedness owing to each Debtor arising from the
sale, lease or exchange of goods or other property and/or the performance of
services; (b) each Debtor's rights in, to and under all purchase orders for
goods, services or other property; (c) each Debtor's rights to any goods,
services or other property represented by any of the foregoing (including
returned or repossessed goods and unpaid sellers' rights of rescission,
replevin, reclamation and rights of stoppage in transit); (d) monies due to or
to become due to each Debtor under all contracts for the sale, lease or exchange
of goods or other property and/or the performance of services (whether or not
yet earned by performance on the part of such Debtor); (e) uncertificated
securities; and (f) Proceeds of any of the foregoing and all collateral security
and guaranties of any kind given by any Person with respect to any of the
foregoing.
"Blocked Accounts" has the meaning assigned to that term in Section 7.
"Collateral" has the meaning assigned to that term in Section 2.
"Collecting Banks" has the meaning assigned to that term in Section 7.
"Copyright License" means any written agreement now or hereafter in
existence granting to any Debtor any right to use any Copyright including,
without limitation, the agreements described in Schedule 1 of the Copyright
Security Agreement.
"Copyrights" means collectively all of the following: (a) all copyrights,
rights and interests in copyrights, works that may be protected by copyright,
copyright registrations and copyright applications now owned or hereafter
created or acquired by each Debtor, including, without limitation, those listed
on Schedule 1 of the Copyright Security Agreement; (b) all renewals of any of
the foregoing; (c) all income, royalties, damages and payments now or hereafter
due and/or payable under any of the foregoing, including, without limitation,
damages or payments for past or future infringements of any of the foregoing;
(d) the right to sue for past, present and future infringements of any of the
foregoing; (e) all rights corresponding to any of the foregoing throughout the
world; and (f) all goodwill associated with and symbolized by any of the
foregoing.
"Copyright Security Agreement" means a copyright security agreement to be
executed and delivered by a Debtor to Agent, substantially in the form of
Exhibit A, as such agreement may hereafter be amended, supplemented or otherwise
modified from time to time.
2
<PAGE>
"Depositary Account" has the meaning assigned to that term in Section 7.
"Documents" means all "documents" (as defined in the UCC) or other receipts
covering, evidencing or representing goods now owned or hereafter acquired by a
Debtor.
"Equipment" means all "equipment" (as defined in the UCC) now owned or
hereafter acquired by any Debtor including, without limitation, all machinery,
motor vehicles, trucks, trailers, vessels, aircraft and rolling stock and all
parts thereof and all additions and accessions thereto and replacements
therefor.
"Fixtures" means all of the following now owned or hereafter acquired by
any Debtor: plant fixtures; business fixtures; other fixtures and storage
facilities, wherever located; and all additions and accessions thereto and
replacements therefor.
"General Intangibles" means all "general intangibles" (as defined in the
UCC) now owned or hereafter acquired by any Debtor including, without
limitation, all right, title and interest of any Debtor in and to: (a) all
agreements, leases, licenses and contracts to which such Debtor is or may become
a party; (b) all obligations or indebtedness owing to such Debtor (other than
Accounts) from whatever source arising; (c) all tax refunds; (d) Intellectual
Property; and (e) all trade secrets and other confidential information relating
to the business of such Debtor including by way of illustration and not
limitation: systems and techniques for the analysis, diagnosis and correction
of malfunctions of products used by such Debtor's customers; the names and
addresses of, and credit and other business information concerning, such
Debtor's past, present or future customers; the prices which such Debtor obtains
for its services or at which it sells or leases merchandise; estimating and cost
procedures; profit margins; policies and procedures pertaining to the sale and
design of equipment, components, devices and services furnished by such Debtor;
information concerning suppliers of such Debtor; and information concerning the
manner of operation, business plans, pledges, projections, and all other
information of any kind or character, whether or not reduced to writing, with
respect to the conduct by such Debtor of its business not generally known by the
public.
"Instruments" means all "instruments", "chattel paper" or "letters of
credit" (each as defined in the UCC) including, but not limited to, promissory
notes, drafts, bills of exchange and trade acceptances, now owned or hereafter
acquired by any Debtor.
"Intellectual Property" shall mean collectively all of the following:
Copyrights, Copyright Licenses, Patents, Patent Licenses, Trademarks and
Trademark Licenses.
"Inventory" means all "inventory" (as defined in the UCC), now owned or
hereafter acquired by any Debtor, wherever located including, without
limitation, finished goods, raw materials, work in process and other materials
and supplies (including packaging and shipping materials) used or consumed in
the manufacture or production thereof and goods which are returned to or
repossessed by such Debtor.
3
<PAGE>
"Investment Property" means all "investment property" (as defined in the
UCC) now owned or hereafter acquired by a Debtor.
"Patent License" means any written agreement now or hereafter in existence
granting to any Debtor any right to use any invention on which a Patent is in
existence including, without limitation, the agreements described in Schedule 1
of the Patent Security Agreement.
"Patents" means collectively all of the following: (a) all patents and
patent applications now owned or hereafter created or acquired by each Debtor
including, without limitation, those listed on Schedule 1 of the Patent Security
Agreement and the inventions and improvements described and claimed therein; (b)
the reissues, divisions, continuations, renewals, extensions and continuations-
in-part of any of the foregoing; (c) all patentable inventions now owned or
hereafter created or acquired by each Debtor; (d) all income, royalties, damages
or payments now and hereafter due and/or payable under any of the foregoing with
respect to any of the foregoing, including, without limitation, damages or
payments for past or future infringements of any of the foregoing; (e) the right
to sue for past, present and future infringements of any of the foregoing; (f)
all rights corresponding to any of the foregoing throughout the world; and (g)
all goodwill associated with any of the foregoing.
"Patent Security Agreement" means a patent security agreement executed and
delivered by a Debtor to Agent, substantially in the form of Exhibit B, as such
agreement may hereafter be amended, supplemented or otherwise modified from time
to time.
"Proceeds" means all proceeds of, and all other profits, rentals or
receipts, in whatever form, arising from the collection, sale, lease, exchange,
assignment, licensing or other disposition of, or realization upon, any
Collateral including, without limitation, all claims of any Debtor against third
parties for loss of, damage to or destruction of, or for proceeds payable under,
or unearned premiums with respect to, policies of insurance with respect to any
Collateral, and any condemnation or requisition payments with respect to any
Collateral, in each case whether now existing or hereafter arising.
"Secured Obligations" has the meaning assigned to that term in Section 3.
"Security Interests" means the security interests granted pursuant to
Section 2, as well as all other security interests created or assigned as
additional security for the Secured Obligations pursuant to the provisions of
this Agreement.
"Trademark License" means any written agreement now or hereafter in
existence granting to a Debtor any right to use any Trademark, including,
without limitation, the agreements described in Schedule 1 of the Trademark
Security Agreement.
"Trademarks" means collectively all of the following now owned or hereafter
created or acquired by each Debtor: (a) all trademarks, trade names, corporate
names, company names, business names, fictitious business names, trade styles,
service marks, logos, other business
4
<PAGE>
identifiers, prints and labels on which any of the foregoing have appeared or
appear, all registrations and recordings thereof, and all applications in
connection therewith including registrations, recordings and applications in the
United States Patent and Trademark Office or in any similar office or agency of
the United States, any State thereof or any other country or any political
subdivision thereof, including, without limitation, those described in Schedule
1 of the Trademark Security Agreement; (b) all reissues, extensions or renewals
thereof; (c) all income, royalties, damages and payments now or hereafter due
and/or payable under any of the foregoing or with respect to any of the
foregoing including damages or payments for past or future infringements of any
of the foregoing; (d) the right to sue for past, present and future
infringements of any of the foregoing; (e) all rights corresponding to any of
the foregoing throughout the world; and (f) all goodwill associated with and
symbolized by any of the foregoing.
"Trademark Security Agreement" means the trademark security agreement
executed and delivered by a Debtor to Agent substantially in the form of
Exhibit C, as such agreement may hereafter be amended, supplemented or otherwise
modified from time to time.
"UCC" means the Uniform Commercial Code as in effect on the date hereof in
the State of Illinois, provided that if by reason of mandatory provisions of
--------
law, the perfection or the effect of perfection or non-perfection of the
Security Interests in any Collateral or the availability of any remedy hereunder
is governed by the Uniform Commercial Code as in effect on or after the date
hereof in any other jurisdiction, "UCC" means the Uniform Commercial Code as in
effect in such other jurisdiction for purposes of the provisions hereof relating
to such perfection or effect of perfection or non-perfection or availability of
such remedy.
1.2 Other Definition Provisions. References to "Subsections",
---------------------------
"subsections", "Exhibits" and "Schedules" shall be to Sections, subsections,
Exhibits and Schedules, respectively, of this Agreement unless otherwise
specifically provided. Any of the terms defined in subsection 1.1 may, unless
the context otherwise requires, be used in the singular or the plural depending
on the reference. All references to statutes and related regulations shall
include (unless otherwise specifically provided herein) any amendments of same
and any successor statutes and regulations.
SECTION 2. Grant of Security Interests
---------------------------
In order to secure the prompt and complete payment and performance of the
Secured Obligations in accordance with the terms thereof, each Debtor hereby
grants to Agent, for the benefit of Agent and the Lenders, a continuing security
interest in and to all right, title and interest of such Debtor in the following
property, whether now owned or existing or hereafter acquired or arising and
regardless of where located (all being collectively referred to as the
"Collateral"):
(A) Accounts;
5
<PAGE>
(B) Inventory;
(C) General Intangibles, other than those agreements, leases, licenses and
contracts to which a Debtor is or may be a party which by their terms prohibit
the assignment thereof without the consent of the other party thereto to the
extent any necessary consents shall not have been obtained (collectively, "Non-
Assignable Contracts");
(D) Documents;
(E) Instruments;
(F) Equipment, other than Equipment subject to purchase money Liens
permitted by the Credit Agreement which prohibit the granting of subordinate
Liens;
(G) Fixtures;
(H) Investment Property;
(I) Any Depositary Account and all other deposit accounts of such Debtor
maintained with any bank or financial institution;
(J) All cash deposited therein from time to time and other monies and
property of such Debtor in the possession or under the control of Agent or any
Lender;
(K) All books, records, ledger cards, files, correspondence, computer
programs, tapes, disks and related data processing software that at any time
evidence or contain information relating to any of the property described in
subparts (A) - (J) above or are otherwise necessary or helpful in the collection
thereof or realization thereon; and
(L) Proceeds of all or any of the property described in subparts (A) - (K)
above.
Notwithstanding the foregoing, so long as no Event of Default has occurred and
is continuing, such Debtor shall have the exclusive, non-transferable right and
license to use the Intellectual Property and the exclusive right to grant to
other Persons licenses and sublicenses with respect to the Intellectual
Property.
SECTION 3. Security for Secured Obligations
--------------------------------
This Agreement secures the prompt and complete payment and performance of
the obligations of Debtors under the Guaranty and all other Loan Documents to
which a Debtor is a party, including all obligations of Debtors now or hereafter
existing under this Agreement and all renewals, extensions, restructurings and
refinancings of any of the above (all such debts,
6
<PAGE>
obligations and liabilities of Debtors being collectively referred to herein as
the "Secured Obligations").
SECTION 4. Debtor Remains Liable
---------------------
Anything herein to the contrary notwithstanding: (a) each Debtor shall
remain liable under the contracts and agreements included in the Collateral to
the extent set forth therein to perform all of its duties and obligations
thereunder to the same extent as if this Agreement had not been executed; (b)
the exercise by Agent of any of the rights granted hereunder shall not release
any Debtor from any of its duties or obligations under the contracts and
agreements included in the Collateral; and (c) Agent shall not have any
obligation or liability under the contracts and agreements included in the
Collateral by reason of this Agreement, nor shall Agent be obligated to perform
any of the obligations or duties of any Debtor thereunder or to take any action
to collect or enforce any claim for payment assigned hereunder.
SECTION 5. Representations and Warranties
------------------------------
Each Debtor represents and warrants as follows:
5.1 Binding Obligation. This Agreement is the legally valid and binding
------------------
obligation of such Debtor, enforceable against such Debtor in accordance with
its terms, except as enforcement may be limited by bankruptcy, insolvency,
reorganization, moratorium, or similar laws or equitable principles relating to
or limiting creditor's rights generally.
5.2 Location of Equipment and Inventory. All of the Equipment and
-----------------------------------
Inventory of such Debtor is located at the places specified on Schedule I.
5.3 Ownership of Collateral. Except for the Permitted Encumbrances
-----------------------
disclosed on Schedule II and the Security Interests, each Debtor owns its
Collateral free and clear of any Lien. No effective financing statement or
other form of lien notice covering all or any part of the Collateral is on file
in any recording office, except for those in favor of Agent and as disclosed on
Schedule II. Except as disclosed on Schedule II, none of the Collateral is in
the possession of any bailee, warehouseman, agent, processor or consignee.
5.4 Office Locations; Fictitious Names. The chief place of business, the
----------------------------------
chief executive office and the office where such Debtor keeps its books and
records are located at the places specified on Schedule I. Such Debtor does not
do business and has not done business during the past five years under any
trade-name or fictitious business name except as disclosed on Schedule III.
5.5 Perfection. This Agreement, and the filing of appropriate financing
----------
statements and delivery of those documents and instruments required to perfect
the Liens granted hereunder, create a valid, perfected and, except for the
Permitted Encumbrances, first priority security interest in its Collateral
located in the United States , securing the payment of the Secured Obligations,
and all filings and other actions necessary or desirable to perfect and protect
such
7
<PAGE>
security interest have been duly taken other than registering the Lien on
certificates of title for titled vehicles.
5.6 Governmental Authorizations; Consents. Except for the filing of the
-------------------------------------
financing statements referred to in Section 5.5 hereof and the registration of
Liens on certificates of title for titled vehicles, no authorization, approval
or other action by, and no notice to or filing with, any governmental authority
or regulatory body or consent of any other Person (including without limitation
any licensor of Intellectual Property or any party to the Purchase Agreement) is
required either (a) the execution, delivery or performance of this Agreement by
such Debtor, (b) for the grant by such Debtor of the security interest granted
hereby or (c) for the perfection of such Security Interests in Collateral
located in the United States or the exercise by Agent of its rights and remedies
hereunder, other than as may be required by the Federal Assignment of Claims
Act.
5.7 Accounts. Each Account constitutes the legally valid and binding
--------
obligation of the customer obligated to pay the same. The amount represented by
such Debtor to Agent as owing by each customer is the correct amount actually
and unconditionally owing, except for normal cash discounts and allowances where
applicable. No customer has any defense, set-off, claim or counterclaim against
such Debtor that can be asserted against Agent, whether in any proceeding to
enforce Agent's rights in the Collateral or otherwise except defenses, set-offs,
claims or counterclaims that are not, in the aggregate, material to the value of
the Accounts. None of the Accounts is evidenced by a promissory note or other
instrument other than a check.
5.8 Intellectual Property. The Copyrights, Copyright Licenses, Patents,
---------------------
Patent Licenses, Trademarks and Trademark Licenses listed on the respective
schedules to each of the Copyright Security Agreement, the Patent Security
Agreement and the Trademark Security Agreement constitute all of the
Intellectual Property owned by the applicable Debtor. The execution, delivery
and performance of this Agreement by such Debtor will not violate or cause a
default under any of the Intellectual Property or any agreement in connection
therewith.
5.9 Accurate Information. All information heretofore, herein or hereafter
--------------------
supplied to Agent by or on behalf of such Debtor with respect to the Collateral
is and will be accurate and complete in all material respects.
5.10 Non-Assignable Contracts. Failure to obtain consents to the
------------------------
assignment or granting of a security interest in the Non-Assignable Contracts
will not have, and will not reasonably be expected to have, a Material Adverse
Effect. The Non-Assignable Contracts are not material to Parent and its
Subsidiaries taken as a whole.
8
<PAGE>
SECTION 6. Further Assurances; Covenants
-----------------------------
6.1 Other Documents and Actions. Subject to the provisions of subsection
---------------------------
2.5 of the Credit Agreement, each Debtor will, from time to time, at its
expense, promptly execute and deliver all further instruments and documents and
take all further action that may be necessary or desirable, or that Agent may
reasonably request, in order to perfect and protect the Security Interests
granted or purported to be granted hereby or to enable Agent to exercise and
enforce its rights and remedies hereunder with respect to any Collateral.
Without limiting the generality of the foregoing, each Debtor will: (a) execute
and file such financing or continuation statements, or amendments thereto, and
such other instruments or notices, as may be necessary or desirable, or as Agent
may reasonably request, in order to perfect and preserve the Security Interests
granted or purported to be granted hereby; (b) at any reasonable time, upon
demand by Agent exhibit the Collateral to allow inspection of the Collateral by
Agent or persons designated by Agent; and (c) upon Agent's request, appear in
and defend any action or proceeding that may affect such Debtor's title to or
the Security Interests of the Agent in the Collateral.
6.2 Agent Authorized. Each Debtor hereby authorizes Agent to file one or
----------------
more financing or continuation statements, and amendments thereto, relating to
all or any part of the Collateral without the signature of such Debtor to the
extent permitted by law.
6.3 Corporate or Name Change. Each Debtor will notify Agent promptly in
------------------------
writing prior to any change in such Debtor's name, identity or corporate
structure.
6.4 Business Locations. Except for the sale of Inventory in the ordinary
------------------
course of business and dispositions expressly permitted in the Credit Agreement,
each Debtor will keep the Collateral at the locations specified on Schedule I
and those referred to in the next sentence. Each Debtor will give Agent thirty
(30) days prior written notice of any change in such Debtor's chief place of
business, of any new location of business, and of any new location for any of
the Collateral. With respect to any new location (which in any event shall be
within the continental United States), each Debtor will execute such documents
and take such actions as Agent deems necessary to perfect and protect the
Security Interests.
6.5 Bailees. If any Collateral is at any time in the possession or
-------
control of any warehouseman, bailee, consignee or any of a Debtor's agents or
processors, such Debtor shall, upon the request of Agent, notify such
warehouseman, bailee, consignee, agent or processor of the Security Interests
created hereby and shall instruct such Person to hold all such Collateral for
Agent's account subject to Agent's instructions.
6.6 Instruments. Each Debtor will deliver and pledge to Agent all
-----------
Instruments duly endorsed and accompanied by duly executed instruments of
transfer or assignment, all in form and substance satisfactory to Agent. Each
Debtor will mark conspicuously all chattel paper with a legend, in form and
substance satisfactory to Agent, indicating that such chattel paper is subject
to the Security Interests and will, upon Agent's request from time to time,
deliver possession thereof to Agent, for the benefit of Agent and the Lenders.
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<PAGE>
6.7 Certificates of Title. Upon Agent's request, each Debtor shall
---------------------
promptly deliver to Agent any and all certificates of title, applications for
title or similar evidence of ownership of all Equipment and shall cause Agent to
be named as lienholder on any such certificate of title or other evidence of
ownership. Each Debtor shall promptly inform Agent of any acquisitions or
dispositions of Equipment and shall not permit any Equipment to become a fixture
to real estate other than real estate encumbered by the Mortgages.
6.8 Account Covenants. Except as otherwise provided in this subsection
-----------------
6.8, each Debtor shall continue to collect, at its own expense, all amounts due
or to become due Debtor under the Accounts. In connection with such
collections, each Debtor may take (and after the occurrence and during the
continuance of an Event of Default, at Agent's direction, shall take) such
action as such Debtor or Agent may deem necessary or advisable to enforce
collection of the Accounts; provided, that Agent shall have the right at any
--------
time after the occurrence of a Default or an Event of Default to: (a) notify the
customers or obligors under any Account of the assignment of such Account to
Agent, for the benefit of Agent and the Lenders, and to direct such customers or
obligors to make payment of all amounts due or to become due directly to Agent;
(b) enforce collection of any such Accounts; and (c) adjust, settle or
compromise the amount or payment of such Accounts. After the occurrence of a
Default or an Event of Default (I) all amounts and proceeds (including
Instruments) received by each Debtor with respect to the Accounts shall be
received in trust for the benefit of Agent (on behalf of Lenders), shall be
segregated from other funds of such Debtor and shall be forthwith paid over to
Agent in the same form as so received (with any necessary endorsement) pursuant
to Section 7 and (ii) no Debtor shall adjust, settle or compromise the amount or
payment of any Account, or release wholly or partially any customer or obligor
thereof, or allow any credit or discount thereon without the prior consent of
Agent.
6.9 Intellectual Property Covenants. Each Debtor shall concurrently
-------------------------------
herewith deliver to Agent the Copyright Security Agreement, the Patent Security
Agreement and the Trademark Security Agreement and all other documents,
instruments and other items as may be necessary for Agent to file such
agreements with the United States Copyright Office, United States Patent and
Trademark Office and any similar domestic or foreign office, department or
agency. If, before the Secured Obligations are paid in full, any Debtor obtains
any new Intellectual Property or rights thereto or becomes entitled to the
benefit of any Intellectual Property not listed on the respective schedules to
such security agreements, such Debtor shall give to Agent prompt written notice
thereof, and shall amend the respective security agreement to include any such
new Intellectual Property. Each Debtor shall: (a) prosecute diligently any
copyright, patent, trademark or license application at any time pending; (b)
make application on all new copyrights, patents and trademarks as reasonably
deemed appropriate by such Debtor; (c) preserve and maintain all rights in the
Intellectual Property including, without limitation, the prosecution of
infringement actions with respect to the Intellectual Property; and (d) use its
best efforts to obtain any consents, waivers or agreements necessary to enable
Agent to exercise its remedies with respect to the Intellectual Property. No
Debtor shall abandon any right to file a copyright, patent or trademark
application nor shall any Debtor abandon any pending copyright,
10
<PAGE>
patent or trademark application, or Copyright, Copyright License, Patent, Patent
License, Trademark or Trademark License without the prior written consent of
Agent. Notwithstanding the foregoing, this Section 6.9 shall not apply to any
Intellectual Property which is not material to the operation or financial
condition of a Debtor's business.
6.10 Equipment Covenants. Each Debtor shall cause the Equipment which is
-------------------
material to the operations and business of such Debtor to be maintained and
preserved in the same condition, repair and working order as when new, ordinary
wear and tear excepted, and in accordance with any manufacturer's manual, and
shall promptly make or cause to be made all repairs, replacements, and other
improvements in connection therewith that are necessary or desirable to such
end.
6.11 Insurance. Each Debtor shall maintain insurance with respect to the
---------
Collateral in accordance with the terms of the Credit Agreement.
6.12 Taxes and Claims. Each Debtor will pay promptly when due all property
----------------
and other taxes, assessments and governmental charges or levies imposed upon,
and all claims against, the Collateral (including claims for labor, materials
and supplies), except to the extent the validity thereof is being contested in
good faith.
6.13 Collateral Description. Each Debtor will furnish to Agent, from time
----------------------
to time, statements and schedules further identifying and describing the
Collateral and such other reports in connection with the Collateral as Agent may
reasonably request, all in reasonable detail.
6.14 Use of Collateral. No Debtor will use or permit any Collateral to be
-----------------
used unlawfully or in violation of any provision of this Agreement or any
applicable statute, regulation or ordinance or any policy of insurance covering
any of the Collateral.
6.15 Records of Collateral. Each Debtor shall keep full and accurate
---------------------
books and records relating to the Collateral and shall stamp or otherwise mark
such books and records in such manner as Agent may reasonably request indicating
that the Collateral is subject to the Security Interests.
6.16 Other Information. Each Debtor will, promptly upon Agent's
-----------------
reasonable request, provide to Agent all information and evidence it may
reasonably request concerning the Collateral, and in particular the Accounts, to
enable Agent to enforce the provisions of this Agreement.
11
<PAGE>
SECTION 7. Bank Accounts; Collection of Accounts and Payments
--------------------------------------------------
On or prior to the Closing Date, Agent and Debtor shall enter into an
Assignment of Deposit Accounts and Bank Agency Agreement with each financial
institution with which such Debtor maintains from time to time any deposit
accounts (general or special). Pursuant to the Assignment of Deposit Accounts
and Bank Agency Agreement(s) and pursuant hereto, each Debtor grants, sells,
conveys, assigns, transfers, pledges and sets over unto Agent, for the benefit
of Agent and the Lenders, all of such Debtor's right, title and interest in and
to such accounts and all funds at any time paid, deposited, credited or held in
such accounts (whether for collection, provisionally or otherwise) or otherwise
in the possession of such financial institutions, and each such financial
institution shall act as agent and pledgee-in-possession for Agent in connection
therewith. Following the Closing Date, no Debtor shall establish any deposit
account with any financial institution except in accordance with the terms of
the Credit Agreement.
Upon the request of Agent from time to time after the occurrence and during
the continuance of an Event of Default, each Debtor shall promptly establish
lock box or blocked accounts (collectively, "Blocked Accounts") in such Debtor's
name with such banks as are acceptable to Agent ("Collecting Banks"), subject to
irrevocable instructions in the form of Exhibit D hereto, to which the obligors
on all Accounts shall directly remit all payments on Accounts and in which such
Debtor will immediately deposit all cash payments made for Inventory or in
respect of Accounts or other cash payments constituting proceeds of Collateral
in the identical form in which such payment was made, whether by cash or check.
In addition, Agent, for the benefit of Agent and the Lenders, may establish one
or more depository accounts at each Collecting Bank or at a centrally located
bank (collectively, the "Depository Account"). Without limitation of the terms
and provisions of the Assignment of Deposit Accounts and Bank Agency
Agreement(s), from and after receipt by any Collecting Bank of written notice
from Agent to such Collecting Bank that an Event of Default has occurred, all
amounts held or deposited in the Blocked Accounts held by such Collecting Bank
shall be transferred to the Depository Account; provided that, prior to such
Collecting Bank's receipt of such notice, such amounts shall be automatically
transferred to such Debtor's operating account for unrestricted use by such
Debtor, provided that any such use is not prohibited by the Credit Agreement.
Subject to the foregoing, each Debtor hereby agrees that all payments received
by Agent or any Lender, whether by cash, check, wire transfer or any other
instrument, whether made to such Blocked Accounts or otherwise received by Agent
or any Lender and whether representing payments on the Accounts or proceeds of
other Collateral, will be the sole and exclusive property of Lenders. Each
Debtor, and any of its Affiliates, employees, agents or other Persons acting for
or in concert with such Debtor, shall, acting as trustee for Agent and Lenders,
receive, as the sole and exclusive property of Lenders, any monies, checks,
notes, drafts or any other payments relating to and/or representing proceeds of
Accounts or other Collateral which come into the possession or under the control
of such Debtor or any Affiliates, employees, agents or other Persons acting for
or in concert with such Debtor, and immediately upon receipt thereof, such
Debtor or such Persons shall deposit the same or cause the same to be deposited,
in kind, in a Blocked Account. Notwithstanding the foregoing, any amounts
contained in Agent's Depository Account or the Blocked Accounts or otherwise
received by Agent in excess of the Secured Obligations then due
12
<PAGE>
and payable shall be the property of the applicable Debtor and shall promptly be
paid over to such Debtor.
SECTION 8. Agent Appointed Attorney-in-Fact
--------------------------------
Each Debtor hereby irrevocably appoints Agent as such Debtor's attorney-in-
fact, with full authority in the place and stead of such Debtor and in the name
of such Debtor, Agent or otherwise, from time to time after the occurrence and
during the continuance of an Event of Default, in Agent's discretion to take any
action and to execute any instrument that Agent may deem necessary or advisable
to accomplish the purposes of this Agreement, including, without limitation:
(a) to obtain and adjust insurance required to be paid to Agent;
(b) to ask, demand, collect, sue for, recover, compound, receive and
give acquittance and receipts for moneys due and to become due under or in
respect of any of the Collateral;
(c) to receive, endorse, and collect any drafts or other
instruments, documents and chattel paper, in connection with clauses (a)
and (b) above;
(d) to file any claims or take any action or institute any
proceedings that Agent may deem necessary or desirable for the collection
of any of the Collateral or otherwise to enforce the rights of Agent with
respect to any of the Collateral;
(e) to pay or discharge taxes or Liens, levied or placed upon or
threatened against the Collateral, the legality or validity thereof and the
amounts necessary to discharge the same to be determined by Agent in its
sole discretion;
(f) to sign and endorse any invoices, freight or express bills,
bills of lading, storage or warehouse receipts, assignments, verifications
and notices in connection with Accounts and other documents (including
without limitation financing statements, continuation statements and other
documents necessary or advisable to perfect the Security Interests)
relating to the Collateral; and
(g) generally to sell, transfer, pledge, make any agreement with
respect to or otherwise deal with any of the Collateral as fully and
completely as though Agent were the absolute owner thereof for all
purposes, and to do, at Agent's option and such Debtor's expense, at any
time or from time to time, all acts and things that Agent deems necessary
to protect, preserve or realize upon the Collateral.
Each Debtor hereby ratifies and approves all acts of Agent made or taken
pursuant to this Section 8. Neither Agent nor any person designated by Agent
shall be liable for any acts or omissions or
13
<PAGE>
for any error of judgment or mistake of fact or law. This power, being coupled
with an interest, is irrevocable so long as this Agreement shall remain in
force.
SECTION 9. Transfers and Other Liens
-------------------------
Except as otherwise permitted by the Credit Agreement, no Debtor shall:
(a) sell, assign (by operation of law or otherwise) or otherwise
dispose of, or grant any option with respect to, any of the Collateral,
except that each Debtor may sell Inventory in the ordinary course of
business; or
(b) create or suffer to exist any lien, security interest or other
charge or encumbrance upon or with respect to any of the Collateral to
secure indebtedness of any Person except for the Security Interests created
by this Agreement and Permitted Encumbrances disclosed on Schedule II.
SECTION 10. Remedies
--------
If any Event of Default shall have occurred and be continuing, Agent may
exercise in respect of the Collateral, in addition to all other rights and
remedies provided for herein or otherwise available to it, all the rights and
remedies of a secured party on default under the UCC (whether or not the UCC
applies to the affected Collateral) and also may: (a) require any Debtor to, and
each Debtor hereby agrees that it will, at its expense and upon request of Agent
forthwith, assemble all or part of the Collateral as directed by Agent and make
it available to Agent at a place to be designated by Agent which is reasonably
convenient to both parties; (b) withdraw all cash in any of any Debtor's
accounts and apply such monies in payment of the Secured Obligations in the
manner provided in Section 14; (c) without notice or demand or legal process,
enter upon any premises of any Debtor and take possession of the Collateral; and
(d) without notice except as specified below, sell the Collateral or any part
thereof in one or more parcels at public or private sale, at any of the Agent's
offices or elsewhere, at such time or times, for cash, on credit or for future
delivery, and at such price or prices and upon such other terms as Agent may
deem commercially reasonable. Each Debtor agrees that, to the extent notice of
sale shall be required by law, at least ten days notice to such Debtor of the
time and place of any public sale or the time after which any private sale is to
be made shall constitute commercially reasonable notification. At any sale of
the Collateral, if permitted by law, Agent may bid (which bid may be, in whole
or in part, in the form of cancellation of indebtedness) for the purchase of the
Collateral or any portion thereof for the account of Agent (on behalf of Agent
and the Lenders). Agent shall not be obligated to make any sale of Collateral
regardless of notice of sale having been given. Agent may adjourn any public or
private sale from time to time by announcement at the time and place fixed
therefor, and such sale may, without further notice, be made at the time and
place to which it was so adjourned. To the extent permitted by law, each Debtor
hereby specifically waives all rights of redemption, stay or appraisal which it
has or may have under any law now existing or hereafter enacted.
14
<PAGE>
SECTION 11. License of Intellectual Property
--------------------------------
Each Debtor hereby assigns, transfers and conveys to Agent, effective upon
the occurrence and during the continuance of any Event of Default, the
nonexclusive right and license to use all Intellectual Property owned or used by
such Debtor together with any goodwill associated therewith, all to the extent
necessary to enable Agent to realize on the Collateral and any successor or
assign to enjoy the benefits of the Collateral. This right and license shall
inure to the benefit of Agent and all of its successors, assigns and
transferees, whether by voluntary conveyance, operation of law, assignment,
transfer, foreclosure, deed in lieu of foreclosure or otherwise. Such right and
license is granted free of charge, without requirement that any monetary payment
whatsoever be made to any Debtor by Agent.
SECTION 12. Intentionally Omitted
---------------------
SECTION 13. Limitation on Duty of Agent with Respect to Collateral
------------------------------------------------------
Beyond the safe custody thereof, Agent shall have no duty with respect to
any Collateral in its possession or control (or in the possession or control of
any agent or bailee of Agent) or with respect to any income thereon or the
preservation of rights against prior parties or any other rights pertaining
thereto. Agent shall be deemed to have exercised reasonable care in the custody
and preservation of the Collateral in its possession if the Collateral is
accorded treatment substantially equal to that which it accords its own
property. Agent shall not be liable or responsible for any loss or damage to
any of the Collateral, or for any diminution in the value thereof, by reason of
the act or omission of any warehouseman, carrier, forwarding agency, consignee
or other agent or bailee selected by Agent in good faith.
SECTION 14. Application of Proceeds
-----------------------
Upon the occurrence and during the continuance of an Event of Default, the
proceeds of any sale of, or other realization upon, all or any part of the
Collateral and any cash held in any of any Debtor's accounts shall be applied:
first, to all fees, costs and expenses incurred by Agent or any Lender with
- -----
respect to the Credit Agreement, the other Loan Documents or the Collateral
including, without limitation, those described in subsections 1.3(C), 6.4 and
9.1 of the Credit Agreement and in Section 15 hereof; second, to accrued and
------
unpaid interest on the Secured Obligations (including any interest which but for
the provisions of the Bankruptcy Code, would have accrued on such amounts);
third, to the principal amounts of the Secured Obligations outstanding; and
- -----
fourth, to any other indebtedness or obligations of any Debtor owing to Agent or
- ------
any Lender.
SECTION 15. Expenses
--------
Each Debtor, shall pay all insurance expenses and all expenses of
protecting, storing, warehousing, appraising, insuring, handling, maintaining
and shipping the Collateral, all costs, fees and expenses of perfecting and
maintaining the Security Interests, and any and all excise,
15
<PAGE>
property, sales and use taxes imposed by any state, federal or local authority
on any of the Collateral, or with respect to periodic appraisals and inspections
of the Collateral, or with respect to the sale or other disposition thereof. If
any Debtor fails promptly to pay any portion of the above expenses when due or
to perform any other obligation of such Debtor under this Agreement, Agent or
any other Lender may, at its option, but shall not be required to, pay or
perform the same and charge such Debtor's account for all costs and expenses
incurred therefor and shall provide subsequent notice to such Debtor or Parent
of any amounts so paid, and such Debtor agrees to reimburse Agent or such Lender
therefor on demand. All sums so paid or incurred by Agent or any other Lender
for any of the foregoing, any and all other sums for which any Debtor may become
liable hereunder and all costs and expenses (including attorneys' fees, legal
expenses and court costs) incurred by Agent or any other Lender in enforcing or
protecting the Security Interests or any of their rights or remedies under this
Agreement shall be payable on demand, shall constitute Secured Obligations,
shall bear interest until paid at the highest rate provided in the Credit
Agreement and shall be secured by the Collateral.
SECTION 16. Termination of Security Interests; Release of Collateral
--------------------------------------------------------
Upon payment in full of all Secured Obligations (other than contingent
indemnification obligations to the extent no unsatisfied claim giving rise
thereto has been asserted) and the termination of all Commitments, Risk
Participation Agreements and Lender Letters of Credit, the Security Interests
shall terminate and all rights to the Collateral shall revert to applicable
Debtor. Upon such termination of the Security Interests or release of any
Collateral, Agent will, at the expense of Debtors, execute and deliver to
Debtors such documents as Debtors shall reasonably request to evidence the
termination of the Security Interests or the release of such Collateral, as the
case may be.
SECTION 17. Notices
-------
All notices, approvals, requests, demands and other communications
hereunder shall be given in accordance with the notice provisions of the Credit
Agreement.
SECTION 18. Waivers, Non-Exclusive Remedies
-------------------------------
No failure on the part of Agent to exercise, and no delay in exercising and
no course of dealing with respect to, any right under the Credit Agreement or
this Agreement shall operate as a waiver thereof; nor shall any single or
partial exercise by Agent of any right under the Credit Agreement or this
Agreement preclude any other or further exercise thereof or the exercise of any
other right. The rights in this Agreement and the Credit Agreement are
cumulative and are not exclusive of any other remedies provided by law.
SECTION 19. Successors and Assigns
----------------------
This Agreement is for the benefit of Agent and Lenders and their successors
and assigns, and in the event of an assignment of all or any of the Secured
Obligations, the rights hereunder,
16
<PAGE>
to the extent applicable to the Secured Obligations so assigned, may be
transferred with such Secured Obligations. This Agreement shall be binding on
each Debtor and its successors and assigns.
SECTION 20. Changes in Writing
------------------
No amendment, modification, termination or waiver of any provision of this
Agreement or consent to any departure by any Debtor therefrom, shall in any
event be effective without the written concurrence of Agent and such Debtor.
SECTION 21. Applicable Law
--------------
THIS AGREEMENT SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN
ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF ILLINOIS, WITHOUT REGARD TO
CONFLICTS OF LAWS PRINCIPLES.
SECTION 22. Failure or Indulgence Not Waiver; Remedies Cumulative
-----------------------------------------------------
No failure or delay on the part of Agent or any Lender in the exercise of
any power, right or privilege hereunder shall impair such power, right or
privilege or be construed to be a waiver of any default or acquiescence therein,
nor shall any single or partial exercise of any such power, right or privilege
preclude other or further exercise thereof or any other right, power or
privilege. All rights and remedies existing under this Agreement are cumulative
to, and not exclusive of, any rights or remedies otherwise available.
SECTION 23. Headings
--------
Section and subsection headings in this Agreement are included herein for
convenience of reference only and shall not constitute a part of this Agreement
for any other purpose or be given any substantive effect.
SECTION 24. Counterparts
------------
This Agreement may be executed in any number of counterparts, all of which
taken together shall constitute one and the same instrument and any of the
parties hereto may execute this Agreement by signing any such counterpart.
[remainder of this page intentionally left blank]
17
<PAGE>
Witness the due execution hereof by the respective duly authorized officers
of the undersigned as of the day first above written.
QUANTUM RESEARCH CORPORATION, HELLER FINANCIAL, INC., as Agent
a Maryland corporation
By: /s/ Douglas L. Cox By: /s/ Karen E. Rode
-------------------------- -------------------------------
Name: Douglas L. Cox Name: Karen Rode
Title: Vice President Title: Vice President
FEIN: 03-1320503
------------------------
ORC TELESERVICE CORP., a
Delaware corporation
By: /s/ John F. Short
--------------------------
Name: John F. Short
Title: President
FEIN: 22-3504695
------------------------
ORC PROTEL, INC., a Delaware
corporation
By: /s/ John F. Short
--------------------------
Name: John F. Short
Title: President
FEIN: 52-2069926
------------------------
MACRO INTERNATIONAL INC., a
Delaware corporation
By: /s/ Douglas L. Cox
--------------------------
Name: Douglas L. Cox
Title: Vice President
FEIN: 52-0955232
------------------------
18
<PAGE>
SCHEDULE I
Locations of Equipment, Inventory, Books and
Records, Chief Executive Office, Other Locations
<PAGE>
SCHEDULE II
Other Liens, Security Interests and
Financing Statements; Bailees
<PAGE>
SCHEDULE III
Trade-names and Fictitious Names
(Present and Past Five Years)
<PAGE>
EXHIBIT A
COPYRIGHT SECURITY AGREEMENT
----------------------------
WHEREAS, ____________________, a ____________ corporation ("Grantor") owns
the Copyright registrations and Copyright applications listed on Schedule 1
annexed hereto, and is a party to the Copyright Licenses listed on Schedule 1
annexed hereto; and
WHEREAS, ____________, a __________ corporation ("Parent") has entered into
a Credit Agreement dated as of _______________, 1999 (as the same may be
amended, restated, supplemented or otherwise modified from time to time, the
"Credit Agreement") with Heller Financial, Inc., as agent ("Agent") for the
benefit of all financial institutions that from time to time become lenders
under the Credit Agreement ("Lenders"), and the Lenders parties thereto,
providing for extensions of credit and other financial accommodations to be made
to Parent by Agent and the Lenders; and
WHEREAS, Grantor is a wholly owned subsidiary of Parent and has guaranteed
the payment and performance of Parent's Obligations pursuant to that certain
Guaranty dated _________, 1999 (the "Guaranty"); and
WHEREAS, pursuant to the terms of a Security Agreement dated as of
_______________, 1999 (as the same may be amended, restated, supplemented or
otherwise modified from time to time, the "Security Agreement"), among Grantor,
certain other debtors and Agent (in such capacity, "Grantee"), Grantor has
granted to Grantee, for the benefit of Agent and the Lenders a security interest
in substantially all the assets of Grantor including all right, title and
interest of Grantor in, to and under all now owned and hereafter acquired
Copyrights (as defined in the Security Agreement), Copyright registrations,
Copyright applications and Copyright Licenses (as defined in the Security
Agreement), together with the goodwill of the business symbolized by Grantor's
Copyrights and all proceeds thereof, to secure the payment of all amounts owing
by Grantor under the Guaranty and the other Loan Documents to which it is a
party;
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Grantor does hereby grant to
Grantee, for the benefit of Grantee and the Lenders a continuing security
interest in all of Grantor's right, title and interest in, to and under the
following (all of the following items or types of property being herein
collectively referred to as the "Copyright Collateral"), whether presently
existing or hereafter created or acquired:
(1) each Copyright, Copyright application and Copyright registration,
together with any reissues, extensions or renewals thereof, including,
without limitation, the Copyright,
<PAGE>
Copyright registrations and Copyright applications referred to in Schedule
1 annexed hereto, and all of the goodwill of the business connected with
the use of, and symbolized by, each Copyright, Copyright registration and
Copyright application;
(2) each Copyright License and all of the goodwill of the business
connected with the use of, and symbolized by, each Copyright License; and
(3) all products and proceeds of the foregoing, including, without
limitation, any claim by Grantor against third parties for past, present or
future (a) infringement or dilution of any Copyright or Copyright
registration including, without limitation, the Copyright and Copyright
registrations referred to in Schedule 1 annexed hereto, the Copyright
registrations issued with respect to the Copyright applications referred in
Schedule 1 and the Copyright licensed under the Copyright License, or (b)
injury to the goodwill associated with any Copyright, Copyright
registration or Copyright licensed under any Copyright License.
This security interest is granted in conjunction with the security interests
granted to Grantee pursuant to the Security Agreement. Grantor hereby
acknowledges and affirms that the rights and remedies of Grantee with respect to
the security interest in the Copyright Collateral made and granted hereby are
more fully set forth in the Security Agreement, the terms and provisions of
which are incorporated by reference herein as if fully set forth herein.
IN WITNESS WHEREOF, Grantor has caused this Copyright Security Agreement to
be duly executed by its duly authorized officer as of the ______ day of
___________, 1999.
Acknowledged:
HELLER FINANCIAL, INC., _________________________
as Agent
By:___________________________ By:______________________
Title:_________ Vice President Title:___________________
2
<PAGE>
ACKNOWLEDGEMENT
STATE OF ____________ )
) ss.
COUNTY OF ___________ )
On the ____ day of ____________, 1999 before me personally appeared
______________, to me personally known or proved to me on the basis of
satisfactory evidence to be the person described in and who executed the
foregoing instrument as _____________ of ___________________________, who being
by me duly sworn, did depose and say that he is ______________ of
__________________, the corporation described in and which executed the
foregoing instrument; that the said instrument was signed on behalf of said
corporation by order of its Board of Directors; and that he acknowledged said
instrument to be the free act and deed of said corporation.
_____________________
Notary Public
{Seal}
My commission expires:
_____________________
3
<PAGE>
Schedule 1
to Copyright
Security Agreement
------------------
COPYRIGHT REGISTRATIONS
-----------------------
REG. NO. DATE
-------- ----
COPYRIGHT APPLICATIONS
----------------------
COPYRIGHT LICENSES
------------------
Name of Agreement Parties Date of Agreement
- ----------------- ------- -----------------
4
<PAGE>
EXHIBIT B
PATENT SECURITY AGREEMENT
-------------------------
_____WHEREAS,_____________________, a _____________ corporation ("Grantor") owns
the Patents and Patent Applications listed on Schedule 1 annexed hereto, and is
a party to the Patent Licenses listed on Schedule 1 annexed hereto; and
WHEREAS, _______________, a ____________ corporation ("Parent") has entered
into a Credit Agreement dated as of _______________, 1999 (as the same may be
amended, restated, supplemented or otherwise modified from time to time, the
"Credit Agreement") with Heller Financial, Inc., as agent ("Agent") for the
benefit of all financial institutions that from time to time become lenders
under the Credit Agreement ("Lenders"), as the Lenders parties thereto,
providing for extensions of credit and other financial accommodations to be made
to Parent by Agent and the Lenders; and
WHEREAS, Grantor is a wholly owned subsidiary of Parent and has guaranteed
the payment and performance of Parent's Obligations pursuant to that certain
Guaranty dated ____________, 1999 (the "Guaranty"); and
WHEREAS, pursuant to the terms of a Security Agreement dated as of
__________________, 1999 (as the same may be amended, restated, supplemented or
otherwise modified from time to time, the "Security Agreement"), among Grantor,
certain other debtors and Agent (in such capacity, together with its successors
in such capacity, the "Grantee"), Grantor has granted to Grantee, for the
benefit of Agent and the Lenders a security interest in substantially all the
assets of Grantor including all right, title and interest of Grantor in, to and
under all now owned and hereafter acquired Patents (as defined in the Security
Agreement), Patent applications and Patent Licenses (as defined in the Security
Agreement), and all products and proceeds thereof, to secure the payment of all
amounts owing by Grantor under the Guaranty and other Loan Documents to which it
is a party;
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Grantor does hereby grant to
Grantee, for the benefit of Grantee and the Lenders a continuing security
interest in all of Grantor's right, title and interest in, to and under the
following (all of the following items or types of property being herein
collectively referred to as the "Patent Collateral"), whether presently existing
or hereafter created or acquired:
1
<PAGE>
(1) each Patent and Patent application, including, without limitation,
each Patent and Patent application referred to in Schedule 1 annexed
hereto, together with any reissues, continuations or extensions thereof;
(2) each Patent License, including, without limitation, each Patent
License listed on Schedule 1 annexed hereto; and
(3) all products and proceeds of the foregoing, including, without
limitation, any claim by Grantor against third parties for past, present or
future infringement of any Patent, including, without limitation, any
Patent referred to in Schedule 1 annexed hereto, any Patent issued pursuant
to a Patent Applications referred to in Schedule 1 and any Patent licensed
under any Patent License listed on Schedule 1 annexed hereto.
This security interest is granted in conjunction with the security
interests granted to Grantee pursuant to the Security Agreement. Grantor hereby
acknowledges and affirms that the rights and remedies of Grantee with respect to
the security interest in the Patent Collateral made and granted hereby are more
fully set forth in the Security Agreement, the terms and provision of which are
incorporated by reference herein as if fully set forth herein.
IN WITNESS WHEREOF, Grantor has caused this Patent Security Agreement to be
duly executed by its duly authorized officer thereunto as of the ______ day of
_____________, 1999.
Acknowledged:
HELLER FINANCIAL, INC., ____________________
as Agent
By:___________________________ By:_______________________
Title:________ Vice President Title:____________________
2
<PAGE>
ACKNOWLEDGEMENT
STATE OF ____________ )
)ss.
COUNTY OF ___________ )
On the ____ day of ____________, 1999 before me personally appeared
______________, to me personally known or proved to me on the basis of
satisfactory evidence to be the person described in and who executed the
foregoing instrument as _____________ of __________________________________, who
being by me duly sworn, did depose and say that he is ______________ of
___________________________, the corporation described in and which executed the
foregoing instrument; that the said instrument was signed on behalf of said
corporation by order of its Board of Directors; and that he acknowledged said
instrument to be the free act and deed of said corporation.
________________________
Notary Public
{Seal}
My commission expires:
_____________________
3
<PAGE>
Schedule 1
to Patent
Security Agreement
------------------
PATENTS
-------
U.S. Patent No. Date Issued Related Foreign Patents
- --------------- ----------- -----------------------
PATENT APPLICATIONS
-------------------
PATENT LICENSES
---------------
Name of Agreement Parties Date of Agreement
- ----------------- ------- -----------------
4
<PAGE>
EXHIBIT C
TRADEMARK SECURITY AGREEMENT
----------------------------
WHEREAS, ____________________, a ____________ corporation ("Grantor"), owns
the Trademarks, Trademark registrations, and Trademark applications listed on
Schedule 1 annexed hereto, and is a party to the Trademark Licenses listed on
Schedule 1 annexed hereto; and
WHEREAS, _______________, a ____________ corporation ("Parent") has entered
into a Credit Agreement dated as of _______________, 1999 (as the same may be
amended, restated, supplemented or otherwise modified from time to time, the
"Credit Agreement") with Heller Financial, Inc., as agent ("Agent") for the
benefit of all financial institutions that from time to time become lenders
under the Credit Agreement ("Lenders"), and the Lenders parties thereto,
providing for extensions of credit and other financial accommodations to be made
to Parent by Agent and the Lenders; and
WHEREAS, Grantor is a wholly owned subsidiary of Parent and has guaranteed
the payment and performance of Parent's Obligations pursuant to that certain
Guaranty dated ___________, 1999 (the "Guaranty"); and
WHEREAS, pursuant to the terms of a Security Agreement dated as of
__________, 1999 (as the same may be amended, restated, supplemented or
otherwise modified from time to time, the "Security Agreement"), among Grantor,
certain other debtors and Agent (in such capacity, "Grantee"), Grantor has
granted to Grantee, for the benefit of Agent and the Lenders a security interest
in substantially all the assets of Grantor including all right, title and
interest of Grantor in, to and under all now owned and hereafter acquired
Trademarks (as defined in the Security Agreement), Trademark registrations,
Trademark applications and Trademark Licenses (as defined in the Security
Agreement), together with the goodwill of the business symbolized by Grantor's
Trademarks, and all proceeds thereof, to secure the payment of all amounts owing
by Grantor under the Guaranty and other Loan Documents to which it is a party;
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Grantor does hereby grant to
Grantee, for the benefit of Grantee and the Lenders a continuing security
interest in all of Grantor's right, title and interest in, to and under the
following (all of the following items or types of property being herein
collectively referred to as the "Trademark Collateral"), whether presently
existing or hereafter created or acquired:
1
<PAGE>
(1) each Trademark, Trademark registration and Trademark application,
including, without limitation, the Trademarks, Trademark registrations
(together with any reissues, continuations or extensions thereof) and
Trademark applications referred to in Schedule 1 annexed hereto, and all of
the goodwill of the business connected with the use of, and symbolized by,
each Trademark, Trademark registration and Trademark application;
(2) each Trademark License and all of the goodwill of the business
connected with the use of, and symbolized by, each Trademark License; and
(3) all products and proceeds of the foregoing, including, without
limitation, any claim by Grantor against third parties for past, present or
future (a) infringement or dilution of any Trademark or Trademark
registration including, without limitation, the Trademarks and Trademark
registrations referred to in Schedule 1 annexed hereto, the Trademark
registrations issued with respect to the Trademark applications referred in
Schedule 1 and the Trademarks licensed under any Trademark License, or (b)
injury to the goodwill associated with any Trademark, Trademark
registration or Trademark licensed under any Trademark License.
This security interest is granted in conjunction with the security interests
granted to Grantee pursuant to the Security Agreement. Grantor hereby
acknowledges and affirms that the rights and remedies of Grantee with respect to
the security interest in the Trademark Collateral made and granted hereby are
more fully set forth in the Security Agreement, the terms and provisions of
which are incorporated by reference herein as if fully set forth herein.
IN WITNESS WHEREOF, Grantor has caused this Trademark Security Agreement to
be duly executed by its duly authorized officer thereunto as of the ____ day of
___________, 1999.
Acknowledged:
HELLER FINANCIAL, INC., ____________________
as Agent
By:___________________________ By:_______________________
Title:________ Vice President Title:____________________
2
<PAGE>
ACKNOWLEDGEMENT
STATE OF ____________ )
)ss
COUNTY OF ___________ )
On the ____ day of ____________, 1999 before me personally appeared
______________, to me personally known or proved to me on the basis of
satisfactory evidence to be the person described in and who executed the
foregoing instrument as _____________ of _______________________________, who
being by me duly sworn, did depose and say that he is ______________ of
___________________________, the corporation described in and which executed the
foregoing instrument; that the said instrument was signed on behalf of said
corporation by order of its Board of Directors; and that he acknowledged said
instrument to be the free act and deed of said corporation.
________________________
Notary Public
{Seal}
My commission expires:
_____________________
3
<PAGE>
Schedule 1
to Trademark
Security Agreement
------------------
TRADEMARK REGISTRATIONS
-----------------------
MARK REG. NO. DATE
---- -------- ----
TRADEMARK APPLICATIONS
----------------------
TRADEMARK LICENSES
------------------
Name of Agreement Parties Date of Agreement
- ----------------- ------- -----------------
4
<PAGE>
EXHIBIT D
[FORM OF LOCKBOX LETTER]
______________________, 19___
[Name and Address of
Lockbox Bank]
RE: [name of transaction]
---------------------
Gentlemen:
We hereby notify you that effective ____________________, 19___, we have
transferred to Heller Financial, Inc., a Delaware corporation, as Agent for the
benefit of our Lenders ("Agent"), exclusive ownership and control of our lock-
box account No. ____________________ (the "Lockbox Account") maintained with you
under the terms of the Lockbox Agreement attached hereto as Exhibit A.
We hereby irrevocably instruct you to make all payments to be made by you
out of or in connection with the Lockbox Account as you may be instructed by
Agent.
We also hereby notify you that Agent shall be irrevocably entitled to
exercise any and all rights and to receive from you all information requested by
Agent in respect of or in connection with the Lockbox Account, including,
without limitation, the right to specify when payments are to be made out of or
in connection with the Lockbox Account.
All funds deposited into the Lockbox Account will not be subject to any
deduction, set-off, banker's lien or any other right in favor of any person
other than Agent, except that you may set-off against the Lockbox Account the
face amount of any check deposited in and credited to such Lockbox Account which
is subsequently returned for any reason. Your compensation for providing the
services contemplated herein shall be as mutually agreed between you and us from
time to time and we will continue to pay such compensation.
Please confirm your acknowledgement of and agreement to the foregoing
instructions by signing in the space provided below.
Sincerely yours, Acknowledged and Agreed:
_____________________ [BANK]
By:_________________________ By:_________________________
Title:______________________ Title:______________________
1
<PAGE>
Exhibit 10.5
INVESTMENT AGREEMENT
THIS INVESTMENT AGREEMENT (this "Agreement") is made as of May _____, 1999
by and between OPINION RESEARCH CORPORATION, a Delaware corporation (the
"Company") ALLIED INVESTMENT CORPORATION and ALLIED CAPITAL CORPORATION, each a
Maryland corporation (collectively referred to herein as "Allied").
RECITALS:
A. Allied wishes to invest the aggregate sum of Fifteen Million and
no/100 Dollars ($15,000,000.00) in the Company, in exchange for certain
subordinated debentures of the Company and Warrants to purchase shares of Common
Stock of the Company.
B. The parties wish to set forth herein their understandings and
agreements pertaining to this transaction.
NOW, THEREFORE, in consideration of the foregoing Recitals and the mutual
covenants contained herein, and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, Allied and its
successors and assigns with respect to the Debentures or the Warrant (as these
terms are hereinafter defined) (individually, a "Holder" and collectively, the
"Holders"), and the Company hereby agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1 Defined Terms. As used in this Agreement, the following terms
have the meanings specified below:
"Acquisition," means the acquisition by the Company of not less than 99.7%
of the stock of Macro.
"Acquisition Agreement," means the Stock Purchase Agreement with respect to
the Acquisition, dated as of April 30, 1999, by and among the entities and
individuals identified therein as "Stockholders," as Seller, and the Company, as
Purchaser.
"Act of Bankruptcy," when used in reference to any Person, means the
occurrence of any of the following with respect to such Person: (i) such Person
shall have made an assignment for the benefit of his or its creditors; (ii) such
Person shall have admitted in writing his or its inability to pay his or its
debts as they become due; (iii) such Person shall have filed a voluntary
petition in bankruptcy; (iv) such Person shall have been adjudicated a bankrupt
or insolvent; (v) such Person shall have filed any petition or answer seeking
for himself or itself any reorganization, arrangement, composition,
readjustment, liquidation, dissolution or similar relief under any present or
future Applicable Law pertinent to such circumstances; (vi) such Person shall
have
-1-
<PAGE>
filed or shall file any answer admitting or not contesting the material
allegations of a bankruptcy, insolvency or similar petition filed against such
Person; (vii) such Person shall have sought or consented to, or acquiesced in,
the appointment of any trustee, receiver, or liquidator of such Person or of all
or any substantial part of the properties of such Person; (viii) 60 days shall
have elapsed after the commencement of an action against such Person seeking
reorganization, arrangement, composition, readjustment, liquidation, dissolution
or similar relief under any present or future Applicable Law without such action
having been dismissed or without all orders or proceedings thereunder affecting
the operations or the business of such Person having been stayed, or if a stay
of any such order or proceedings shall thereafter be set aside and the action
setting it aside shall not be timely appealed; or (ix) 60 days shall have
expired after the appointment, without the consent or acquiescence of such
Person of any trustee, receiver or liquidator of such Person or of all or any
substantial part of the assets and properties of such Person without such
appointment having been vacated.
"Act of Dissolution," when used in reference to any Person (other than an
individual), shall mean the occurrence of any action initiating, or any event
that results in, the dissolution, liquidation, winding-up or termination of such
Person.
"Adjusted EBITDA" means EBITDA plus Pro Forma EBITDA.
"Affiliate" means, when used with respect to a specified Person, another
Person that directly, or indirectly through one or more intermediaries, Controls
or is Controlled by or is under common Control with the Person specified.
"Applicable Law(s)," when used in the singular, shall mean any applicable
federal, state or local law, ordinance, order, regulation, rule or requirement
of any governmental or quasi-governmental agency, instrumentality, board,
commission, bureau or other authority having jurisdiction, and, when used in the
plural, shall mean all such applicable federal, state and local laws,
ordinances, orders, regulations, rules and requirements.
"Audited Financials" See Section 4.6.
-----------
"Business Day" means any day other than a Saturday, Sunday or day on which
banks in Washington, D.C. are authorized or required by law to close.
"Capital Lease Obligations" of any Person means the obligations of such
Person to pay rent or other amounts under any lease of (or other arrangement
conveying the right to use) real or personal property, or a combination thereof
which obligations are required to be classified and accounted for as capital
leases on a balance sheet of such Person under GAAP, and the amount of such
obligations is the capitalized amount thereof determined in accordance with
GAAP.
"Change in Control" means any transaction or series of related transactions
involving the Company's capital stock or any securities convertible into or
exchangeable for the Company's capital stock, which results in one or more
Persons that are Affiliates of each other (other than the stockholders of the
Company that are existing as of the date hereof) either (A) owning in
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<PAGE>
excess of 50% of the outstanding capital stock of the Company or (B) being able
to elect a majority of the board of directors of the Company.
"Charges" See Section 8.9.
-----------
"Closing" means the consummation of the Transaction.
"Closing Date" means the date of the Transaction hereunder.
"Code" means the Internal Revenue Code of 1986, as amended from time to
time.
"Common Stock" means any and all (as the context may require) of the shares
of the authorized common stock of the Company.
"Contracts" See Section 4.15.
------------
"Control" means the possession, directly or indirectly, of the power to
direct or cause the direction of the management or policies of a Person, whether
through the ownership of voting securities, by contract or otherwise, and the
terms "Controlling" and "Controlled" have meanings correlative thereto.
"Company's Business" means corporate marketing research and model-based
telemarketing and related services.
"Debentures" means the subordinated debentures dated the date of this
Agreement in the aggregate principal amount of $15,000,000 from the Company made
payable to Allied, which evidences the Company's repayment obligation for the
investment by Allied in the Company.
"Default" means any event or condition that upon notice, lapse of time or
both would constitute an Event of Default.
"Dollars" or "$" means lawful money of the United States of America.
"Earn Out Payments" means the earn out payments payable by the Company or
its Subsidiaries to (a) the seller, in an amount not to exceed $8.7 million,
pursuant to the Acquisition Agreement upon satisfaction of certain financial
hurdles as set forth in the Acquisition Agreement and (b) the sellers of the
shares in ProTel Marketing Inc., in an amount not to exceed $7.0 million,
pursuant to the ProTel Purchase Agreement.
"EBITDA" means net income (or loss) for the period of the Company and its
Subsidiaries on a consolidated basis determined in accordance with GAAP, but
excluding: (a) the income (or loss) of any Person (other than Subsidiaries of
the Company) in which the Company or any of its Subsidiaries has an ownership
interest unless received by the Company or its Subsidiary in a cash
distribution; and (b) the income (or loss) or any Person (other than Macro,
whose net income (or loss) shall be included in the calculation of EBITDA)
accrued prior to the date it became a Subsidiary of the Company or is merged
into or consolidated with the Company;
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<PAGE>
Plus, without duplication:
Any provision for (or less any benefit from) income and franchise taxes
included in the determination of net income;
Interest expense deducted in the determination of net income;
Amortization and depreciation deducted in determining net income; losses
(or less gains) from Asset Dispositions (i.e., the disposition, whether by sale,
lease, transfer, loss, damage, destruction, condemnation or otherwise of any of
the following: (i) any of the capital stock or other equity or ownership
interest of any of the Company's Subsidiaries or (ii) any or all of the assets
of the Company or any of its Subsidiaries other than (A) sales of inventory in
the ordinary course of business and (B) sales by Macro of low income housing tax
credits) or other non-cash items included in the determination of net income
(excluding sales, expenses or losses related to current assets);
Extraordinary losses (or less gains), as defined under GAAP, net of related
tax effects;
To the extent deducted in computing net income (loss), one time severance
expenses not to exceed $2,470,000 in the aggregate in connection with the
termination of employment of Michael Cooper;
To the extent deducted in determining net income (or loss), (i) loss
incurred by Macro for closure of Eastern Europe Operations not to exceed
$350,000 in the aggregate and (ii) translation loss incurred in connection with
such closure, not to exceed $210,000 in the aggregate;
Less:
Expenditures made subsequent to the Closing Date (including, but not
limited to, capitalization of costs and expenses or payment of pre-Closing Date
liabilities) applicable to, but not included in, the unaudited consolidated and
consolidating balance sheets of the Company and its Subsidiaries prepared in
accordance with GAAP as of the Closing Date after giving effect to the closing
of the Acquisition, the Senior Debt, and the Transaction; including expenditures
during the period made in connection with the Acquisition, the Senior Debt, and
the Transaction and payment of liabilities existing on the Closing Date.
"Environment" means ambient air, surface water and groundwater (including
potable water, navigable water and wetlands), the land surface or subsurface
strata, the workplace or as otherwise defined in any Environmental Law.
"Environmental Claim" means any written notice of violation, claim, demand,
order, directive, cost recovery action or other cause of action by, or on behalf
of, any Governmental Authority or any Person for damages, injunctive or
equitable relief, personal injury (including sickness, disease or death),
Remedial Action costs, tangible or intangible property damage, natural resource
damages, nuisance, pollution, any adverse effect on the environment caused by
any Hazardous Material, or for fines, penalties or restrictions, resulting from
or based upon (a)
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<PAGE>
the existence, or the continuation of the existence, of a Release (including
sudden or non-sudden, accidental or non-accidental Releases), (b) exposure to
any Hazardous Material, (c) the presence, use, handling, transportation,
storage, treatment or disposal of any Hazardous Material or (d) the violation or
alleged violation of any Environmental Law or Environmental Permit.
"Environmental Law" means any and all applicable present and future
treaties, laws, rules, regulations, codes, ordinances, orders, decrees,
judgments, injunctions, notices or binding agreements issued, promulgated or
entered into by any Governmental Authority, relating in any way to the
environment preservation or reclamation of natural resources, the management,
Release or threatened Release of any Hazardous Material or to health and safety
matters, including the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended by the Superfund Amendments and
Reauthorization Act of 1986, 42 U.S.C. (S)(S) 9601 et seq. (collectively
"CERCLA"), the Solid Waste Disposal Act, as amended by the Resource Conservation
and Recovery Act of 1976 and Hazardous and Solid Waste Amendments of 1984, 42
U.S.C. (S)(S) 6901 et seq., the Federal Water Pollution Control Act as amended
by the Clean Water Act of 1977, 33 U.S.C. (S)(S) 1251 et seq., the Clean Air Act
of 1970, as amended 42 U.S.C. .(S)(S) 7401 et seq., the Toxic Substances Control
Act of 1976, 15 U.S.C. (S)(S) 2601 et seq., the Occupational Safety and Health
Act of 1970, as amended, 29 U.S.C. (S)(S) 651 et seq., the Emergency Planning
and Community Right-to-Know Act of 1986, 42 U.S.C. (S)(S) 11001 et seq., the
Safe Drinking Water Act of 1974, as amended, 42 U.S.C. (S)(S) 300(f) et seq.,
the Hazardous Materials Transportation Act, 49 U.S.C. (S)(S) 5101 et seq., and
any similar or implementing state or local law, and all amendments or
regulations promulgated under any of the foregoing.
"Environmental Permit" means any permit, approval, authorization,
certificate, license, variance, filing or permission required by or from any
Governmental Authority pursuant to any Environmental Law.
"ERISA" means the Employee Retirement Income Security Act of 1974, as the
same may be amended from time to time.
"ERISA Affiliate" means any trade or business (whether or not incorporated)
that, together with the Company, is treated as a single employer under Section
414(b) or (c) of the Code, or solely for purposes of Section 302 of ERISA and
Section 412 of the Code, is treated as a single employer under Section 414 of
the Code.
"ERISA Event" means (a) any "reportable event", as defined in Section 4043
of ERISA or the regulations issued thereunder, with respect to a Plan; (b) the
adoption of any amendment to a Plan that would require the provision of security
pursuant to Section 401(a)(29) of the Code or Section 307 of ERISA; (c) the
existence with respect to any Plan of an "accumulated funding deficiency" (as
defined in Section 412 of the Code or Section 302 of ERISA), whether or not
waived; (d) the filing pursuant to Section 412(d) of the Code or Section 303(d)
of ERISA of an application for a waiver of the minimum funding standard with
respect to any Plan; (e) the incurrence of any liability under Title IV of ERISA
with respect to the termination of any Plan or the withdrawal or partial
withdrawal of the Company or any of its ERISA Affiliates from any Plan or
Multiemployer Plan; (f) the receipt by the Company or any ERISA Affiliate from
the
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<PAGE>
Pension Benefit Guaranty Corporation (as defined in ERISA) ("PBGC") or a
plan administrator of any notice relating to the intention to terminate any Plan
or Plans or to appoint a trustee to administer any Plan; (g) the receipt by the
Company or any ERISA Affiliate of any notice concerning the imposition of
Withdrawal Liability or a determination that a Multiemployer Plan is, or is
expected to be, insolvent or in reorganization, within the meaning of Title IV
of ERISA; (h) the occurrence of a "prohibited transaction" with respect to which
the Company or any of its Subsidiaries is a "disqualified person" (within the
meaning of Section 4975 of the Code) or with respect to which the Company or any
such Subsidiary could otherwise be liable; and (i) any other event or condition
with respect to a Plan or Multiemployer Plan that could reasonably be expected
to result in liability of the Company other than PBGC premiums due but not
delinquent in excess of $250,000.
"Events of Default" has the meaning assigned to such term in Article VII.
-----------
"Financial Officer" of any corporation means the chief financial officer or
principal accounting officer of such corporation.
"Financials" means, collectively, the Audited Financials and the Interim
Financials, as defined in Section 4.6.
-----------
"GAAP" means generally accepted accounting principles applied on a
consistent basis.
"Governmental Authority(ies)" means any Federal, state, local, quasi-
governmental instrumentality or foreign court, or governmental agency,
authority, instrumentality, agency, bureau, commission, department or regulatory
body.
"Guarantors" means jointly and severally ORC, Inc., ORC Teleservice Corp.,
ORC Protel, Inc., Quantum Research Corporation, Macro, and each other wholly
owned domestic Subsidiary of the Company that joins in the Guaranty after the
date hereof.
"Guaranty" means the Subsidiary Guaranty dated the date of this Agreement
from the Guarantors for the benefit of Allied.
"Hazardous Materials" means all explosive or radioactive substances or
wastes, hazardous or toxic substances or wastes, pollutants, solid, liquid or
gaseous wastes, including petroleum or petroleum distillates, asbestos or
asbestos containing materials, polychlorinated biphenyls ("PCBs") or PCB-
containing materials or equipment, radon gas, infectious or medical wastes and
all other substances or wastes of any nature regulated pursuant to any
Environmental Law.
"Indebtedness" of any Person means, without duplication, (a) all
indebtedness for borrowed money; (b) that portion of obligations with respect to
capital leases that is properly classified as a liability on a balance sheet in
conformity with GAAP; (c) notes payable and drafts accepted representing
extensions of credit whether or not representing obligations for borrowed money;
(d) any obligation owed for all or any part of the deferred purchase price of
property or services if the purchase price is due more than six months from the
date the obligation is incurred
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<PAGE>
or is evidenced by a note or similar written instrument including the Earn-Out
Payments; and (e) all indebtedness secured by any Lien on any property or asset
owned or held by that Person regardless of whether the indebtedness secured
thereby shall have been assumed by that Person or is nonrecourse to the credit
of that Person.
"Indemnitee" See Section 8.5.
-----------
"Intellectual Property" means, collectively, all of the Company's now owned
and hereafter acquired intellectual property, including, without limitation the
following: (a) all patents (including all rights corresponding thereto
throughout the world, and all improvements thereon); (b) all trademarks
(including service marks, trade names and trade secrets, and all goodwill
associated therewith), (c) all copyrights (including all renewals, extensions
and continuations thereof); (d) all applications for patents, trademarks or
copyrights and all applications otherwise relating in any way to the subject
matter of such patents, copyrights and trademarks; (e) all patents, copyrights,
trademarks or applications therefor arising after the date of this Agreement;
(f) all reissues, continuations, continuations-in-part and divisions of the
property described in the preceding clauses (a), (b), (c), (d), and (e),
including, without limitation, any claims by the Company against third parties
for infringement thereof; and (g) all rights to sue for past, present and future
infringements or violations of any such patents, trademarks, and copyrights.
Intellectual Property also includes manufacturing formulas, trade secrets,
methodologies, know how, shop rights, designs, logos, tags, labels, franchises,
distributorships, customer lists, rights to contract expirations or renewals,
rights to insurance policy expirations or renewals, personal services contracts,
employment contracts, confidentiality agreements and similar covenants, rights
under agreements not to compete and similar covenants of any Person regarding
any of the foregoing, and including opinions and advice of counsel, consultants,
advisors, and experts (including research materials, engineering reports and
other work product of employees), as memorialized in any form, regarding any of
the foregoing, and including any amendments, reissues, renewals, or
supplementations of, or substitutions or replacements for, any of the foregoing,
and including any other rights or interests (including any lien or security
interest) in any of the foregoing, and agreements with employees and former
employees relating to any of the foregoing, and rights to sue for past, present
or future violations or infringements of any of the foregoing, and goodwill
associated with or related to any of the foregoing or Debtor or Debtor's
business
"Interest" means any ownership or profit-sharing interest (howsoever
designated) in any general or limited partnership, trust, limited liability
company, private company or joint venture, and all agreements, instruments and
documents convertible, in whole or in part, into any one or more of the
foregoing.
"Interest Rate" means a rate of interest of 12% per annum, which is payable
quarterly in arrears.
"Interim Financials" See Section 4.6.
-----------
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<PAGE>
"Inventory" means "inventory" as defined in Article 9 of the UCC, including
all raw materials, work in process, parts, components, assemblies, supplies and
materials used or consumed in the Company's business, all goods, wares and
merchandise, finished or unfinished, held for sale or lease or leased or
furnished or to be furnished under contracts of service or hire.
"Investment Documents" means, collectively, this Agreement, the Debenture,
the Warrants, the Registration Rights Agreement, the Guaranty, and all other
instruments and documents executed and delivered by or on behalf of the Company
to Allied in connection with the Transaction.
"Investments" means, collectively, (a) any direct or indirect purchase or
other acquisition by the Company or any of its Subsidiaries of any beneficial
interest in, including stock, partnership interest or other equity securities
of, or ownership interest in, any other Person; and (b) any direct or indirect
loan, advance or capital contribution by the Company or any of its Subsidiaries
to any other Person, including all indebtedness and accounts receivable from
that other Person that are not current assets or did not arise from sales to
that other Person in the ordinary course of business. The amount of any
Investment shall be the original cost of such Investment plus the cost of all
----
additions thereto, without any adjustments for increases or decreases in value,
or write-ups, write-downs or write-offs with respect to such Investment.
"Leases" See Section 4.11.
------------
"Licenses" shall mean, collectively, all rights, licenses, permits and
authorizations now or hereafter issued by any Governmental Authority reasonably
necessary in connection with the operation or conduct of the Company's Business.
"Lien" means, with respect to any asset, (a) any mortgage, deed of trust,
lien, pledge, encumbrance, charge or security interest in or on such asset, (b)
the interest of a vendor or a lessor under any conditional sale agreement,
capital lease or title retention agreement (or any financing lease having
substantially the same economic effect as any of the foregoing) relating to such
asset and (c) in the case of securities, any purchase option, call or similar
right of a third party with respect to such securities.
"Litigation Schedule" See Section 4.14.
------------
"Macro" means Macro International Inc., a Delaware corporation.
"Management Group" means, collectively, John F. Short, Douglas L. Cox,
Kevin P. Croke, Michael T. Errecart, Gregory C. Ellis, and Frank J. Quirk. If
any of the foregoing individuals ceases to be an employee of the Company or any
of its Subsidiaries, such individual shall not longer be a Management Group
member.
"Material Adverse Effect" means (a) a materially adverse effect on the
business, operations, prospects or condition, financial or otherwise, of the
Company, taken as a whole, (b) material impairment of the ability of the Company
to perform any of its obligations under any
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Investment Document or (c) material impairment of the rights of or benefits
available to the Holders under any Investment Document.
"Maturity Date" means May 31, 2007.
"Maximum Rate" See Section 8.9.
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"Multiemployer Plan" means a multiemployer plan as defined in Section
4001(a)(3) of ERISA.
"New Lending Office" See Section 2.11.
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"Non-U.S. Lender" See Section 2.11.
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"Obligations" means all indebtedness, advances pursuant to this Agreement
or otherwise, debts, liabilities and obligations, for the performance of
covenants, tasks or duties or for payment of monetary amounts (whether or not
such performance is then required or contingent, or such amounts are liquidated
or determinable) owing by the Company to Allied, and all covenants and duties
regarding such amounts, of any kind or nature, present or future, whether or not
evidenced by any note, agreement or other instrument, arising under this
Agreement or any of the other Investment Documents. The term includes all
principal, interest (including all interest that accrues after the commencement
of any case or proceeding in bankruptcy after the insolvency of, or for the
reorganization of any Obligor, whether or not allowed in such proceeding), fees,
charges, expenses, attorneys' fees, and any other sum chargeable to the Company
under this Agreement or any other Investment Document.
"Other Taxes" See Section 2.11.
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"Permitted Investments" means:
(a) marketable direct obligations issued or unconditionally guaranteed
by the United State Government or issued by any agency thereof and backed by the
full faith and credit of the United States, in each case maturing within one (1)
year from the date of acquisition thereof;
(b) commercial paper maturing no more than one (1) year from the date
issued and, at the time of acquisition, having a rating of at least A-1 from
Standard & Poor's Corporation or at least P-1 from Moody's Investors Service,
Inc.;
(c) certificates of deposit or bankers' acceptances maturing within
one (1) year from the date of issuance thereof issued by, or overnight reverse
repurchase agreements from, any commercial bank organized under the laws of the
United States of America or any state thereof or the District of Columbia having
combined capital and surplus of not less than $500,000,000;
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(d) time deposits maturing no more than thirty (30) days from the date
of creation thereof with commercial banks having membership in the Federal
Deposit Insurance Corporation in amounts not exceeding the lesser of $100,000 or
the maximum amount of insurance applicable to the aggregate amount of the
Company's deposits at such institution; and
(e) deposits or investments in mutual or similar funds offered or
sponsored by brokerage or other companies having membership in the Securities
Investor Protection Corporation in amounts not exceeding the lesser of $100,000
or the maximum amount of insurance applicable to the aggregate amount of the
Company's deposits in such institution.
"Person" means any natural person, corporation, business trust, joint
venture, association, company, partnership or government, or any agency or
political subdivision thereof.
"Plan" means any employee pension benefit plan (other than a Multiemployer
Plan) subject to the provisions of Title IV of ERISA or Section 412 of the Code
or Section 307 of ERISA, and in respect of which the Company or any ERISA
Affiliate is (or, if such plan were terminated, would under Section 4069 of
ERISA be deemed to be) an "employer" as defined in Section 3(5) of ERISA.
"Preferred Stock" means any and all (as the context may require) of the
shares of the authorized preferred stock of the Company.
"Pro Forma EBITDA" means an amount equal to operating earnings before
interest, taxes, depreciation and amortization for each Person acquired the
Company in connection with an acquisition permitted hereunder for the most
recent 12 month period preceding such acquisition, which amount shall be
calculated by the Company and shall be subject to the approval of the Holders.
After the closing of such acquisition, Pro Forma EBITDA with respect to each
such Person shall equal such 12 month number multiplied by a fraction, the
numerator of which is twelve minus the number of full calendar months such
Person, or its assets, have been owned by the Company for which the Holders have
received monthly financial statements, and the denominator of which is 12.
"ProTel Purchase Agreement" means the Asset Purchase Agreement dated
December 11, 1997 among the Company, ORC ProTel, Inc., ProTel Marketing, Inc.
and certain principals of ProTel Marketing, Inc.
"Real Property" shall mean, collectively, all real property owned by the
Company or in which the Company has a leasehold interest and all real property
hereafter acquired by the Company in fee or by means of a leasehold interest,
including all real property on which the Company's Business is now or hereafter
conducted, together with all goods located on any such real property that are or
may become "fixtures" under the law of the jurisdiction in which such real
property is located.
"Receiver" means any receiver, trustee, custodian, liquidator, or similar
fiduciary.
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"Registration Rights Agreement" means the Registration Rights Agreement,
dated of even date herewith, by and between the Company and Allied.
"Release" means any spilling, leaking, pumping, pouring, emitting,
emptying, discharging, injecting, escaping, leaching, dumping, disposing,
depositing, dispersing, emanating or migrating of any Hazardous Material in,
into, onto or through the environment.
"Remedial Action" means (a) "remedial action" as such term is defined in
CERCLA, 42 U.S.C. Section 9601(24), and (b) all other actions required by any
Governmental Authority or voluntarily undertaken to: (i) cleanup, remove, treat,
abate or in any other way address any Hazardous Material in the environment;
(ii) prevent the Release or threat of Release, or minimize the further Release
of any Hazardous Material so it does not migrate or endanger or threaten to
endanger public health, welfare or the environment or (iii) perform studies and
investigations in connection with, or as a precondition to, (i) or (ii) above.
"Responsible Officer" of any corporation means any executive officer or
Financial Officer of such corporation and any other officer or similar official
thereof responsible for the administration of the obligations of such
corporation in respect of this Agreement.
"Senior Credit Agreement" means the Credit Agreement dated as of the date
hereof among the Company and ORC, Inc., as borrowers, and Heller Financial,
Inc., as agent and lender, as the same may be amended, supplemented or revised
from time to time to the extent permitted hereunder.
"Senior Credit Facility" means the senior credit facility dated as of the
date hereof, by and between the Company, ORC, Inc. and the Senior Lender, and
refinancings thereof that are permitted under the terms hereof.
"Senior Debt" means all of the following: (a) the aggregate principal
indebtedness advanced from time to time under the Senior Credit Facility up to a
maximum aggregate principal indebtedness of $50,000,000, consisting of (i) the
Senior Revolver Debt and (ii) $30,000,000 of term debt as such amount is reduced
from time to time by all payments and prepayments of the principal amount
thereof; (b) all interest accrued and accruing on the amounts outstanding under
the Senior Credit Facility time to time (including interest accruing after the
commencement of an Act of Bankruptcy without regard to whether or not such
interest is an allowed claim); (c) all other fees or monetary obligations owed
to the Senior Lender under the Senior Credit Facility; (d) all costs incurred by
the Senior Lender in commencing or pursuing any enforcement action(s) with
respect to the amounts described in clauses (a) through (c), including, without
limitation, attorneys' fees and disbursements; and (e) any advances made by the
Senior Lender to protect any collateral securing the Senior Debt. "Senior Debt"
shall include all amendments, modifications, restatements, and refinancings from
time to time of the foregoing, provided such amendments, modifications or
refinancings do not (A) increase the interest rate payable thereon by more than
three hundred basis points, except in connection with the imposition of a
default rate of interest, (B) lengthen or shorten the average term to maturity
thereof by more than one year other than in connection with a refinancing
permitted under the
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terms hereof, or (C) increase the aggregate principal amount outstanding
thereunder except as permitted in Section 6.1 hereof.
"Senior Lender" means collectively Heller Financial, Inc., as agent and
lender, and certain other lenders who are or become parties as lender to the
Senior Credit Agreement or any future lender under any future Senior Credit
Facility.
"Senior Revolver Debt" a portion of the Senior Debt consisting of a
$20,000,000 revolving credit facility.
"Subordination Agreement" means that certain Subordination Agreement, dated
as of the date hereof, by and among the Company, ORC, Inc., Allied, and Heller
Financial, Inc. as agent for the Senior Lender.
"Subsidiary" means, with respect to any Person (herein referred to as the
"parent"), any corporation, partnership, association or other business entity
(a) of which securities or other ownership interests representing more than 50%
of the equity or more than 50% of the ordinary voting power or more than 50% of
the general partnership interests are, at the time any determination is being
made, owned, controlled or held, or (b) that is, at the time any determination
is made, otherwise Controlled, by such Person.
"Taxes" See Section 2.11.
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"Transaction" See Section 4.2.
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"Transfer" means the sale, assignment, lease, transfer, mortgaging,
encumbering or other disposition, whether voluntary or involuntary, and whether
or not consideration is received therefor.
"Transfer Affecting the Company's Business" means (a) one or more
transactions undertaken by the Company resulting in (i) the Transfer of all or
substantially all of the assets of the Company; (ii) a merger or consolidation
of the Company with another Person where the Company is not the surviving or
successor entity; or (iii) a single acquisition of another entity at a total
consideration of $5,000,000.00 or more in any rolling twelve (12) month period
except to the extent that such acquisition is approved by the majority Holders,
which consent shall not be unreasonably withheld or delayed; or (iv) two or more
acquisitions of other entities at an aggregate consideration of $7,500,000.00 or
more in any rolling twelve (12) month period except to the extent that such
acquisition is approved by the majority Holders, which consent shall not be
unreasonably withheld or delayed; or (b) a Transfer of shares in the Company by
any member of the Management Group except (i) Transfers to immediate family
member or trusts for immediate family members for estate planning purposes, (ii)
Transfers of not more than ten percent (10%) of the shares in the Company in the
aggregate held by the Management Group members during any rolling twelve (12)
month period so long as the Holders shall have received prompt notice of
Transfers by any Management Group member of more than ten percent (10%) of the
shares of the Company held by such Management Group member even if the foregoing
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aggregate ten percent (10%) limit has not been exceeded, and (iii) Transfers of
shares in the Company by any member of the Management Group sold to apply the
net proceeds of sale to pay the exercise price of stock options in the Company
held by such Management Group member; or (c) a Change in Control.
"Warrant Shares" means all shares of Common Stock issuable upon the
exercise of the Warrants.
"Warrants" means, collectively, the warrants to purchase eight percent (8%)
of the Common Stock of the Company.
"Wholly Owned Subsidiary" of any Person means a Subsidiary of such Person
of which securities (except for directors' qualifying shares) or other ownership
interests representing 100% of the equity or 100% of the ordinary voting power
or 100% of the general partnership interests are, at the time any determination
is being made, owned, controlled or held by such Person or one or more wholly
owned subsidiaries of such Person or by such Person and one or more wholly owned
subsidiaries of such Person.
"Withdrawal Liability" means liability to a Multiemployer Plan as a result
of a complete or partial withdrawal from such Multiemployer Plan, as such terms
are defined in Part I of Subtitle E of Title IV of ERISA.
"Year 2000 Issues" With respect to any Person, anticipated costs, problems
and uncertainties associated with the inability of certain computer applications
and imbedded systems to effectively handle data, including dates, on and after
January 1, 2000, as it affects the business, operations, and financial condition
of such Person, and such Person's customers, suppliers and vendors.
SECTION 1.2 Terms Generally. The definitions in Section 1.1 apply equally
-----------
to both the singular and plural forms of the terms defined. Whenever the
context may require, any pronoun includes the corresponding masculine, feminine
and neuter forms. The words "include," "includes" and "including" are deemed to
be followed by the phrase "without limitation." All references herein to
Articles, Sections, Exhibits and Schedules are deemed references to Articles and
Sections of, and Exhibits and Schedules to, this Agreement unless the context
shall otherwise require. Except as otherwise expressly provided herein, (a) any
reference in this Agreement to any Investment Document means such document as
amended, restated, supplemented or otherwise modified from time to time and (b)
all terms of an accounting or financial nature are construed in accordance with
GAAP, as in effect from time to time.
ARTICLE II
THE INVESTMENT
SECTION 2.1 Funding. At the closing under this Agreement (the
"Closing"), the Company will borrow, and Allied will invest in the Company, the
aggregate sum of $15,000,000,
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such indebtedness to be evidenced by, and to be repaid according to the terms of
the Debenture. The entire principal sum will be advanced at Closing.
SECTION 2.2 Senior Debt. The rights of Allied under the Debenture, the
Guaranty and this Investment Agreement as to right of payment are subordinate
only to the Senior Debt.
SECTION 2.3 Repayment of Debenture. From the Closing until September 5,
2005, the Company shall pay interest only. Beginning on September 5, 2005 and
quarterly thereafter, the Company shall pay the first of eight (8) equal
payments of principal and interest in an amount sufficient to fully amortize the
outstanding principal balance by the Maturity Date. Subject to the terms of
Section 2.7 and if not sooner paid, all unpaid principal amounts, accrued and
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unpaid interest, and other obligations of the Company to the Holders due and
owing hereunder shall be paid upon the earlier of (i) the date of acceleration
of the Debentures pursuant to Article VII, and (ii) the Maturity Date
-----------
SECTION 2.4 Interest on the Debenture. Subject to the provisions of
Section 2.5, the Debentures shall bear interest (computed on the basis of the
- -----------
actual number of days elapsed over a year of 360 days) at the Interest Rate.
SECTION 2.5 Default Interest. If the Company shall default in the payment
of the principal of or interest on the Debentures or any other amount due
hereunder, by acceleration or otherwise, or under any other Investment Document
to which the Company is a party, the Company shall on demand from time to time
pay interest, to the extent permitted by law, on such defaulted amount to but
excluding the date of actual payment (after as well as before judgment) at the
Interest Rate plus 3%.
SECTION 2.6 Prepayment. The Company may at any time and from time to time
prepay the principal indebtedness evidenced by the Debenture, in whole or in
part, upon at least three Business Days' prior written or telecopy notice (or
telephone notice promptly confirmed by written or telecopy notice) to Allied
before 2:00 p.m, Washington, DC time, subject to the Company's obligation to pay
a prepayment premium of 2% of any prepaid principal prior to the first
anniversary of the Closing Date and a prepayment premium of 1% of any prepaid
principal prior to the second anniversary of the Closing Date. There shall be
no prepayment premium on any prepayment made from and after the second
anniversary of the Closing Date. Any partial prepayments shall be made in
increments of $500,000.
SECTION 2.7 Mandatory Prepayment of the Debentures at Option of Holder.
The Company's obligations under the Debentures and this Agreement are not
assumable; upon a Transfer Affecting the Company's Business, the Holder shall
have the right (but not the obligation) to require the Company to repay the then
outstanding principal balance, all accrued but unpaid interest thereon, and all
applicable prepayment premiums then due and owing under the Debenture, and to
pay all of the other Obligations, if any, in full.
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SECTION 2.8 Payments.
(a) The Company shall make each payment (including principal of or
interest on the Debentures or other amounts) hereunder and under any other
Investment Document to which the Company is a party not later than 12:00 (noon),
Washington, D.C. time, on the date when due in immediately available dollars,
without setoff, defense or counterclaim. Each such payment shall be made to
Allied at its offices at 1919 Pennsylvania Avenue, N.W., Washington, D.C. 20006-
3434, attention of Thomas H. Westbrook.
(b) Whenever any payment (including principal of or interest on the
Debenture) hereunder or under any other Investment Document shall become due, or
otherwise would occur, on a day that is not a Business Day, such payment may be
made on the next succeeding Business Day, and such extension of time shall in
such case be included in the computation of interest.
SECTION 2.9 Warrants. At the Closing, the Company shall issue and sell
the Warrants to Allied.
SECTION 2.10 Taxes.
(a) Any and all payments by or on behalf of the Company hereunder and
under any other Investment Document shall be made, in accordance with Section
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2.8, free and clear of and without deduction for any and all current or future
- ---
taxes, levies, imposts, deductions, charges or withholdings, and all liabilities
with respect thereto, excluding (i) income or gross receipts taxes imposed on
the net income of a Holder and (ii) franchise taxes imposed on the net income of
a Holder (all such nonexcluded taxes, levies, imposts, deductions, charges,
withholdings and liabilities, collectively or individually, being called
"Taxes"). If any Holder is a foreign Person, it shall be qualified to transact
business in the United States as a foreign person. If the Company must deduct
any Taxes from or in respect of any sum payable hereunder or under any other
Investment Document to a Holder, (i) the sum payable shall be increased by the
amount (an "additional amount") necessary so that after making all required
deductions (including deductions applicable to additional sums payable under
this Section 2.10) such Holder shall receive an amount equal to the sum it would
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have received had no such deductions been made, (ii) the Company shall make such
deductions and (iii) the Company shall pay the full amount deducted to the
relevant Governmental Authority in accordance with applicable law.
(b) In addition, the Company will pay to the relevant Governmental
Authority in accordance with applicable law any current or future stamp or
documentary taxes or any other excise or property taxes, charges or similar
levies that arise from any payment made hereunder or under any other Investment
Document or from the execution, delivery or registration of, or otherwise with
respect to, this Agreement or any other Investment Document ("Other Taxes").
(c) The Company will indemnify each Holder for the full amount of
Taxes and Other Taxes paid by such Holder and any liability (including
penalties, interest and expenses (including reasonable attorney's fees and
expenses)) arising therefrom or with respect thereto,
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whether or not such Taxes or Other Taxes were correctly or legally asserted by
the relevant Governmental Authority. A certificate as to the amount of such
payment or liability prepared by such Holder absent demonstrable error, shall be
final, conclusive and binding for all purposes. Such indemnification shall be
made within 30 days after the date such Holder makes written demand therefor.
(d) As soon as practicable after the date of any payment of Taxes or
Other Taxes by the Company to the relevant Governmental Authority, the Company
will deliver to each Holder, the original or a certified copy of a receipt
issued by such Governmental Authority evidencing payment thereof. If there is a
refund of any additional amount paid by the Company, the Company shall be
entitled to receive such refund.
(e) Any transferee of Allied, with respect to the investment, if
organized under the laws of a jurisdiction other than the United States, any
State thereof or the District of Columbia (a "Non-U.S. Lender") shall deliver to
the Company two copies of either United States Internal Revenue Service Form
1001 or Form 4224, or, in the case of a Non-U.S. Lender claiming exemption from
U.S. Federal withholding tax under Section 871(h) or 881(c) of the Code with
respect to payments of "portfolio interest", a Form W-8, or any subsequent
versions thereof or successors thereto (and, if such Non-U.S. Lender delivers a
Form W-8, a certificate representing that such Non-U.S. Lender is not a bank for
purposes of Section 881(c) of the Code, is not a 10% shareholder (within the
meaning of Section 871(h)(3)(B) of the Code) of the Company and is not a
controlled foreign corporation related to the Company (within the meaning of
Section 864(d)(4) of the Code)), properly completed and duly executed by such
Non-U.S. Lender claiming complete exemption from, or reduced rate of U.S.
Federal withholding tax on payments by the Company under this Agreement and the
other Investment Documents. Such forms shall be delivered by each Non-U.S.
Lender on or before the date it becomes a party to this Agreement and on or
before the date, if any, such Non-U.S. Lender changes its applicable lending
office by designating a different lending office (a "New Lending Office"). In
addition, each Non-U.S. Lender shall deliver such forms promptly upon the
obsolescence or invalidity of any form previously delivered by such Non-U.S.
Lender. Notwithstanding any other provision of this Section 2.10(e), no Non-
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U.S. Lender shall be required to deliver any form pursuant to this Section
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2.10(e) that such Non-U.S. Lender is not legally able to deliver.
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(f) The Company shall not be required to indemnify any Non-U.S. Lender
or to pay any additional amounts to any Non-U.S. Lender, in respect of United
States Federal withholding tax pursuant to paragraph (a) or (c) above to the
extent that (i) the obligation to withhold amounts with respect to United States
Federal withholding tax existed on the date such Non-U.S. Lender became a party
to this Agreement or, with respect to payments to a New Lending Office, the date
such Non-U.S. Lender designated such New Lending Office with respect to the
Debenture; provided, however, that this paragraph (f) shall not apply (x) to any
Holder as a result of an assignment, participation,
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transfer or designation made at the request of the Company and (y) to the extent
the indemnity payment or additional amounts any Holder would be entitled to
receive (without regard to this paragraph (f)) do not exceed the indemnity
payment or additional amounts that the Person making the assignment,
participation or transfer to such Holder would have been entitled to receive in
the absence of such assignment, participation, transfer or designation or (ii)
the obligation to pay such additional amounts would not have arisen but for a
failure by such Non-U.S. Lender to comply with the provisions of paragraph (f)
above.
(g) Nothing contained in this Section 2.10 shall require a Holder to
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make available any of its tax returns (or any other information that it
reasonably deems to be confidential or proprietary).
SECTION 2.11 Use of Proceeds. The proceeds of the investment by Allied
shall be used to consummate the Acquisition and for general working capital
purposes. At Allied's sole discretion and expense, Allied shall conduct a
review of the Company's financial records to determine the disposition of the
proceeds of the investment, and the Financial Officer of the Company shall
certify in writing to Allied that the proceeds of the investment were used in
accordance with this Section 2.11.
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ARTICLE III
CONDITIONS
SECTION 3.1 Conditions to Closing. The obligation of Allied to enter into
this Agreement and to perform its obligations hereunder is subject to the
satisfaction of the following conditions on or prior to the Closing Date:
(a) The representations and warranties set forth in Article IV hereof
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shall be true and correct on and as of the date of the Transaction.
(b) The Company and each of the Guarantors shall be in compliance with
all the terms and provisions set forth herein and in each other Investment
Document on its part to be observed or performed, and at the time of and
immediately after the Transaction, no Event of Default or Default shall have
occurred and be continuing.
(c) Allied shall have received the following items:
(i) a favorable written opinion of counsel for the Company and
the Guarantors (A) dated the Closing Date, (B) addressed to Allied, and (C)
covering such matters relating to the Investment Documents and the Transaction
as Allied shall reasonably request, and the Company hereby requests such counsel
to deliver such opinion;
(ii) the Debenture, duly executed by the Company and each of the
other Investment Documents, executed by each of the parties thereto (other than
Allied);
(iii) (A) a copy of the certificate or articles of incorporation,
including all amendments thereto, of the Company and each Guarantor, certified
as of a recent date by the Secretary of State of the state of its organization,
and a certificate as to the good standing of the Company and each Guarantor as
of a recent date, from such Secretary of State; (B) a certificate of the
Secretary or Assistant Secretary of the Company and each Guarantor dated the
Closing Date and certifying (1) that attached thereto is a true and complete
copy of the by-laws of the
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Company as in effect on the Closing Date and at all times since a date prior to
the date of the resolutions described in clause (2) below, (2) that attached
thereto is a true and complete copy of resolutions duly adopted by the Board of
Directors of the Company and each Guarantor authorizing the execution, delivery
and performance of the Investment Documents to which such Person is a party and
that such resolutions have not been modified, rescinded or amended and are in
full force and effect, (3) that the certificate or articles of incorporation of
the Company and each Guarantor have not been amended since the date of the last
amendment thereto shown on the certificate of good standing furnished pursuant
to clause (A) above, and (4) as to the incumbency and specimen signature of each
officer executing any Investment Document or any other document delivered in
connection herewith on behalf of the Company and each Guarantor; (C) a
certificate of another officer as to the incumbency and specimen signature of
the Secretary or Assistant Secretary executing the certificates pursuant to (B)
above; and (D) such other documents as Allied may reasonably request;
(iv) all amounts due and payable on or prior to the Closing Date,
including, to the extent invoiced, reimbursement or payment of all out-of-pocket
expenses required to be reimbursed or paid by the Company hereunder or under any
other Investment Document;
(v) the Warrants;
(vi) the Audited Financials and Interim Financials, as described
in Section 4.6;
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(vii) the employment contracts, as described in Section 4.24;
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and
(viii) the Registration Rights Agreement, in form and substance
acceptable to the parties.
(d) After giving effect to the transactions contemplated hereby, the
Company shall have outstanding no Indebtedness other than (A) the Senior Debt,
(B) the extension of credit under this Agreement and (C) the Indebtedness listed
on Schedule 4.7 or as disclosed in the Financials.
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(e) Allied shall have received fully executed conformed copies of the
Acquisition Agreement and each of the other documents related to the Acquisition
Agreement. On the Closing Date, the Acquisition shall have been consummated in
accordance with the terms of the Acquisition Agreement.
(f) The closing of the Senior Debt shall have occurred.
(g) All legal matters incident to this Agreement, the Debentures and
the other Investment Documents shall be satisfactory to Allied.
(h) No event that has a Material Adverse Effect shall have occurred.
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(i) Allied shall have received such other documents, instruments and
information as Allied may reasonably request.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
In order to induce Allied to enter into the Transaction, the Company
represents and warrants to Allied that, after giving effect to the Acquisition:
SECTION 4.1 Organization; Powers. The Company and each Guarantor (a) is a
corporation duly organized, validly existing and in good standing under the laws
of the jurisdiction of its organization, (b) has all requisite power and
authority to own its property and assets and to carry on its business as now
conducted and as proposed to be conducted, (c) is qualified to do business in,
and is in good standing in, every jurisdiction where such qualification is
required, except where the failure so to qualify could not reasonably be
expected to result in a Material Adverse Effect, and (d) has the corporate power
and authority to execute, deliver and perform its obligations under each of the
Investment Documents and each other agreement or instrument contemplated hereby,
and to borrow hereunder.
SECTION 4.2 Authorization. The execution, delivery and performance by the
Company and of each of the Investment Documents and the obligations hereunder
(collectively, the "Transaction") (a) have been duly authorized by all requisite
corporate and, if required, stockholder action on the part of the Company and
each Guarantor and (b) will not (i) violate (A) any provision of law, statute,
rule or regulation, or of the certificate or articles of incorporation or other
constitutive documents or by-laws of the Company or any Guarantor, (B) any order
of any Governmental Authority or (C) any provision of any indenture, agreement
or other instrument to which the Company or any Guarantor is a party or by which
it or any of its property is or may be bound, (ii) result in a breach of or
constitute (alone or with notice or lapse of time or both) a default under, or
give rise to any right to accelerate or to require the prepayment, repurchase or
redemption of any obligation under any such indenture, agreement or other
instrument or (iii) result in the creation or imposition of any Lien upon or
with respect to any property or assets now owned or hereafter acquired by the
Company or any Guarantor.
SECTION 4.3 Enforceability. This Agreement has been duly executed and
delivered by the Company and constitutes, and each other Investment Document
when executed and delivered by the Company and the Guarantors will constitute, a
legal, valid and binding obligation of the Company and each Guarantor
enforceable against the Company and each Guarantor in accordance with its terms,
subject to applicable bankruptcy, insolvency, reorganization, moratorium,
fraudulent transfer and other similar laws relating to or affecting creditors'
rights generally from time to time in effect and to general principles of equity
(including, without limitation, concepts of materiality, reasonableness, good
faith and fair dealing), regardless or whether considered in a proceeding in
equity or at law.
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SECTION 4.4 Governmental Approvals. No action, consent or approval or
registration or filing with or any other action by any Governmental Authority is
or will be required to be obtained by the Company or the Guarantors in
connection with the Transaction, except for such as have been made or obtained
and are in full force and effect.
SECTION 4.5 Company's Business. The Company has been exclusively engaged
in the operation of the Company's Business.
SECTION 4.6 Financial Condition.
(a) The Company has previously provided to Allied a true and complete
copy of the Company's audited financial statements summarizing the financial
results of operations for its fiscal year ended December 31, 1998 (the "Audited
Financials"). The Audited Financials were prepared in accordance with GAAP, are
true and correct in all material respects, and fairly present the Company's
operating income and financial condition at such date and for the period then
ended. The auditors have issued an unqualified statement to the Company
concerning the Audited Financials, a copy of which is included with the Audited
Financials;
(b) The Company has previously provided to Allied a true and complete
copy of preliminary unaudited financial statements summarizing the financial
results of operation of the Company for the three month period ended March 31,
1999 (collectively, the "Interim Financials"). The Interim Financials were
prepared in accordance with GAAP (except that footnotes are omitted), are true
and correct in all material respects, and fairly present the Company's operating
income and financial condition at such date and for the period then ended,
subject to normal and immaterial year-end adjustments; and
(c) The Company has previously provided to Allied a true and complete
copy of the audited financial statements of Macro summarizing the financial
results of operations for the fiscal year ended April 30, 1998 and preliminary
unaudited financial statements summarizing the financial results of operation of
Macro for the eleven month period ended March 31, 1999 (the "Macro Financials").
SECTION 4.7 Indebtedness. Except as disclosed in the Financials or listed
on Schedule 4.7 attached hereto, the Company has no Indebtedness, or any
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material liability or obligation of any nature (whether liquidated or
unliquidated, mature or not yet mature, absolute or contingent, secured or
unsecured), arising out of any transaction entered into or any state of facts
existing prior hereto, including, without limitation, liabilities or obligations
on account of taxes or government charges, penalties, interest or fines thereon
or in respect thereof, and the Company does not know of any basis for any claim
against the Company as of the date of this Agreement or of any debt, liability
or obligation other than those described in this Section 4.7 or elsewhere in
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this Agreement. The Company is not in default or alleged to be in default in
any material respect with respect to any of its liabilities listed in the
Audited Financials or the Interim Financials.
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SECTION 4.8 Acquisition. As of the Closing Date, the Company has
delivered to Allied a complete and correct copy of the Acquisition Agreement
(including all schedules, exhibits, amendments, supplements, modifications,
assignments and all other documents delivered pursuant thereto or in connection
therewith). Neither the Company nor, to the Company's knowledge, any other
party thereto is in material default in the performance or compliance with any
provisions thereof. The Acquisition Agreement complies with, and prior to the
Closing Date, the Acquisition has been consummated in accordance with, all
applicable laws. All requisite approvals by Governmental Authorities having
jurisdiction over the Company, Macro, and any other Persons referenced therein,
with respect to the transactions contemplated by the Acquisition Agreement, have
been obtained on or before the Closing Date, and no such approvals impose or
will impose any conditions to the consummation of the transactions contemplated
by the Acquisition Agreement or to the conduct by the Company of its business
thereafter. As of the Closing Date, to the knowledge of the Company, all
representations and warranties of Macro in the Acquisition Agreement are true,
correct and complete in all material respects and are hereby incorporated herein
by this reference thereto as if fully set forth herein.
SECTION 4.9 Ownership and Control. Attached hereto as Schedule 4.9 is an
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accurate and complete list of the following information: (a) the authorized
capitalization of the Company as of the date hereof; (b) the number of shares of
each class of the Company's issued capital stock and the number of outstanding
shares thereof; (c) a description of all convertible securities and all options,
warrants and similar rights held with respect to the Company's capital stock.
All shares of capital stock of the Company and all convertible securities,
options, warrants and similar rights held with respect to the Company's capital
stock have been duly authorized and validly issued, are fully paid and
nonassessable (in the case of capital stock). Except as listed in Schedule 4.9
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attached hereto, there are no outstanding options, warrants, convertible
securities or other stock purchase rights issued by the Company as of the date
hereof.
SECTION 4.10 No Material Adverse Change. Since the ending date of the
Interim Financials and the Macro Financials (and, for the purposes of this
Section 4.10, assuming the accuracy of the Interim Financials and the Macro
- ------------
Financials), other than as disclosed in Schedule 4.10 hereto, neither the
-------------
Company nor Macro has: (i) suffered any material adverse change in its
condition (financial or otherwise) or its overall business prospects; (ii)
entered into any material transactions or incurred any material debt, obligation
or liability (whether liquidated or unliquidated, mature or not yet mature,
absolute or contingent, secured or unsecured) other than the Obligations and in
connection with the Acquisition and the Senior Debt; (iii) sustained any
material loss or damage to its Real Property or personal property, whether or
not insured; (iv) suffered any material interference with its business or
operations, present or proposed; and (v) made any Transfer, abandonment or other
disposition of any of its Real Property or personal property or any interest
therein or relating thereto, that is material to the financial position or
prospects of the Company.
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SECTION 4.11 Title to Properties; Possession Under Leases.
(a) The Company has good and marketable title to, or valid leasehold
interests in, all its material properties and assets free and clear of Liens,
other than Liens expressly permitted by Section 6.2.
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(b) Attached hereto as Schedule 4.11 is an accurate and complete list
-------------
of all leases of Real Property and all other material leases to which the
Company is a party or by which the Company or any of its assets is bound,
together with all amendments or supplements thereto (collectively, the
"Leases"). True and complete copies of each of the Leases have been provided to
Allied prior to the date hereof. Each of the Leases is valid, binding and
enforceable in accordance with its terms and remains in full force and effect.
The Company is not in material default or alleged to be in default in any
material respect with respect to any of its obligations under any of the Leases
(nor would be in default or alleged to be in default with the giving of notice,
passage of time, or both), and, to the Company's knowledge, no party other than
the Company is in default with respect to such party's obligations under any of
the Leases (or would be in default or alleged to be in default with the giving
of notice, passage of time, or both). The Company's possession of any property
leased by it has not been disturbed, nor has any claim been asserted against the
Company that is or could be adverse to the Company's interests under any of the
Leases. None of the Leases is subject to any material rights of set-off,
recoupment or similar deduction or offset and, except as noted on Schedule 4.11
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attached hereto, the collateral assignment of the Company's rights under certain
of the Leases to Senior Lender will not impair or conflict with the validity or
enforceability of any of the Leases. The Company has not assigned or encumbered
any of its rights, title or interest in or under any of the Leases nor agreed to
any oral modifications of any of the provisions of any of the Leases, except for
a collateral assignment of certain Leases to the Senior Lender.
SECTION 4.12 Subsidiaries. Schedule 4.12 sets forth as of the Closing
-------------
Date a list of all Subsidiaries of the Company and the percentage ownership
interest of the Company therein. The shares of capital stock or other ownership
interests so indicated on Schedule 4.12 are fully paid and non-assessable and
-------------
are owned by the Company, directly or indirectly, free and clear of all Liens,
other than certain pledges to the Senior Lender. Schedule 4.12 also sets forth
-------------
all joint ventures and partnerships of the Company with any other Person.
SECTION 4.13 Company's Officers, Directors, and Affiliates. Attached
hereto as Schedule 4.13 is an accurate and complete list of all directors,
-------------
officers, and Affiliates of the Company. Other than the Persons listed in
Schedule 4.13 and the Company's shareholders, there are no other Persons
- -------------
controlling the Company's Business.
SECTION 4.14 Litigation; Compliance with Laws
(a) Except as set forth on Schedule 4.14 (the "Litigation Schedule"),
-------------
there are no actions, suits or proceedings at law or in equity or by or before
any Governmental Authority now pending or threatened against or affecting the
Company, its directors or officers, or any business, property or rights of any
such Person (i) that involve any Investment Document
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<PAGE>
or the Transaction or (ii) as to which there is a reasonable possibility of an
adverse determination and that, if adversely determined, could reasonably be
expected, individually or in the aggregate, to result in a Material Adverse
Effect.
(b) Neither the Company nor any of its respective material properties
or assets is in violation of nor will the continued operation of its material
properties and assets as currently conducted violate, any law, rule or
regulation, or is in default with respect to any judgment, writ, injunction,
decree or order of any Governmental Authority, where such violation or default
could reasonably be expected to result in a Material Adverse Effect.
(c) Except for matters set out in the Litigation Schedule, the Company
is not in breach of, default under, or in violation of (where such breach,
default or violation would have a Material Adverse Effect on the Company): (a)
any Applicable Law, decree, or order that may result in a Material Adverse
Effect; or (b) any material deed, lease, loan agreement, commitment, bond, note,
deed of trust, restrictive covenant, license, indenture, contract, or other
agreement, instrument or obligation to which it is a party or by which it is
bound or to which its assets are subject.
SECTION 4.15 Material Contracts. Attached hereto as Schedule 4.15 is an
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accurate and complete list of all material contracts (i.e., all those
representing 10% or more of the Company's total consolidated revenue, profit or
volume) to which the Company is a party or by which the Company or any of its
assets is bound (collectively, the "Contracts"). The Company has entered into
all Contracts necessary for the conduct of its business as presently conducted.
True and complete copies of each of the Contracts have been provided to Allied.
Each of the Contracts is valid, binding and enforceable in accordance with its
terms and remains in full force and effect. The Company is not in default or
alleged to be in default in any material respect with respect to any of its
obligations under any of the Contracts (nor would be in default or alleged to be
in default with the giving of notice, passage of time, or both), and, to the
best of the Company's knowledge, no party other than the Company is in default
with respect to such party's obligations under any of the Contracts (or would be
in default or alleged to be in default with the giving of notice, passage of
time, or both). No claim has been asserted against the Company that is or could
be adverse to the Company's interests under any of the Contracts. None of the
Contracts is subject to any material rights of set-off, recoupment or similar
deduction or offset. The Company has not assigned or encumbered any of its
rights, title or interest in or under any of the Contracts nor agreed to any
oral modifications of any of the provisions of any of the Contracts, other than
the Company's pledge of general intangibles to the Senior Lender.
SECTION 4.16 No Side Agreements. To the Company's knowledge, there exists
no agreement or understanding calling for any payment or consideration from a
customer or supplier of the Company to an officer, director, shareholder or
manager of the Company with respect to any transaction between the Company and a
supplier or customer. Except for the transactions set forth on Schedule 4.16
-------------
attached hereto, no Affiliate of the Company, directly or indirectly, transacts
any business with the Company, except for employment arrangements in accordance
with the terms of Section 6.11 below.
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SECTION 4.17 Investment Company Act; Public Utility Holding Company Act.
The Company is not (a) an "investment company" as defined in, or subject to
regulation under, the Investment Company Act of 1940 or (b) a "holding company"
as defined in, or subject to regulation under, the Public Utility Holding
Company Act of 1935.
SECTION 4.18 Use of Proceeds. The Company will use the proceeds of the
investment only for the purposes specified in Article II.
----------
SECTION 4.19 Tax Returns. The Company has filed or caused to be filed all
Federal and material state, local and foreign tax returns or materials required
to have been filed by it or has filed extensions therefor and has paid or caused
to be paid all taxes due and payable by it and all assessments received by it,
except taxes that are being contested in good faith by appropriate proceedings
and for which the Company shall have set aside on its books adequate reserves.
SECTION 4.20 No Material Misstatements. No information, report, financial
statement, exhibit or schedule filed with the Securities and Exchange Commission
or furnished by or on behalf of the Company or Macro to Allied in connection
with the negotiation of any Investment Document or included therein or delivered
pursuant thereto contained, contains or will contain any material misstatement
of fact or omitted, omits or will omit to state any material fact necessary to
make the statements therein, in the light of the circumstances under which they
were, are or will be made, not misleading.
SECTION 4.21 Employee Benefit Matters. There is no existing single-
employer plan defined in Section 4001(a) of ERISA as to which the Company is, or
immediately after the Closing Date will be, an "employer" or a "substantial
employer" as defined in Sections 3(5) and 4001(a)(2) of ERISA, respectively.
Attached hereto as Schedule 4.21 is an accurate and complete list of each plan
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described in Section 4001(a) of ERISA, as to which the Company is assuming any
liability or will be liable to make contributions or for the payment of
benefits. The Company has delivered to Allied true and complete copies of each
of the plans listed on Schedule 4.21 attached hereto. There have been no
-------------
"reportable events" as set forth in Section 4043(b) of ERISA with respect to any
such plan, and no termination of any such plan since the effective date of ERISA
which could result in any tax, penalty or liability being imposed upon the
Company. The Company has not participated in, and the execution and delivery of
this Agreement by the Company will not involve, any "prohibited transaction" (as
defined in Section 4975 of the Code) that could subject the Company to any tax
or penalty imposed by Section 4975 of the Code. To the best knowledge of the
Company, no predecessor-in-interest to the Company has participated in any
"prohibited transaction" (as defined in Section 4975 of the Code) that could
subject the Company to any tax or penalty imposed by Section 4975 of the Code.
Since the effective date of ERISA, neither the Company nor, to the best
knowledge of the Company, any predecessor-in-interest to the Company, has
incurred any "accumulated funding deficiency", as such term is defined in
Section 302 of ERISA, to which the Company could be subject or for which it
might be liable. The Company is not, and immediately after the Closing will not
be, a party to, and none of the operations of the Company is, or after the
Closing will be, covered by, a "multi-employer plan", as defined in Section
3(37) of ERISA.
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<PAGE>
SECTION 4.22 Environmental Matters. To the Company's knowledge, except as
set forth in Schedule 4.22:
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(a) The properties owned or operated by the Company (the "Properties")
do not contain any Hazardous Materials in amounts or concentrations which (i)
constitute, or constituted a violation of, (ii) require Remedial Action under,
or (iii) could give rise to liability under, Environmental Laws, which
violations, Remedial Actions and liabilities, in the aggregate, could reasonably
be expected to result in a Material Adverse Effect;
(b) The Properties and all operations of the Company are in
compliance, and in the last five years have been in compliance, with all
Environmental Laws and all necessary Environmental Permits have been obtained
and are in effect, except to the extent that such non-compliance or failure to
obtain any necessary permits, in the aggregate, could not reasonably be expected
to result in a Material Adverse Effect;
(c) There have been no Releases or threatened Releases at, from, under
or proximate to the Properties or otherwise in connection with the operations of
the Company, which Releases or threatened Releases, in the aggregate, could
reasonably be expected to result in a Material Adverse Effect;
(d) The Company has not received any notice of an Environmental Claim
in connection with the Properties or the operations of the Company or with
regard to any Person whose liabilities for environmental matters the Company has
retained or assumed, in whole or in part, contractually, by operation of law or
otherwise, which, in the aggregate, could reasonably be expected to result in a
Material Adverse Effect, nor does the Company have reason to believe that any
such notice will be received or is being threatened; and
(e) Hazardous Materials have not been transported from the Properties,
nor have Hazardous Materials been generated, treated, stored or disposed of at,
on or under any of the Properties in a manner that could give rise to liability
under any Environmental Law, nor has the Company retained or assumed any
liability, contractually, by operation of law or otherwise, with respect to the
generation, treatment, storage or disposal of Hazardous Materials, which
transportation, generation, treatment storage or disposal, or retained or
assumed liabilities, in the aggregate, could reasonably be expected to result in
a Material Adverse Effect.
SECTION 4.23 Labor Matters. As of the date hereof, there are no strikes,
lockouts or slowdowns against the Company pending or, to the actual knowledge of
the Company, threatened. The hours worked by and payments made to employees of
the Company have not been in violation of the Fair Labor Standards Act or any
other applicable federal state, local or foreign law dealing with such matters.
All payments due from the Company, or for which any claim may be made against
the Company, on account of wages and employee health and welfare insurance and
other benefits, have been paid or accrued as a liability on the books of the
Company. The consummation of the Transaction will not give rise to any right of
termination or right of renegotiation on the part of any union under any
collective bargaining agreement to which the Company is bound.
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<PAGE>
SECTION 4.24 Employees. Attached hereto as Schedule 4.24 is an accurate
-------------
and complete list of all employment and compensation contracts, including all
retirement benefit agreements not disclosed on Schedule 4.21, between the
-------------
Company and its officers and executives. The Company has delivered to Allied
accurate and complete copies of all such contracts. No officer, executive or
other key employee of the Company has advised the Company (orally or in writing)
that he or she intends to terminate employment with the Company.
SECTION 4.25 Management History. To the Company's knowledge, during the
past ten years, no officer or director of the Company (including, but not
limited to, each member of the Management Group) has been arrested for, or
convicted of, any criminal offense, has been the subject of an Act of
Bankruptcy, or has served as an officer, director, general partner, member, or
manager of any Person that has been or is the subject of an Act of Bankruptcy.
SECTION 4.26 Solvency. Immediately after the consummation of the
Transaction to occur on the Closing Date and after giving effect to the
application of the proceeds of the investment, (a) the fair value of the assets
of the Company, at a fair valuation, will exceed its debts and liabilities,
subordinated, contingent or otherwise; (b) the present fair saleable value of
the property of the Company will be greater than the amount that will be
required to pay the probable liability of its debts and other liabilities,
subordinated, contingent or otherwise, as such debts and other liabilities
become absolute and matured, (c) the Company on a consolidated basis will be
able to pay its debts and liabilities, subordinated, contingent or otherwise, as
and when such debts and liabilities become absolute and matured; and (d) the
Company on a consolidated basis will not have unreasonably small capital with
which to conduct the businesses in which it is engaged as such businesses are
now conducted and are proposed to be conducted following the Closing Date.
SECTION 4.27 Licenses. The Company has good title to all of the Licenses
needed to properly operate the Company's Business.
SECTION 4.28 Warrant Shares. All of the Warrant Shares have been duly
authorized and reserved for issuance, and upon issuance subsequent to the
payment of the exercise price in accordance with the terms of the Warrants, the
Warrant Shares will be validly issued, fully paid and non-assessable.
SECTION 4.29 Brokers. Other than Wallace Willmore Cromwell & Co., LLC,
whose commission shall be paid by the Company, the Company has not engaged the
services of a broker in connection with the Transaction.
SECTION 4.30 Intellectual Property. As of the Closing Date, the Company
owns or has rights to use all Intellectual Property necessary to continue to
conduct its business as now or heretofore conducted by it or proposed to be
conducted by it, and each patent, trademark, copyright and License is listed,
together with application or registration numbers, as applicable in Schedule
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4.30. The Company conducts its business and affairs without infringement of or
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interference with any Intellectual Property of any other Person.
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<PAGE>
SECTION 4.31 Year 2000 Representation. The Company and its Subsidiaries
have made a full and complete assessment of the Year 2000 Issues and have
prepared a realistic and achievable program for remediating any applicable Year
2000 Issues on a timely basis. The Company believes that Year 2000 Issues will
not have a Material Adverse Effect.
ARTICLE V
AFFIRMATIVE COVENANTS
Subject to the provisions of Section 5.15 hereof, so long as Allied shall
------------
hold an equity interest in the Company and until the principal of and interest
on the Debentures have been paid in full, unless the Holders of a majority of
the outstanding principal amount of the Debentures shall otherwise consent in
writing, the Company covenants and agrees with the Holders to do all of the
following:
SECTION 5.1 Existence; Businesses and Properties.
(a) The Company and each Guarantor will do or cause to be done all
things necessary to preserve, renew and keep in full force and effect its legal
existence, except as permitted by Section 6.4.
-----------
(b) The Company and each Guarantor will do or cause to be done all
things necessary to obtain, preserve, renew, extend and keep in full force and
effect the rights, licenses, permits, franchises, authorizations, patents,
copyrights, trademarks and trade names material to the conduct of its business;
maintain and operate such business in substantially the manner in which it is
presently conducted and operated to the extent that a failure to do so could
result in a Material Adverse Effect; and at all times maintain and preserve all
property material to the conduct of such business and keep such property in good
repair, working order and condition (ordinary wear and tear excepted) and from
time to time make, or cause to be made, all needful and proper repairs,
renewals, additions, improvements and replacements thereto necessary in order
that the business carried on in connection therewith may be properly conducted
at all times.
(c) The Company shall hold meetings of its board of directors no less
than four (4) times per year in person or by telephone. The Company shall
notify Allied of each meeting at least one week in advance. An Allied
representative shall have the right to attend each board meeting at the
Company's expense.
SECTION 5.2 Insurance. The Company and each Guarantor will keep its
insurable properties adequately insured at all times by financially sound and
reputable insurers; maintain such other insurance, to such extent and against
such risks, including fire and other risks insured against by extended coverage,
as is customary with companies in the same or similar businesses operating in
the same or similar locations, including commercial general liability insurance
against claims for personal injury or death or property damage occurring upon,
in, about or in connection with the use of any properties owned, occupied or
controlled by it; and maintain such other insurance as may be required by law.
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SECTION 5.3 Obligations and Taxes. The Company and each Guarantor will
pay its Indebtedness and other obligations promptly and in accordance with their
terms (except to the extent that a failure to do so could not reasonably be
expected to result in a Material Adverse Effect), and pay and discharge promptly
when due all taxes, assessments and governmental charges or levies imposed upon
it or upon its income or profits or in respect of its property, before the same
shall become delinquent or in default, as well as all lawful claims for labor,
materials and supplies or otherwise that, if unpaid, might give rise to a Lien
upon such properties or any part thereof, provided, however, that such payment
and discharge shall not be required with respect to any such tax, assessment
charge, levy or claim so long as the validity or amount thereof shall be
contested in good faith by appropriate proceedings and the Company or applicable
Guarantor shall have set aside on its books adequate reserves with respect
thereto in accordance with GAAP and such contest operates to suspend collection
of the contested obligation, tax, assessment or charge and enforcement of a
Lien.
SECTION 5.4 Financial Statements, Reports, etc. The Company will furnish
to the Holders
(a) within 90 days after the end of each fiscal year, its
consolidated and consolidating balance sheet and related statements of
operations, stockholders' equity and cash flows showing the financial condition
of the Company, as of the close of such fiscal year and the results of its
operations during such year, all audited by an independent public accountant of
recognized national or regional standing and accompanied by an opinion of such
accountant (which shall not be qualified in any material respect) to the effect
that such financial statements fairly present the financial condition and
results of operations of the Company on a consolidated basis in accordance with
GAAP;
(b) within 45 days after the end of each fiscal quarter of each
fiscal year, its consolidated and consolidating balance sheet and related
statements of operations, stockholders' equity and cash flows showing the
financial condition of the Company, as of the close of such fiscal quarter and
the results of its operations during such fiscal quarter and the then elapsed
portion of the fiscal year, all certified by its Financial Officer (on behalf of
the Company) as fairly presenting the financial condition and results of
operations of the Company on a consolidated basis in accordance with GAAP,
subject to normal year-end audit adjustments;
(c) as soon as available and in any event within 45 days after the
end of each month (including the last month of the Company's fiscal year), a
copy of the monthly financial reports required to be submitted to the Senior
Lender pursuant to the Senior Credit Agreement;
(d) concurrently with any delivery of financial statements under sub-
paragraph (a) or (b) above, a certificate of the accounting firm or Financial
Officer of the Company (on behalf of the Company) opining on or certifying such
statements (which certificate, when furnished by an accounting firm, may be
limited to accounting matters and disclaim responsibility for legal
interpretations), certifying that no Event of Default or Default has occurred
or, if such an Event of Default or Default has occurred, specifying the nature
and extent thereof and any corrective action taken or proposed to be taken with
respect thereto;
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(e) prior to fiscal year end, a projection for the next three (3)
years and quarterly projections for the coming year in the same format at the
financial statements of the Company;
(f) within thirty (30) days after filing, copies of all periodic and
other material reports, proxy statements and other materials filed by the
Company with the Securities and Exchange Commission, or any Governmental
Authority succeeding to any or all of the functions of said Commission, or with
any national securities exchange, or distributed to its shareholders (exclusive
of proprietary information unless (i) the Person that is the source of the
information or report is a public company and (ii) such Person would then be
required to file such proprietary information with the Securities and Exchange
Commission), as the case may be;
(g) promptly, from time to time, such other information regarding the
operations, business affairs and financial condition of the Company, or
compliance with the terms of any Investment Document, as the Holders may
reasonably request.
SECTION 5.5 Litigation and Other Notices. The Company will furnish to the
Holders prompt written notice of the following:
(a) any Event of Default or Default, specifying the nature and extent
thereof and the corrective action (if any) taken or proposed to be taken with
respect thereto;
(b) the filing or commencement of or any threat or notice of
intention of any Person to file or commence, any action, suit or proceeding,
whether at law or in equity or by or before any Governmental Authority, against
the Company or any Affiliate thereof that could reasonably be expected to result
in a Material Adverse Effect, and within thirty (30) days after filing, the
Company shall provide the Holders with copies of all pleadings of any material
lawsuits filed by or against the Company;
(c) within ten (10) days after receipt, a copy of any notice received
by the Company of the occurrence of any default under any Indebtedness,
including the Senior Debt, or under any Leases to which the Company is a party;
and
(d) any development that has resulted in, or could reasonably be
expected to result in, a Material Adverse Effect.
SECTION 5.6 Employee Benefits. The Company will (a) comply in all
material respects with the applicable provisions of ERISA and the Code and (b)
furnish to the Holders (i) as soon as possible after, and in any event within 10
days after any Responsible Officer of the Company or any ERISA Affiliate knows
or has reason to know that any ERISA Event has occurred that alone or together
with any other ERISA Event could reasonably be expected to result in liability
of the Company in an aggregate amount exceeding $250,000, a statement of a
Financial Officer of the Company setting forth details as to such ERISA Event
and the action, if any, that the Company propose to take with respect thereto.
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SECTION 5.7 Maintaining Records; Access to Properties and Inspections.
The Company will keep proper books of record and account in which full, true and
correct entries in conformity with GAAP and all requirements of law are made of
all dealings and transactions in relation to its business and activities. The
Company will permit any representatives designated by the Holders to visit and
inspect the financial records and the properties of the Company at reasonable
times during normal business hours and as often as reasonably requested and to
make extracts from and copies of such financial records, and permit any
representatives designated by the Holders to discuss the affairs, finances and
condition of the Company with the officers thereof and independent accountants
therefor.
SECTION 5.8 Compliance with Laws. The Company will comply with all
federal, state, local and foreign laws and regulations applicable to it,
including those relating to ERISA and labor matters to the extent that non-
compliance could result in a Material Adverse Effect. Without limiting the
generality of the foregoing, the Company will comply, and cause all lessees and
other persons occupying its Properties to comply, in all material respects with
all Environmental Laws and Environmental Permits applicable to its operations
and Properties; obtain and renew all material Environmental Permits necessary
for its operations and Properties; and conduct any Remedial Action in accordance
with Environmental Laws; provided, however, that the Company shall not be
required to undertake any Remedial Action to the extent that its obligation to
do so is being contested in good faith and by proper proceedings and appropriate
reserves are being maintained with respect to such circumstances.
SECTION 5.9 Preparation of Environmental Reports. If a Default caused by
reason of a breach of Section 4.22 or Section 5.8 shall have occurred and be
------------ -----------
continuing, at the request of the Holders, the Company will provide to the
Holders, within 45 days after such request, at the expense of the Company, an
environmental site assessment report for the Properties that are the subject of
such default prepared by an environmental consulting firm acceptable to the
Holders and indicating the presence or absence of Hazardous Materials and the
estimated cost of any compliance or Remedial Action in connection with such
Properties.
SECTION 5.10 Year 2000 Issues. The Company shall take all reasonable
steps in an effort to insure that the Company's computer based systems are able
to operate and effectively process data including dates on and after January 1,
2000. From time to time, at the request of the Holders, the Company shall
provide to the Holders such updated information as is requested regarding the
status of the Company's efforts to become Year 2000 Compliant. For the purposes
of this paragraph, "Year 2000 Compliant" means that all software, embedded
microchips and other processing capabilities used by, and material to the
business operations or financial condition of, the Company and its Subsidiaries
are able to interpret, store, transmit, receive and manipulate data on and
involving all calendar dates correctly and without causing any abnormal ending
scenarios in relation to dates in and after the Year 2000.
SECTION 5.11 Further Assurances. The Company will execute any and all
further documents, agreements and instruments, and take all further action that
may be required under applicable law, or that the Holders may reasonably
request, in order to effectuate the transactions contemplated by the Investment
Documents. The Company shall deliver or cause to be delivered
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to the Holders all such instruments and documents (including legal opinions and
lien searches) as the Holders may reasonably request to evidence compliance with
this Section.
SECTION 5.12 Maintenance of Office or Agency. The Company shall maintain
an office or agency (i) where the Debentures may be presented for payment, or
for registration and transfer and for exchange as provided in this Agreement;
and (ii) where notices and demands to or upon the Company in respect of the
Debentures may be served. The location of such office or agency initially shall
be Opinion Research Corporation, 23 Orchard Road, Skillman, New Jersey 08558.
The Company shall give the Holders written notice of any change of location
thereof.
SECTION 5.13 Financial Ratios and Covenants. Beginning with the calendar
quarter ended September 30, 1999, the Company shall, with respect to such
calendar quarter and each calendar quarter thereafter, have complied or comply
with and maintain each of the following financial ratios and financial
covenants, measured in accordance with GAAP, based upon results for the
immediately preceding calendar quarter, and using the information set forth in
the financial statements provided by the Company in accordance with Section 5.4
-----------
above:
(a) Indebtedness to Adjusted EBITDA Ratio. Prior to the Maturity
Date, the Company shall maintain the following maximum ratio of Indebtedness as
of the last day of such calendar quarter to Adjusted EBITDA for the 12 month
period ending on such day, commencing with the calendar quarter ending September
30, 1999:
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------
September 30, 1999 - December 31, 2000 - December 31, 2001 - December 31, 2002 and
September 30, 2000 September 30, 2001 September 30, 2002 thereafter
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
4.50:1 4.25:1 4.00:1 3.75:1
- --------------------------------------------------------------------------------------------------
</TABLE>
In the calculation of Indebtedness for the Indebtedness to Adjusted EBITDA
ratio, the Senior Revolver Debt portion of the Company's Indebtedness shall be
deemed to be the average daily principal balance of the Senior Revolver Debt for
the final one month period of the applicable 12 month period.
(b) EBITDA to Principal and Interest Ratio. Prior to the Maturity
Date, the Company shall maintain the following minimum ratios of EBITDA for the
12 month period ending on the last day of such calendar quarter to Principal and
Interest for the 12 month period ending on the last day of such calendar quarter
commencing with the calendar quarter ending September 30, 1999:
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------
1999 2000 2001 and thereafter
- ----------------------------------------------------------------------------
<S> <C> <C>
1.30:1 1.50:1 1.60:1
- ----------------------------------------------------------------------------
</TABLE>
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<PAGE>
As used in this financial covenant, "Principal and Interest" means all scheduled
payments during the applicable period of principal and cash interest obligations
on the Company's Indebtedness.
SECTION 5.14 Right of First Refusal.
(a) For purposes of this Section 5.14, the term "Covered Financings"
------------
means the issuance or sale of any equity interest in the Company, or any
security or instrument convertible into or exchangeable for such equity interest
in the Company, or any options (exclusive of options listed in Schedule 4.9),
------------
warrants or other rights to acquire any equity interest in the Company, except
(i) any issuance or sale of any of the foregoing if the primary purpose thereof
is other than to raise additional capital for the Company, (ii) any offering and
issuance or sale by Company of securities of the Company that are or will be
registered under and in accordance with the requirements of the Securities Act
of 1933, as amended (the "Securities Act") and (iii) options issued to employees
of the Company under Plans approved by the Board of Directors of the Company.
(b) Commencing upon the date hereof and continuing until that such
time as the Debentures has been paid in full and the Obligations have been fully
discharged, Allied shall have the rights described in this Section 5.14 with
------------
respect to any Covered Financings proposed to be undertaken by the Company. If
the Company desires to undertake any Covered Financing, then, prior to doing so,
the Company shall be obligated to first comply with the following requirements:
(i) If the Company receives a bona fide offer (any such, a
"Third Party Offer") from a third party or third parties (all such parties are
collectively referred to as the "Third Party Offeror") to provide a Covered
Financing, then the Company shall promptly furnish to Allied a true and complete
copy of such Third Party Offer (the "Financing Notice"), including the name of
the Third Party Offeror;
(ii) For a period of 15 days following its receipt of the
Financing Notice, Allied shall have the exclusive option to receive seven
percent (7%) of the Covered Financing at the price and upon the terms set forth
in the Third Party Offer and such additional terms and conditions as may be
required, customary, and consistent with the terms and conditions contained in
the Third Party Offer. If Allied elects to participate in the Covered Financing,
it shall notify the Company of such election no later than 15 days following
Allied's receipt of the Financing Notice;
(iii) If Allied does not elect to participate in the Covered
Financing, the Company shall be entitled to proceed to obtain the Covered
Financing from the Third Party Offeror only if each of the following
requirements is satisfied: (i) the Covered Financing is being made upon the
terms and conditions contained in the Third Party Offer and such additional
terms and conditions as may be required, customary and consistent with the terms
and conditions contained in the Third Party Offer and (ii) the Covered Financing
will be fully funded prior to the expiration of 120 calendar days from the date
of the Third Party Offer.
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<PAGE>
(iv) If, for any reason whatsoever, the Company fails to obtain the
Covered Financing from the Third-Party Offeror within the time limit specified
in clause (iii) of this Section 5.14 and in conformity with each of the other
------------
requirements specified in clause (iii) of this Section 5.14, then the Company
------------
shall promptly notify Allied to that effect in writing, and the Company shall
comply anew with the requirements of this Article V prior to obtaining any
---------
Covered Financing.
SECTION 5.15 Duration of Certain Covenants. Upon repayment of the
Debentures in full and for so long as any of the Company's securities remain
listed on a national securities exchange or automated trading system, the
Company shall not be required to comply with the covenants set forth in this
Article V. If after repayment of the Debentures, none of the Company's classes
of securities are any longer listed for trading as described above, the
following covenants shall again be in full force and effect: Section 5.1,
-----------
Section 5.4, Section 5.5, Section 5.7, and Section 5.11.
- ----------- ----------- ----------- ------------
SECTION 5.16 Schedules. Each of the Schedules attached to this Agreement
pertain only to the Company except as the context may require otherwise. The
Company agrees to provide revised Schedules, as applicable, to incorporate
pertinent information for each of the Subsidiaries within thirty (30) days after
the date hereof.
ARTICLE VI
NEGATIVE COVENANTS
Until the principal of and interest on the Debentures have been paid in
full, unless the Holders of a majority in interest of the outstanding principal
amount of the Debentures shall otherwise consent in writing, the Company
covenants and agrees not to do any of the following without the prior written
consent of such Holders:
SECTION 6.1 Indebtedness. The Company shall not and shall not permit any
of its Subsidiaries directly or indirectly to incur, create, assume or permit to
exist any Indebtedness other than (a) the Senior Debt or debt to replace the
Senior Debt on terms materially the same as or more favorable than the Senior
Debt; provided that Senior Debt, or replacement senior debt, may increase as
long as the financial covenants set forth in Exhibit A remain satisfied upon
---------
inclusion of the Senior Debt increase; (b) Indebtedness existing on the date
hereof and set forth in Schedule 4.7 or as disclosed in the Financials; (c)
------------
Indebtedness created hereunder and under the other Investment Documents; (d) the
obligation to make Earn Out Payments; (e) intercompany Indebtedness from the
Company to its Subsidiaries or from a Subsidiary to other Subsidiaries provided
the aggregate amount of all loans to foreign Subsidiaries shall not exceed
$6,500,000 at any time outstanding; (f) Indebtedness not to exceed $1,250,000 in
the aggregate at any time outstanding secured by purchase money Liens or
incurred with respect to capital leases; and (g) unsecured Indebtedness not to
exceed $1,250,000 in the aggregate at any time outstanding.
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<PAGE>
SECTION 6.2 Liens. The Company shall not create, incur, assume or permit
to exist any Lien on any property or assets (including stock or other securities
of any Person, including any Subsidiary) now owned or hereafter acquired by it
or on any income or revenues or rights in respect of any thereof except:
(a) Liens securing the Senior Debt or any replacement or refinancing
thereof permitted hereunder;
(b) Liens for taxes, assessments or other governmental charges not yet
due and payable;
(c) statutory Liens of landlords, carriers, warehousemen, mechanics,
materialmen, repairmen and other similar liens imposed by law, which are
incurred in the ordinary course of business for sums not more than thirty (30)
days delinquent or which are being diligently contested in good faith in a
manner which stays enforcement of such Liens, provided that appropriate
provisions shall have been established therefor in accordance with GAAP and the
aggregate amount of liabilities secured by such Liens does not exceed $250,000
at any time;
(d) Liens (other than any Lien imposed by ERISA or any rule or
regulation promulgated thereunder) incurred or deposits made in the ordinary
course of business in connection with workers' compensation, unemployment
insurance and other types of social security, or to secure the performance of
tenders, statutory obligations, surety, stay, customs and appeal bonds, bids,
leases, government contracts, trade contracts, performance and return of money
bonds and other similar obligations (exclusive of obligations for the payment of
borrowed money);
(e) pledges and deposits, in an aggregate amount not to exceed
$200,000, made in the ordinary course of business in compliance with workers'
compensation unemployment insurance and other social security laws or
regulations;
(f) Liens for purchase money obligations; provided, that (i) the
purchase of the asset subject to any such Lien is permitted under Section 6.15,
------------
(ii) the Indebtedness secured by any such Lien is permitted under Section 6.1;
-----------
and (iii) any such Lien encumbers only the asset so purchased and the proceeds
resulting from the sale thereof;
(g) zoning restrictions, easements, rights-of-way, restrictions on use
of real property and other similar encumbrances incurred in the ordinary course
of business which, in the aggregate, are not substantial in amount and do not
materially detract from the value of the property subject thereto or interfere
with the ordinary conduct of the business of the Company or any of its
Subsidiaries;
(h) any attachment or judgment Lien not constituting an Event of
Default under Section 7.1
(i) any interest or title of a lessor or sublessor under any lease
prohibited by this Agreement; and
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<PAGE>
(j) Liens existing on the date hereof and renewals and extensions
thereof, which Liens are set forth on Schedule 6.2 hereto.
------------
SECTION 6.3 Investments, Notes, and Advances. The Company shall not make
any Investments except:
(a) Investments by the Company and its Subsidiaries existing on the
date hereof; provided that there shall be no increase in such Investment after
the Closing date;
(b) Permitted Investments so long as such Permitted Investments are
not subject to setoff rights;
(c) intercompany loans permitted under Section 6.1;
-----------
(d) loans and advances to employees in the ordinary course of business
not to exceed $150,000 in the aggregate at any time outstanding and existing
loans (including extensions thereof) to officers not to exceed $260,000 in the
aggregate at any time outstanding;
(e) acquisitions permitted hereunder; and
(f) capital contributions made to Subsidiaries as long as the
aggregate amount of capital contributions made after the Closing Date by the
Company and its domestic Subsidiaries to foreign Subsidiaries does not exceed
$1,000,000.
SECTION 6.4 Mergers, Consolidations, Sales of Assets and Acquisitions, Act
of Dissolution.
(a) The Company shall not merge into or consolidate with any other
Person, or permit any other Person to merge into or consolidate with it, or
sell, transfer, lease or otherwise dispose of (in one transaction or in a series
of transactions) all or any substantial part of its assets (whether now owned or
hereafter acquired) or any capital stock of any Subsidiary, or purchase, lease
or otherwise acquire (in one transaction or a series of transactions) all or any
substantial part of the assets of any other Person, in each case with the prior
consent of holders of a majority of the outstanding principal amount of the
Debentures, which consent shall not be unreasonably withheld, except that (i)
the Company and any Subsidiary may purchase and sell assets in the ordinary
course of business, (ii) if at the time thereof and immediately after giving
effect thereto no Event of Default or Default shall have occurred and be
continuing (A) any Subsidiary may merge into the Company in a transaction in
which the Company is the surviving corporation and (B) any Subsidiary may merge
into or consolidate with any other Subsidiary in a transaction in which the
surviving entity is a Subsidiary and no Person other than the Company or a
Subsidiary receives any consideration; (iii) the Company may make a single
acquisition of another entity at a total consideration of $5,000,000 or more in
any rolling twelve (12) month period or two or more acquisitions of other
entities at an aggregate consideration of $7,500,000 or more in any rolling
twelve (12) month period; and (iv) the Company may transfer assets to its
Subsidiaries so long as such Subsidiary has joined in the Guaranty as a
Guarantor. In addition, the Company may not transfer or in any other manner
convey or dispose (excluding Inventory
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<PAGE>
sold and Equipment disposed of in the ordinary course of business) of an
equitable, beneficial or legal interest in (A) assets necessary to operate
Company's Business, or (B) other material assets unless the Company applies the
proceeds to replace or upgrade the transferred assets, to make related capital
expenditures, or to repay Senior Debt or the Debentures.
(b) The Company shall not suffer an Act of Dissolution (or suffer any
Act of Dissolution).
SECTION 6.5 Dividends and Distributions; Restrictions on Ability of the
Company to Pay Dividends.
(a) The Company shall not declare or pay, directly or indirectly, any
dividend or make any other distribution, whether in cash, property, securities
or a combination thereof (other than a dividend or distribution of any shares of
common stock of the Company), with respect to any shares of its capital stock or
directly or indirectly redeem, purchase, retire or otherwise acquire for value
(or permit any Subsidiary to purchase or acquire) any shares of any class of its
capital stock or set aside any amount for any such purpose; provided, however,
that the Company shall cause each of its Subsidiaries to distribute, or cause to
be distributed, not less frequently than quarterly, to the Company all cash
receipts, including operating cash flow, sales proceeds and investment income,
after payment of all expenses, other costs permitted to be paid herein and after
the funding of reasonable reserves and setting aside funds reasonably
anticipated to be needed for acquisitions reasonably expected to be consummated
that are otherwise permitted hereunder.
(b) The Company shall not permit its Subsidiaries 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 such Subsidiary to
(i) pay any dividends or make any other distributions on its capital stock or
any other interest or (ii) make or repay any loans or advances to the Company or
the parent of such Subsidiary.
(c) Neither the Company nor any of its Subsidiaries shall make any
Earn Out Payment at any time during the continuation of a payment Default.
(d) The Company may redeem the Stock Options (as defined in Section
4(b)(ii) of the ProTel Purchase Agreement) in accordance with the terms of the
ProTel Purchase Agreement as long as all of the following conditions are
satisfied:
(i) no Default or Event of Default exists at the time of any
such payment or would occur as a result thereof;
(ii) the maximum aggregate amount of all redemptions shall not
exceed $2,000,000; and
(iii) such redemption is permitted under the Senior Credit
Agreement.
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<PAGE>
SECTION 6.6 Transactions with Affiliates. The Company shall not sell or
transfer any property or assets to, or purchase or acquire any property or
assets from, or otherwise engage in any other transactions with, any of its
Affiliates, except that the Company may engage in any of the foregoing
transactions with any of its Subsidiaries and the Company or any Subsidiary may
engage in any of the foregoing transactions in the ordinary course of business
at prices and on terms and conditions not less favorable to the Company or such
Subsidiary than could be obtained on an arm's-length basis from unrelated third
parties.
SECTION 6.7 Business of Company, Change of Location, and Subsidiaries. The
Company shall not engage at any time in any business or business activity other
than the business currently conducted by it and business activities reasonably
incidental thereto. The Company shall not acquire or create any new domestic
Subsidiary unless such subsequently acquired or organized Subsidiary executes a
joinder to the Guaranty, in form acceptable to the Holders.
SECTION 6.8 Transfer Affecting the Company's Business. The Company shall
not permit a Transfer Affecting the Company's Business.
SECTION 6.9 Intellectual Property. The Company shall not do any of the
following to the extent that any such action could result in a Material Adverse
Effect:
(a) Except in the ordinary course of its business, the Company will
not Transfer or grant an exclusive or non-exclusive license relating to, or
otherwise dispose of any of the Intellectual Property, including, without
limitation, the Intellectual Property described on Schedule 4.30 attached
-------------
hereto, without the prior written consent of the Holders.
(b) The Company will not do any act, nor omit to do any act, whereby
any such patents or trademarks, once granted, may become abandoned or
unenforceable, and the Company shall notify the Holders as soon as reasonably
possible if it knows or has reason to know of any reason why any application may
become abandoned, invalidated or the subject of any suit.
(c) The Company will render any assistance reasonably necessary to the
Holders without cost in any proceeding before the United States Patent and
Trademark Office or any similar office or agency in the United States or any
other country to maintain each application for any patents, copyrights,
trademarks or other Intellectual Property, including, without limitation, the
filing of all renewals and paying all annuities.
(d) The Company shall not infringe on or interfere with any
Intellectual Property of any other Person in any material respect.
SECTION 6.10 Employee Compensation. All executive compensation shall be
determined by the compensation committee of the Board of Directors of the
Company, which committee shall consist of a majority of outside directors. If
the Company is in default of its payment obligations hereunder or under the
Debenture, then the Company shall not pay any
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<PAGE>
employee, nor loan nor advance money to any employee, an aggregate annual amount
in excess of $350,000.00 (exclusive of sales commissions) without the written
approval of Allied.
SECTION 6.11 Prepayments. Except for the Senior Debt or the Debentures,
the Company shall not prepay any Indebtedness for borrowed money nor make any
Earn Out Payment in advance of the due date.
SECTION 6.12 Stay, Extension and Usury Laws. The Company covenants and
agrees (to the extent that it may lawfully do so) that it will not at any time
insist upon, plead, or in any manner whatsoever claim or take the benefit or
advantage of, and will use its best efforts to resist any attempts to claim or
take the benefit of, any stay, extension or usury law wherever enacted, now or
at any time hereafter in force, which may affect the covenants or the
performance of their obligations under this Agreement or the Debenture. The
Company (to the extent it may lawfully do so) hereby expressly waives all
benefit or advantage of any such law, and covenants that it will not, by resort
to any such law, hinder, delay or impede the execution of any power herein
granted to the Holders, but will suffer and permit the execution of every such
power as though no such law has been enacted.
SECTION 6.13 Investment Company Act. The Company shall not become an
investment company subject to registration under the Investment Company Act of
1940, as amended.
SECTION 6.14 Inconsistent Agreements. Except in connection with the Senior
Debt, the Company shall not (i) enter into any agreement or arrangement that
would restrict in any material respect the ability of the Company to fulfill its
Obligations under the Investment Documents, or (ii) supplement, amend or
otherwise modify the terms of its articles of incorporation or by-laws if the
effect thereof would be materially adverse to the Holders.
SECTION 6.15 Capital Expenditures. The Company shall not incur more than
Five Million and no/100 Dollars ($5,000,000.00) in capital expenditures during
fiscal year 1999. During each fiscal year thereafter, the Company shall not
incur for capital expenditures more than One Million and no/100 Dollars
($1,000,000.00) over the board-approved budget for capital expenditures for that
year. Notwithstanding the foregoing, in the event the Company does not expend
the entire amount set forth herein in each such year, the Company and its
Subsidiaries may carry forward to the immediately succeeding fiscal year 50% of
the unutilized portion of such amount.
ARTICLE VII
EVENTS OF DEFAULT
AND REMEDIES
SECTION 7.1 Events of Default. If any of the following events ("Events of
Default") occur and are continuing:
(a) any representation or warranty made or deemed made in or in
connection with any Investment Document hereunder, or any representation,
warranty, statement or
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<PAGE>
information contained in any report, certificate, financial statement or other
instrument furnished in connection with or pursuant to any Investment Document,
proves to have been materially false or misleading when so made, deemed made or
furnished;
(b) default is made in the payment of any principal of the Debentures
when and as the same shall become due and payable, whether at the due date
thereof or at a date fixed for prepayment thereof or by acceleration thereof or
otherwise;
(c) default is made in the payment of any interest on the Debentures
and such default continues for five days, or default is made in the payment of
any other amount (other than an amount referred to in (b) above) due under any
Investment Document, when and as the same becomes due and payable, and such
default continues for five days after notice;
(d) default is made in the due observance or performance by the
Company of any covenant, condition or agreement contained in Section 5.13 that
------------
is not cured within thirty (30) days after notice from the Holders to the
Company;
(e) default is made in the due observance or performance by the
Company of any covenant, condition or agreement contained in any Investment
Document (other than those specified in (b), (c) or (d) above) and such default
continues unremedied for a period of 30 days after notice thereof from the
Holders to the Company,
(f) with respect to Indebtedness other than Senior Debt, the Company
(i) fails to pay when due or within any applicable grace period any principal or
interest, regardless of amount due, in respect of any individual Indebtedness in
a principal amount in excess of $500,000, or aggregate Indebtedness in excess of
$1,000,000, when and as the same becomes due and payable, or (ii) fails to
observe or perform any other term, covenant, condition or agreement contained in
any agreement or instrument evidencing or governing any Indebtedness if the
effect of any failure referred to in this clause (ii) is to cause, or to permit
the holder or holders of such Indebtedness or a trustee on its or their behalf
(with or without the giving of notice, the lapse of time or both) to cause,
Indebtedness having an individual principal amount in excess of $500,000 or
having an aggregate principal amount in excess of $1,000,000 to become due prior
to its stated maturity; provided that so long as the holder or holders of such
Indebtedness have not commenced exercising any remedies against the Company
following acceleration, the Company shall have a period of 30 days to cure any
failure described in this paragraph (f);
(g) with respect to the Senior Debt, the Senior Lender shall have
accelerated the Senior Debt;
(h) an Act of Bankruptcy or Act of Dissolution shall have occurred
with respect to the Company;
(i) any money judgment, writ or warrant of attachment, or similar
process involving (i) an amount in any individual case in excess of $1,000,000
or (ii) an amount in the aggregate at any time in excess of $3,000,000
(excluding any portion thereof that an insurance
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<PAGE>
company of recognized standing and creditworthiness has agreed in a writing
reasonably satisfactory to the Holders to pay) is rendered against the Company,
and the same shall remain undischarged for a period of 30 consecutive days
during which execution is not effectively stayed, or any action is legally taken
by a judgment creditor to levy upon assets or properties of the Company to
enforce any such judgment; or
(j) an ERISA Event occurs that in the opinion of the Holders, when
taken together with all other such ERISA Events, could reasonably be expected to
result in liability of the Company and its ERISA Affiliates in an aggregate
amount exceeding $250,000.
then, and in every such event, (other than an event with respect to the Company
described in paragraph (h) above) and at any time thereafter during the
continuance of such event but subject to the terms of the Subordination
Agreement, the Holders may by notice to the Company, take either or both of the
following actions, at the same or different times: declare the principal amount
then outstanding under the Debentures to be forthwith due and payable in whole
or in part, whereupon the principal amount so declared to be due and payable,
together with accrued interest thereon and all other liabilities of the Company
accrued hereunder and under any other Investment Document, shall become
forthwith due and payable, without presentment demand, protest or any other
notice of any kind, all of which are hereby expressly waived by the Company,
anything contained herein or in any other Investment Document to the contrary
notwithstanding; and in any event with respect to the Company described in
paragraph (h) above, the principal of the Debentures then outstanding, together
with accrued interest thereon and all other liabilities of the Company accrued
hereunder and under any other Investment Document, shall automatically become
due and payable, without presentment demand, protest or any other notice of any
kind, all of which are hereby expressly waived by the Company, anything
contained herein or in any other Investment Document to the contrary
notwithstanding.
SECTION 7.2 Waivers. The Company waives presentment, demand, notice of
dishonor, and protest, and all demands and notices of any action taken by the
Holders under this Agreement, except as otherwise provided herein.
SECTION 7.3 Enforcement Actions. Subject to the terms of the Subordination
Agreement, upon an Event of Default, the Holders may, at their option, collect
all or any portion of the Obligations or enforce against the Company any of
their respective rights and remedies including, but not limited to: (i)
commencing or pursuing legal proceedings to collect any amounts owed with
respect to the Obligations; or (ii) executing upon, or otherwise enforcing, any
judgment obtained with respect to amounts owed with respect to the Obligations.
SECTION 7.4 Costs. The Company shall pay all expenses of any nature,
whether incurred in or out of court, and whether incurred before or after the
Debentures shall become due at their maturity date or otherwise (including, but
not limited to, reasonable attorneys' fees and costs) which the Holders may
reasonably incur in connection with the collection of any of the Obligations.
The Holders are authorized to pay at any time and from time to time any or all
of such expenses, to add the amount of such payment to the amount of principal
outstanding under the Debenture, and to charge interest thereon at the rate
specified in the Debenture.
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SECTION 7.5 Remedies Non-Exclusive. None of the rights, remedies,
privileges or powers of the Holders expressly provided for herein are exclusive,
but each of them is cumulative with, and in addition to, every other right,
remedy, privilege and power now or hereafter existing in favor of each of the
Holders, whether pursuant to the other Investment Documents, at law or in
equity, by statute or otherwise.
ARTICLE VIII
MISCELLANEOUS
SECTION 8.1 Notices. Notices and other communications provided for herein
shall be in writing and shall be delivered by hand or overnight courier service,
mailed by certified or registered mail or sent by telecopy, as follows:
(a) if to the Company, to Opinion Research Corporation, 23 Orchard
Road, Skillman, New Jersey 08558 (Telecopy No. (908) 281-5103); with a copy to
Wolf, Block, Schorr and Solis-Cohen LLP, 111 South Fifteenth Street, 12th floor,
Philadelphia, Pennsylvania 19102-2678, ATTN: David Gitlin, Esq. (Telecopy No.
(215) 977-2740) [until July 4, 1999] and to Wolf, Block, Schorr and Solis-Cohen
LLP, 1650 Arch Street, Philadelphia, Pennsylvania 19103, ATTN: David Gitlin,
Esq. (Telecopy No. (215) 977-2740) [after July 4, 1999]; and
(b) if to Allied, to Allied Capital Corporation, at its offices at
1919 Pennsylvania Avenue NW, Washington, DC 20006-3434, Attention of Thomas H.
Westbrook (Telecopy No. 202-659-2053), with a copy to Piper & Marbury L.L.P.,
1200 Nineteenth Street, N.W., Washington, D.C. 20036 Attention of Anthony
Rickert (Telecopy No. 202-223-2085).
All notices and other communications given to any party hereto in accordance
with the provisions of this Agreement shall be deemed to have been given on the
date of receipt if delivered by hand or overnight courier service or sent by
telecopy or on the date five Business Days after dispatch by certified or
registered mail if mailed, in each case delivered, sent or mailed (properly
addressed) to such party as provided in this Section 8.1 or in accordance with
-----------
the latest unrevoked direction from such party given in accordance with this
Section 8.1.
- -----------
SECTION 8.2 Survival of Agreement. Except as expressly provided otherwise
in Articles V and VI, all covenants, agreements, representations and warranties
made by the Company herein and in the certificates or other instruments prepared
or delivered in connection with or pursuant to this Agreement or any other
Investment Document shall be considered to have been relied upon by Allied and
shall survive the making by Allied of the investment, regardless of any
investigation made by Allied or on its behalf and shall continue in full force
and effect as long as the principal of or any accrued interest on the Debentures
is outstanding and unpaid. The provisions of Section 8.6 shall remain operative
-----------
and in full force and effect regardless of the expiration of the term of this
Agreement, the consummation of the transactions contemplated hereby, the
repayment of the Debenture, the invalidity or unenforceability of any term or
provision of this Agreement or any other Investment Document, or any
investigation made by or on behalf of Allied.
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<PAGE>
SECTION 8.3 Binding Effect. This Agreement shall become effective when it
shall have been executed by the Company and Allied, and when Allied shall have
received counterparts hereof which, when taken together, bear the signatures of
each of the other parties hereto, and thereafter shall be binding upon and inure
to the benefit of the parties hereto and their respective permitted successors
and assigns.
SECTION 8.4 Successors and Assigns.
(a) Whenever in this Agreement any of the parties hereto is referred
to, such reference shall be deemed to include the permitted successors and
assigns of such party; and all covenants, promises and agreements by or on
behalf of the Company or Allied that are contained in this Agreement shall bind
and inure to the benefit of their respective successors and assigns.
(b) The Company shall not assign or delegate any of its rights or
duties hereunder without the prior written consent of the Holders, and any
attempted assignment or delegation without such consent shall be null and void.
SECTION 8.5 Expenses; Indemnity.
(a) The Company will pay a loan origination fee of $150,000 and all
out-of-pocket expenses incurred by Allied in connection with the preparation of
this Agreement and the other Investment Documents, or in connection with any
amendments, modifications or waivers of the provisions hereof or thereof
(whether or not the transactions hereby or thereby contemplated shall be
consummated) or incurred by Allied in connection with the enforcement or
protection of its rights in connection with this Agreement and the other
Investment Documents, including any suit, action, claim or other activity of
Allied to collect the Obligations or any portion thereof, or in connection with
the Transaction hereunder, including the reasonable fees, charges and
disbursements of Piper & Marbury L.L.P., counsel for Allied, and, in connection
with any such enforcement or protection, the reasonable fees, charges and
disbursements of any other counsel for Allied.
(b) The Company will indemnify each Holder, and its directors,
officers, employees and agents (each such Person being called an "Indemnitee")
against, and to hold each Indemnitee harmless from, any and all losses, claims,
damages, liabilities and related expenses, including reasonable counsel fees,
charges and disbursements, incurred by or asserted against any Indemnitee
arising out of in any way connected with, or as a result of (i) the execution or
delivery of this Agreement or any other Investment Document or any agreement or
instrument contemplated thereby, the performance by the parties thereto of their
respective obligations thereunder or the consummation of the Transaction and the
other transactions contemplated thereby, (ii) the use of the proceeds of the
investment, (iii) any claim, litigation investigation or proceeding relating to
any of the foregoing, whether or not any Indemnitee is a party thereto, or (iv)
any actual or alleged presence or Release of Hazardous Materials on any property
owned or operated by the Company, or any Environmental Claim related in any way
to the Company; provided that such indemnity shall not as to any Indemnitee, be
available to the extent that such losses, claims, damages, liabilities or
related expenses are determined by a court of competent
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<PAGE>
jurisdiction by final and nonappealable judgment to have resulted from the gross
negligence or willful misconduct of such Indemnitee.
(c) The provisions of this Section 8.5 shall remain operative and in
-----------
full force and effect regardless of the expiration of the term of this Agreement
the consummation of the transactions contemplated hereby, the repayment of the
Debenture, the invalidity or unenforceability of any term or provision of this
Agreement or any other Investment Document, or any investigation made by or on
behalf of Allied. All amounts due under this Section 8.5 shall be payable on
-----------
written demand therefor.
SECTION 8.6 Waiver of Consequential and Punitive Damages. The Company and
Allied hereby waive to the fullest extent permitted by law all claims to
consequential and punitive damages in any lawsuit or other legal action brought
by any of them against any other of them in respect of any claim among or
between any of them arising under this Agreement, the other Investment
Documents, or any other agreement or agreements between or among any of them at
any time, including any such agreements, whether written or oral, made or
alleged to have been made at any time prior to the Closing Date, and all
agreements made hereafter or otherwise, and any and all claims arising under
common law or under any statute of any state or the United States of America,
including any thereof in contract, tort, strict liability or otherwise, whether
any such claims be now existing or hereafter arising, now known or unknown. In
making this waiver, Allied and the Company acknowledge and agree that there
shall be no claims for consequential or punitive damages made by Allied against
the Company and there shall be no claims for consequential or punitive damages
made against Allied by the Company. Allied and the Company acknowledge and agree
that this waiver of claims for consequential damages and punitive damages is a
material element of the consideration for this Agreement.
SECTION 8.7 Applicable Law. THIS AGREEMENT AND THE OTHER INVESTMENT
DOCUMENTS (OTHER THAN AS EXPRESSLY SET FORTH IN OTHER INVESTMENT DOCUMENTS)
SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF
MARYLAND (EXCLUDING MARYLAND CONFLICTS OF LAWS PROVISIONS).
SECTION 8.8 Waivers; Amendment.
(a) No failure or delay of Allied in exercising any power or right
hereunder or under any other Investment Document shall operate as a waiver
thereof nor shall any single or partial exercise of any such right or power, or
any abandonment or discontinuance of steps to enforce such a right or power,
preclude any other or further exercise thereof or the exercise of any other
right or power. The rights and remedies of the Holders hereunder and under the
other Investment Documents are cumulative and are not exclusive of any rights or
remedies that it would otherwise have. No waiver of any provision of this
Agreement or any other Investment Document or consent to any departure by the
Company therefrom shall in any event be effective unless the same shall be
permitted by paragraph (b) below, and then such waiver or consent shall be
effective only in the specific instance and for the purpose for which given. No
notice or
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<PAGE>
demand on the Company in any case shall entitle the Company to any other or
further notice or demand in similar or other circumstances.
(b) Neither this Agreement nor any provision hereof may be waived,
amended or modified except pursuant to an agreement or agreements in writing
entered into by the Company and the Holders of a majority in interest of the
Debentures.
SECTION 8.9 Interest Rate Limitation. Notwithstanding anything herein to
the contrary, if at any time the interest rate applicable to the investment,
together with all fees, charges, warrants and other amounts which are treated as
interest on the investment under applicable law (collectively the "Charges"),
shall exceed the maximum lawful rate (the "Maximum Rate") which may be
contracted for, charged, taken, received or reserved by the Holders holding the
investment in accordance with applicable law, the rate of interest payable in
respect of the investment hereunder, together with all Charges payable in
respect thereof shall be limited to the Maximum Rate.
SECTION 8.10 Entire Agreement. This Agreement and the other Investment
Documents constitute the entire contract between the parties relative to the
subject matter hereof. Any other previous agreement among the parties with
respect to the subject matter hereof is superseded by this Agreement and the
other Investment Documents. Nothing in this Agreement or in the other Investment
Documents, expressed or implied, is intended to confer upon any party other than
the parties hereto and thereto any rights, remedies, obligations or liabilities
under or by reason of this Agreement or the other Investment Documents.
SECTION 8.11 WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES, TO THE
FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY
JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER
OR IN CONNECTION WITH THIS AGREEMENT OR ANY OF THE OTHER INVESTMENT DOCUMENTS.
EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY
OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD
NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B)
ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER
INTO THIS AGREEMENT AND THE OTHER INVESTMENT DOCUMENTS, AS APPLICABLE, BY, AMONG
OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 8.11.
------------
SECTION 8.12 Severability. In the event any one or more of the provisions
contained in this Agreement or in any other Investment Document should be held
invalid, illegal or unenforceable in any the validity, legality and
enforceability of the remaining provisions contained herein and therein shall
not in any way be affected or impaired thereby (it being understood that the
invalidity of a particular provision in a particular jurisdiction shall not in
and of itself affect the validity of such provision in any other jurisdiction).
The parties shall endeavor in good faith negotiations to replace the invalid,
illegal or unenforceable provisions with valid
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<PAGE>
provisions the economic effect of which comes as close as possible to that of
the invalid, illegal or unenforceable provisions.
SECTION 8.13 Counterparts. This Agreement may be executed in counterparts
(and by different parties hereto on different counterparts), each of which shall
constitute an original but all of which when taken together shall constitute a
single contract and shall become effective as provided in Section 8.3. Delivery
-----------
of an executed signature page to this Agreement by facsimile transmission shall
be as effective as delivery of a manually signed counterpart of this Agreement.
SECTION 8.14 Heading. Article and Section headings used herein are for
convenience of reference only, are not part of this Agreement and are not to
affect the construction of or to be taken into consideration in interpreting,
this Agreement.
SECTION 8.15 Jurisdiction; Consent to Service of Process.
(a) The Company hereby irrevocably and unconditionally submits, for
itself and its property, to the nonexclusive jurisdiction of any Maryland State
court or Federal court of the United States of America sitting in the State of
Maryland, and any appellate court thereof, in any action or proceeding arising
out of or relating to this Agreement or the other Investment Documents, or for
recognition or enforcement of any judgment and each of the parties hereto hereby
irrevocably and unconditionally agrees that all claims in respect of any such
action or proceeding may be heard and determined in the State of Maryland or, to
the extent permitted by law, in such Federal court. Each of the parties hereto
agrees that a final judgment in any such action or proceeding shall be
conclusive and may be enforced in other jurisdictions by suit on the judgment or
in any other manner provided by law. Nothing in this Agreement shall affect any
right that the Holders may otherwise have to bring any action or proceeding
relating to this Agreement or the other Investment Documents against the Company
or its properties in the courts of any jurisdiction.
(b) The Company hereby irrevocably and unconditionally waives, to the
fullest extent it may legally and effectively do so, any objection which it may
now or hereafter have to the laying of venue of any suit action or proceeding
arising out of or relating to this Agreement or the other Investment Documents
in any Maryland State or Federal court. Each of the parties hereto hereby
irrevocably waives, to the fullest extent permitted by law, the defense of an
inconvenient forum to the maintenance of such action or proceeding in any such
court.
(c) Each party to this Agreement irrevocably consents to service of
process in the manner provided for notices in Section 8.1. Nothing in this
-----------
Agreement will affect the right of any party to this Agreement to serve process
in any other manner permitted by law.
SECTION 8.16 Relationship of the Parties; Advice of Counsel. This
Agreement provides for the making of an investment by Allied, in its capacity as
an investor, in the Company, in its capacity as a borrower, and for the payment
of interest and repayment of principal by the Company to Allied. The provisions
herein for compliance with financial covenants, if any, and delivery of
financial statements are intended solely for the benefit of the
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<PAGE>
Holders to protect their interests as lenders in assuring payments of interest
and repayment of principal, and nothing contained in this Agreement shall be
construed as permitting or obligating Allied to act as a financial or business
advisor or consultant to the Company, as permitting or obligating Allied to
control the Company or to conduct the Company's operations, as creating any
fiduciary obligation on the part of Allied to the Company, or as creating any
joint venture, agency or other relationship between the parties other than as
explicitly and specifically stated in this Agreement. Allied is not (and shall
not be construed as) partner, joint venturer, alter-ego, manager, controlling
person, operator or other business participant of any kind of the Company;
neither Allied nor the Company intend that Allied assumes such status, and,
accordingly, Allied shall not be deemed responsible for (or a participant in)
any acts or omissions of the Company or any of its partners. Each of Allied and
the Company represents and warrants to the other that it has had the advice of
experienced counsel of its own choosing in connection with the negotiation and
execution of this Agreement and with respect to all matters contained herein.
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective authorized officers under seal as of the day
and year first above written.
ATTEST: COMPANY:
OPINION RESEARCH CORPORATION
a Delaware corporation
/s/ Doug Cox By: /s/ John F. Short (SEAL)
- ---------------------------- ---------------------------
Name: John F. Short
Title: President
ALLIED:
ALLIED CAPITAL CORPORATION
a Maryland corporation
/s/ Kristine M. Lansing By: /s/ Thomas H. Westbrook (SEAL)
- ---------------------------- ---------------------------
Name: Thomas H. Westbrook
Title: Principal
ALLIED INVESTMENT CORPORATION
a Maryland corporation
/s/ Kristine M. Lansing
- ---------------------------- By: /s/ Thomas H. Westbrook (SEAL)
------------------------
Name: Thomas H. Westbrook
Title: Principal
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<PAGE>
EXHIBITS AND SCHEDULES
Exhibit A Financial Covenants Solely for Increase in Senior Debt
Schedule 4.7 Indebtedness
Schedule 4.9 Ownership and Control of Company
Schedule 4.10 Material Adverse Changes
Schedule 4.11 Leases
Schedule 4.12 Subsidiaries
Schedule 4.13 Directors, Officers and Affiliates
Schedule 4.14 Litigation
Schedule 4.15 Material Contracts
Schedule 4.16 Transactions with Affiliates
Schedule 4.21 ERISA
Schedule 4.22 Environmental Matters
Schedule 4.24 Employment Contracts
Schedule 4.30 Intellectual Property
Schedule 6.2 Liens
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<PAGE>
EXHIBIT A
FINANCIAL COVENANTS SOLELY FOR INCREASES IN SENIOR DEBT
(a) Indebtedness to Adjusted EBITDA Ratio. The Company shall maintain
the following maximum ratio of Indebtedness as of the last day of the most
recently completed calendar quarter to Adjusted EBITDA for the 12 month period
ending on such day:
<TABLE>
------------------------------------------------------------------------
1999 2000 2001 and thereafter
------------------------------------------------------------------------
<S> <C> <C>
4.50:1 4.00:1 3.75:1
------------------------------------------------------------------------
</TABLE>
In the calculation of Indebtedness for the Indebtedness to Adjusted EBITDA
ratio, the proposed increased Senior Debt portion of the Company's Indebtedness
shall be deemed to be the full increased maximum Senior Debt.
(b) Adjusted EBITDA to Principal and Interest Ratio. The Company shall
maintain the following minimum ratios of Adjusted EBITDA for the 12 month period
ending on the last day of the most recently completed calendar quarter to
Principal and Interest for the 12 month period ending on such date:
<TABLE>
------------------------------------------------------------------------
1999 2000 2001 and thereafter
------------------------------------------------------------------------
<S> <C> <C>
1.30:1 1.50:1 1.60:1
------------------------------------------------------------------------
</TABLE>
As used in this financial covenant, "Principal and Interest" means all scheduled
payments during the applicable period of principal and cash interest obligations
on the Company's Indebtedness, including the proposed increase in Senior Debt.
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<PAGE>
Exhibit 10.6
THIS INSTRUMENT AND THE RIGHTS AND OBLIGATIONS EVIDENCED HEREBY ARE SUBORDINATE
IN THE MANNER AND TO THE EXTENT SET FORTH IN THAT CERTAIN SUBORDINATION AND
INTERCREDITOR AGREEMENT (THE "SUBORDInaTION AGREEMENT") DATED AS OF MAY ____,
1999 AMONG THE HOLDERS OF SUBORDINATED DEBENTURES, OPINION RESEARCH CORPORATION
("COMPANY") AND HELLER FINANCIAL, INC. ("AGENT"), TO THE INDEBTEDNESS (INCLUDING
INTEREST) OWED BY THE COMPANY AND ITS AFFILIATES PURSUANT TO THAT CERTAIN CREDIT
AGREEMENT DATED AS OF MAY ___, 1999 AMONG THE COMPANY, AGENT AND THE LENDERS
FROM TIME TO TIME PARTY THERETO, AS SUCH CREDIT AGREEMENT HAS BEEN AND HEREAFTER
MAY BE AMENDED, SUPPLEMENTED OR OTHERWISE MODIFIED FROM TIME TO TIME; AND EACH
HOLDER OF THIS INSTRUMENT, BY ITS ACCEPTANCE HEREOF, SHALL BE BOUND BY THE
PROVISIONS OF THE SUBORDINATION AGREEMENT.
SUBSIDIARY GUARANTY
THIS SUBSIDIARY GUARANTY (the "Guaranty") is made as of the ___ day of May,
1999, by ORC, INC., a Delaware corporation, ORC TELESERVICE CORP., a Delaware
corporation, ORC PROTEL, INC., a Delaware corporation, QUANTUM RESEARCH
CORPORATION, a Maryland corporation, and MACRO INTERNATIONAL, INC., a Delaware
corporation (collectively, the "Guarantors") in favor OF ALLIED CAPITAL
CORPORATION and ALLIED INVESTMENT CORPORATION, each a Maryland corporation
having an address at 1919 Pennsylvania Avenue, N.W., Washington, D.C. 20006-3434
(collectively, "Allied").
Recitals
A. Allied has agreed to make an investment (the "Investment") in Opinion
Research Corporation, a Delaware corporation (the "Company") in the original
principal amount of FIFTEEN MILLION and 00/100 Dollars ($15,000,000.00),
pursuant to the terms of a certain Investment Agreement of even date herewith by
and among the Company and Allied (the "Investment Agreement"), certain
Subordinated Debentures of even date herewith (collectively, the "Debentures"),
and certain other agreements and instruments described in the Investment
Agreement.
B. The Company is the legal and beneficial owner, directly or indirectly,
of all of the issued and outstanding capital stock of the Guarantors.
C. Allied requires, as a condition of making the Investment, that the
Guarantors enter into this Guaranty.
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<PAGE>
D. The Guarantors desire to induce Allied to make the Investment, and the
Guarantors acknowledge that they will receive substantial direct and indirect
benefits by reason of the making of the Investment by Allied.
NOW, THEREFORE, in consideration of the foregoing Recitals, the making of
the Investment by Allied in the Company, and other good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged, the
Guarantors hereby jointly and severally agree with Allied and the successors and
assigns of Allied (collectively, the "Holder") as follows:
1. Guaranty. In consideration of the making of the Investment in the
Company and other good and valuable consideration, the Guarantors hereby jointly
and severally undertake and guarantee, the collection of all debts, obligations
and liabilities of the Company to the Holder arising pursuant to the Debentures,
the Investment Agreement and the other Investment Documents, whether now due or
hereafter falling due, falling due at maturity or upon acceleration (including,
without limitation, the payment of principal, interest and late charges under
the Debentures), together with all costs of collection, compromise or
enforcement, including, without limitation, reasonable attorneys' fees and
disbursements incurred with respect to any such debts, obligations or
liabilities or with respect to this or any other guaranty or any of them, or
with respect to a proceeding under the federal bankruptcy laws or any
moratorium, insolvency, receivership arrangement or reorganization law, or an
assignment for the benefit of creditors concerning the Company or the
Guarantors, together with interest on all such costs of collection, compromise
or enforcement from the date arising (all of the foregoing, collectively, the
"Guaranteed Obligations"). Each Guarantor agrees that this Guaranty is a present
and continuing guaranty of payment and not of collectability.
2. Irrevocable Guaranty. This Guaranty is irrevocable and shall continue
until terminated in accordance with Section 3.
3. Covenants. The Guarantors hereby jointly and severally covenant and
agree with the Holder as follows:
(a) That this Guaranty shall not be impaired by any modification,
supplement, extension or amendment of the Debentures, Investment Agreement, or
any of the other Investment Documents, nor by any modification, release or other
alteration of any of the Guaranteed Obligations, nor by any agreements or
arrangements whatsoever made with the Company, or anyone else;
(b) That the Guarantors shall have no right of subrogation,
reimbursement or indemnity whatsoever from the Company, unless and until all of
the Guaranteed Obligations have been fully paid and performed;
(c) That, if any payment or transfer to Holder that has been credited
against any of the Guaranteed Obligations under the Debentures or Investment
Agreement, is voided or rescinded or required to be returned by the Holder, this
Guaranty shall continue in effect and
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<PAGE>
shall be reinstated with respect to all such voided, rescinded or returned
payments, transfers or recoveries as though such payment, transfer or recovery
had not been made;
(d) That the Holder's books and records showing the account between
the Holder and the Company shall be admissible in any action or proceeding,
shall, absent demonstrable error, be binding upon each of the Guarantors for the
purpose of establishing the items therein set forth and shall constitute prima
facie proof thereof; provided, however, that the Holder will furnish, from time
to time, copies of such books and records to the Guarantors upon the Guarantors'
written request;
(e) That this Guaranty shall be construed as a continuing obligation
of each of the Guarantors without regard to the regularity, validity or
enforceability of any of the Guaranteed Obligations, and without regard to
whether any of the Guaranteed Obligations are limited, modified, voided,
released or discharged in any proceeding under the federal bankruptcy laws or in
any moratorium, insolvency, receivership, arrangement or reorganization
proceeding;
(f) That this Guaranty shall not be discharged and the Guarantors
shall not be released from liability until all Guaranteed Obligations have been
satisfied in full, and that if all or any portion of the Guaranteed Obligations
are satisfied and the Holder is required for any reason to pay to any Person all
or any part of the sums used to satisfy the Guaranteed Obligations, the
Guaranteed Obligations shall remain in effect and enforceable to the extent
thereof;
(g) That this Guaranty shall remain in full force and effect
notwithstanding any failure, omission or delay on the part of Company, any
Guarantor or the Holder to conform or comply with any term of any of the
Investment Documents or any failure of the Holder to give notice of any Default
or Event of Default;
(h) That this Guaranty shall remain in full force and effect
notwithstanding any action or inaction by the Holder under or in respect of any
of the Investment Documents, any failure, lack of diligence, omission or delay
on the part of the Holder to enforce, assert or exercise any right, power or
remedy conferred on it any of the Investment Documents, or any other action or
inaction on the part of the Holder; and
(i) That any and all present and future debts and obligations of the
Company to any of the Guarantors are subordinated to the full payment and
performance of the Guaranteed Obligations.
4. Representations and Warranties. Each Guarantor represents and warrants
to the Holder as follows:
(a) Organization and Qualification. Each Guarantor is a corporation
------------------------------
duly organized, validly existing and in good standing under the laws of the
State of its organization, has all requisite corporate power and authority to
own its property and to carry on its business as now conducted and as proposed
to be conducted, and is in good standing and authorized to do
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<PAGE>
business in each jurisdiction in which the failure so to qualify would have a
Material Adverse Effect.
(b) Power and Authority. Each Guarantor has the corporate power and
-------------------
authority to enter into, execute, deliver and carry out the terms of this
Guaranty and the other Investment Documents to which it is a party and to incur
the obligations provided for herein and therein, all of which have been duly
authorized by all proper and necessary action and are not prohibited by the
organizational instruments of such Guarantor.
(c) Binding Obligation. This Guaranty and the other Investment
------------------
Documents to which a Guarantor is a party, when executed and delivered, will
constitute the valid and legally binding obligations of such Guarantor,
enforceable against such Guarantor in accordance with their respective terms,
except as such enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or other similar laws affecting the
enforcement of creditors' rights generally and equitable principles.
(d) No Conflict. The execution, delivery and performance by such
-----------
Guarantor of this Guaranty and each of the other Investment Documents to which
it is a party and the consummation of the transactions contemplated thereby do
not and will not: (1) violate any provision of law applicable to such Guarantor,
the certificate of incorporation or bylaws of such Guarantor, or any order,
judgment or decree of any court or other agency of government binding on such
Guarantor; (2) conflict with, result in a breach of or constitute (with due
notice or lapse of time or both) a default under any contractual obligation of
such Guarantor; (3) result in or require the creation or imposition of any
material lien upon any of the properties or assets of such Guarantor; or (4)
require any approval or consent of any person under any contractual obligation
of such Guarantor, except for (a) such approvals or consents obtained on or
before the Closing Date and (b) such violations, conflicts, breaches, liens and
defaults which would not have, and such approvals and consents the absence of
which would not have, either individually or in the aggregate, a Material
Adverse Effect.
(e) Government Consents. The execution, delivery and performance by
-------------------
such Guarantor of this Guaranty and each of the other Investment Documents to
which it is a party, and the consummation of the transactions contemplated
thereby do not and will not require any registration with, consent or approval
of, or notice to, or other action to, with or by any federal, state or other
governmental authority or regulatory body except filings, authorizations,
consents and approvals, all of which have been made or obtained or the absence
of which would not have, either individually or in the aggregate, a Material
Adverse Effect.
(f) Litigation; Adverse Facts. Except as set forth in Schedule 4.14
-------------------------
to the Investment Agreement, there are no judgments outstanding against such
Guarantor or affecting any of its property nor is there any action, charge,
claim, demand, suit, proceeding, petition, governmental investigation or
arbitration now pending or, to the best knowledge of such Guarantor after due
inquiry, threatened against or affecting such Guarantor and/or any of its
property. Such Guarantor has not received any opinion or memorandum or legal
advice from legal counsel to the effect that it is exposed to any liability or
disadvantage which could
-4-
<PAGE>
reasonably be expected to result in any Material Adverse Effect. The actions,
charges, claims, demand, suits, proceedings, petitions, investigations and
arbitrations set forth on such subschedule will not, if adversely determined,
either individually or in the aggregate, result in any Material Adverse Effect
and no not relate to and will not affect the consummation of the transactions
contemplated by the Investment Documents to which such Guarantor is a party.
(g) Payment of Taxes. All material tax returns and reports required
----------------
to be filed by such Guarantor have been timely filed, and all taxes,
assessments, fees and other governmental charges upon such Guarantor and upon
its properties, assets, income and franchises which are shown on such returns as
due and payable have been paid when due and payable. None of the United States
income tax returns of such Guarantor are under audit. No tax liens have been
filed and no claims are being asserted with respect to any such taxes. The
charges, accruals and reserves on the books of such Guarantor in respect of any
taxes or other governmental charges are in accordance with GAAP.
(h) Burdensome Obligations; Solvency. After giving effect to the
--------------------------------
transactions contemplated by this Guaranty and the other Investment Documents to
which such Guarantor is a party, such Guarantor (i) will not be a party to or be
bound by any franchise, agreement, deed, lease or other instrument, or be
subject to any restriction, which is so unusual or burdensome, so as to cause,
in the foreseeable future, a Material Adverse Effect, (ii) does not intend to
incur, and does not believe that it will incur, debts beyond its ability to pay
such debts as they become due, (iii) owns and will own property, the fair
saleable value of which is (I) greater than the total amount of its liabilities
(including contingent liabilities) and (II) greater than the amount that will be
required to pay the probable liabilities of its then existing debts as they
become absolute and matured, and (iv) has and will have capital that is not
unreasonably small in relation to its business as presently conducted and as
proposed to be conducted. Such Guarantor does not presently anticipate that
future expenditures needed to meet the provisions of federal or state statutes,
orders, rules or regulations will be so burdensome so as to have, either
individually or in the aggregate, a Material Adverse Effect.
5. Waivers. The Guarantors hereby jointly and severally expressly waive
to the extent permitted by applicable law: (a) notice of acceptance of this
Guaranty by the Holder; (b) presentment, demand, notice of dishonor, protest,
and any and all notices and demands of every kind that may be required to be
given by any statute or rule or law, except as required by the express terms of
the Debentures, Investment Agreement or other Investment Documents; (c) any
defense arising by reason of any disability or other defense of the Company; (d)
except as provided herein, any right to participate in any security now or later
held by the Holder; (e) any right to enforce any remedies the Holder now has, or
later may have, against the Company as a result of making payments hereunder,
except as set forth in Section 3(b); and (f) diligence in collection or
------------
protection of, or realization upon, any of the Guaranteed Obligations or any
other obligation hereunder, or any security for or guaranty of any of the
foregoing, and any and all formalities that otherwise might be legally required
to charge any of the Guarantors with liability to the extent provided hereunder.
-5-
<PAGE>
6. Successive Actions. Each Guarantor agrees that one or more successive
actions may be brought against any Guarantor, as often as the Holder deems
advisable, until all of the Guaranteed Obligations are paid and performed in
full.
7. No Waiver of Rights. No delay or failure on the part of the Holder to
exercise any right, power or privilege under this Guaranty or any of the other
Investment Documents shall operate as a waiver thereof, and no single or partial
exercise of any right, power or privilege shall preclude any other or further
exercise thereof or the exercise of any other power or right, or be deemed to
establish a custom or course of dealing or performance between the parties
hereto.
8. No Modification Without Writing. This Guaranty may not be modified,
amended, revised, revoked, terminated, changed or varied in any way whatsoever,
except by the express terms of a writing signed by the party or parties sought
to be bound thereby.
9. Severability. Whenever possible, each provision of this Guaranty shall
be interpreted in such manner as to be effective and valid under applicable law,
but if any provision of this Guaranty shall be held invalid or ineffective, such
ineffectiveness or invalidity shall not affect any other provisions of this
Guaranty, and this Guaranty shall be construed as if such ineffective or invalid
provision had never been contained therein.
10. Capitalized Terms. Any term capitalized but not defined herein, which
is capitalized and defined in the Investment Agreement shall have the same
meaning for purposes of this Guaranty as it has for purposes of the Investment
Agreement.
11. Successors and Assigns. This Guaranty shall inure to the benefit of
the Holder, and shall bind each of the Guarantors and their respective heirs,
legal representatives, successors and assigns.
12. Costs and Expenses. Each Guarantor agrees to pay on demand all costs
and expenses incurred by or on behalf of the Holder (including, without
limitation attorneys' fees and expenses) in enforcing the obligations of such
Guarantor under this Guaranty.
13. Joinder. Each Guarantor agrees that any action to enforce this
Guaranty may be brought against Guarantor without any reimbursement or joinder
of Company or any other guarantor of the Guaranteed Obligations in such action.
14. Notice. Notice shall be given under this Guaranty in accordance with
Section 8.1 of the Investment Agreement. The address of the Company shall be
deemed the address of each of the Guarantors for purposes of delivering notice
under this Guaranty and under any of the Investment Documents.
15. Governing Law. This Guaranty shall be deemed to have been made in the
State of Maryland. This Guaranty shall be governed and controlled as to
interpretation, enforcement, validity, construction, effect and in all other
respects by the laws, statutes and decisions of the State of Maryland (excluding
conflicts of
-6-
<PAGE>
laws provisions). The undersigned, in order to induce the Holder to accept this
Guaranty, and for other good and valuable consideration, the receipt and
sufficiency of which hereby is acknowledged, agree that all actions or
proceedings arising directly, indirectly or otherwise in connection with or
related to this Guaranty shall be litigated, at Holder's sole discretion and
election, only in courts having a situs within the State of Maryland. The
GuarantorS hereby consent and submit to the jurisdiction of any local, state or
federal court located within Maryland. The undersigned hereby agree that service
of process hereunder may be accomplished and shall constitute personal service
of such process upon the undersigned if notice is mailed by certified mail to
the undersigned at the address set forth below after the signature of the
undersigned. The undersigned hereby waive any right they may have to transfer or
change the venue of any litigation brought against them by the Holder on this
Guaranty in accordance with this paragraph. The undersigned hereby knowingly,
voluntarily, and intentionally waive the rights they may have to a trial by jury
in any litigation based hereon, or arising out of, under or in connection with
this Guaranty. This provision is a material inducement for the Holder to enter
into the contemplated transactions. The Holder hereby waives the right to jury
trial to the same extent as such right is waived by the undersigned.
16. Waiver of Rights Against Company. Notwithstanding anything to the
contrary which may be contained herein except as set forth in Section 3(b)
hereof, each Guarantor hereby unconditionally and irrevocably agrees that such
Guarantor (i) will not assert against the Company any right or claim, at law or
in equity, to indemnification, reimbursement, contribution, restitution or
payment for or with respect to any and all amounts such Guarantor may pay or be
obligated to pay to the Holder, including, without limitation, the Guaranteed
Obligations, and any and all other obligations which such Guarantor may perform,
satisfy or discharge, under or with respect to this Guaranty, (ii) waives and
releases all such rights and claims, at law or in equity, to indemnification,
reimbursement, contribution, restitution or payment which such Guarantor may
have now or at any time against Company and (iii) will not assign or otherwise
transfer any such right or claims to any other person. Each Guarantor further
unconditionally and irrevocably agrees that such Guarantor shall have no right
of subrogation, and waives any right to enforce any remedy which the Holder now
have or hereafter may have against Company and waives any defense based upon an
election of remedies by the Holder, which destroys or otherwise impairs any
subrogation rights of such Guarantor and/or the right of such Guarantor to
proceed against Company for reimbursement.
17. Incorporation of Recitals. The Recitals are incorporated herein by
reference.
-7-
<PAGE>
IN WITNESS WHEREOF, this Guaranty has been executed and delivered under
seal by the undersigned as of the date first above written.
ATTEST/WITNESS: ORC, INC.,
a Delaware corporation
/s/ Douglas L. Cox By: /s/ Douglas L. Cox (SEAL)
- ------------------------- -------------------------
Name: Douglas L. Cox
Title: Secretary
ORC TELESERVICE CORP.,
a Delaware corporation
/s/ Douglas L. Cox By: /s/ John F. Short (SEAL)
- ------------------------- -------------------------
Name: John F. Short
Title: President
ORC PROTEL, INC.,
a Delaware corporation
/s/ Douglas L. Cox By: /s/ John F. Short (SEAL)
- ------------------------- -------------------------
Name: John F. Short
Title: President
MACRO INTERNATIONAL, INC.,
a Delaware corporation
/s/ Douglas L. Cox By: /s/ Douglas L. Cox (SEAL)
- ------------------------- -------------------------
Name: Douglas L. Cox
Title: Vice President
QUANTUM RESEARCH CORPORATION,
a Maryland corporation
/s/ Douglas L. Cox By: /s/ Douglas L. Cox (SEAL)
- ------------------------- -------------------------
Name: Douglas L. Cox
Title: Vice President
-8-
<PAGE>
STATE OF Pennsylvania)
-----------------------
) SS:
CITY/COUNTY OF Philadelphia)
-----------------
I HEREBY CERTIFY that on this 25/th/ day of May, 1999, before me, the
------ --- --
undersigned officer, personally appeared Douglas L. Cox, who acknowledged
--------------
himself/herself to be the Secretary of ORC, Inc., and that (s)he, in such
---------
capacity, being authorized to do so, executed the foregoing instrument for the
purposes therein contained, by signing the name of corporation, as such officer.
IN WITNESS WHEREOF, I hereunto set my hand and Notarial Seal.
/s/ N. James Peljae
-------------------------
Notary Public
My Commission expires:
STATE OF Pennsylvania )
--------------------
) SS:
CITY/COUNTY OF Philadelphia )
--------------
I HEREBY CERTIFY that on this 25/th/ day of May, 1999, before me, the
------ --- --
undersigned officer, personally appeared John F. Short, who acknowledged
-------------
himself/herself to be the President of ORC Teleservice Corp., and that (s)he,
---------
in such capacity, being authorized to do so, executed the foregoing instrument
for the purposes therein contained, by signing the name of the corporation, as
-----------
such officer.
IN WITNESS WHEREOF, I hereunto set my hand and Notarial Seal.
/s/ N. James Peljae
-------------------
Notary Public
My Commission expires:
-9-
<PAGE>
STATE OF Pennsylvania)
--------------------
) SS:
CITY/COUNTY OF Philadelphia)
--------------
I HEREBY CERTIFY that on this 25/th/ day of May, 1999, before me, the
------ --- --
undersigned officer, personally appeared John F. Short, who acknowledged
-------------
himself/herself to be the President of ORC Protel, Inc., and that (s)he, in such
---------
capacity, being authorized to do so, executed the foregoing instrument for the
purposes therein contained, by signing the name of the corporation as such
officer.
IN WITNESS WHEREOF, I hereunto set my hand and Notarial Seal.
/s/ N. James Peljae
---------------------
Notary Public
My Commission expires:
STATE OF Pennslvania )
-----------------
) SS:
CITY/COUNTY OF Philadelphia )
-------------
I HEREBY CERTIFY that on this 25/th/ day of May, 1999, before me, the
------ --- --
undersigned officer, personally appeared Douglas L. Cox, who acknowledged
--------------
himself/herself to be the Vice President of Macro International, Inc., and that
--------------
(s)he, in such capacity, being authorized to do so, executed the foregoing
instrument for the purposes therein contained, by signing the name of the
corporation, as such officer.
IN WITNESS WHEREOF, I hereunto set my hand and Notarial Seal.
/s/ N. James Peljae
---------------------
Notary Public
My Commission expires:
-10-
<PAGE>
STATE OF Pennsylvania)
-------------------
) SS:
CITY/COUNTY OF Philadelphia)
-------------
I HEREBY CERTIFY that on this 25/th/ day of May, 1999, before me, the
----- --- --
undersigned officer, personally appeared Douglas L. Cox, who acknowledged
--------------
himself/herself to be the Vice President of Quantum Research Corporation, and
--------------
that (s)he, in such capacity, being authorized to do so, executed the foregoing
instrument for the purposes therein contained, by signing the name of the
partnership, as such officer.
IN WITNESS WHEREOF, I hereunto set my hand and Notarial Seal.
/s/ N. James Peljae
---------------------
Notary Public
My Commission expires:
-11-
<PAGE>
Exhibit 10.7
THIS DEBENTURE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR APPLICABLE SECURITIES LAWS, THIS DEBENTURE MAY NOT BE OFFERED, SOLD,
ASSIGNED, TRANSFERRED, PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED OF IN THE
ABSENCE OF AN EFFECTslsFinancial Printing GroupTHIS DEBENTURE HAS NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE
SECURITIES LAWS, THIS DEBENTURE MAY NOT BE OFFERED, SOLD, ASSIGNED, TRANSFERRED,
PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF AN EFFECTIVE
REGISTRATION STATEMENT OF THE DEBENTURE UNDER SUCH ACT AND UNDER ANY APPLICABLE
STATE SECURITIES LAWS, OR UPON SATISFACTION BY THE ISSUER HEREOF THAT SUCH
REGISTRATION IS NOT REQUIRED AS TO SUCH SALE OR OFFER.
THIS INSTRUMENT AND THE RIGHTS AND OBLIGATIONS EVIDENCED HEREBY ARE SUBORDINATE
IN THE MANNER AND TO THE EXTENT SET FORTH IN THAT CERTAIN SUBORDINATION AND
INTERCREDITOR AGREEMENT (THE "SUBORDINATION AGREEMENT") DATED AS OF MAY ____,
1999 AMONG THE HOLDERS OF SUBORDINATED DEBENTURES, OPINION RESEARCH CORPORATION
("COMPANY") AND HELLER FINANCIAL, INC. ("AGENT"), TO THE INDEBTEDNESS (INCLUDING
INTEREST) OWED BY THE COMPANY AND ITS AFFILIATES PURSUANT TO THAT CERTAIN CREDIT
AGREEMENT DATED AS OF MAY ___, 1999 AMONG THE COMPANY, AGENT AND THE LENDERS
FROM TIME TO TIME PARTY THERETO, AS SUCH CREDIT AGREEMENT HAS BEEN AND HEREAFTER
MAY BE AMENDED, SUPPLEMENTED OR OTHERWISE MODIFIED FROM TIME TO TIME; AND EACH
HOLDER OF THIS INSTRUMENT, BY ITS ACCEPTANCE HEREOF, SHALL BE BOUND BY THE
PROVISIONS OF THE SUBORDINATION AGREEMENT.
SUBORDINATED DEBENTURE
$9,500,000.00 May ______, 1999
FOR VALUE RECEIVED, the undersigned, OPINION RESEARCH CORPORATION, a
Delaware corporation (the "Company"), promises to pay to the order of ALLIED
CAPITAL CORPORATION, a Maryland corporation (the "Holder") the principal sum of
Nine Million Five Hundred Thousand and 00/100 Dollars ($9,500,000.00) (the
"Principal Amount"), together with interest thereon as set forth below, at its
offices or such other place as the Holder may designated in writing.
1. Investment Agreement. This Subordinated Debenture (the "Debenture") is
--------------------
subject to the terms of an Investment Agreement between the Company, the Holder
and an affiliate of the Holder, dated of even date herewith (the "Investment
Agreement"), a copy of which may be examined during normal business hours at the
Company's offices. Any capitalized term used herein and not otherwise defined
herein shall have the meaning given to it in the Investment Agreement.
2. Interest Rate Provisions.
------------------------
2.1. Initial Interest Rates. Except as provided in Section 2.2, from
----------------------
the date hereof and thereafter until repayment of this Debenture in full,
interest shall accrue hereunder at
-1-
<PAGE>
the fixed rate of twelve percent (12%) per annum (the "Interest Rate") and shall
be paid in arrears on a quarterly basis. Interest shall be calculated on the
basis of the actual number of days elapsed over a year of 360 days.
2.2. Default Interest Rate. If the Company shall default in the
---------------------
payment of the principal of or interest on this Debenture or any other amount
due hereunder, by acceleration or otherwise, or under any other Investment
Document to which the Company is a party, the Company shall on demand from time
to time pay interest, to the extent permitted by law, on such defaulted amount
to but excluding the date of actual payment (after as well as before judgment)
at the Interest Rate plus three percent (3%).
3. Payment Provisions.
------------------
3.1. Interest Payments. Commencing on September 5, 1999 and
-----------------
continuing quarterly thereafter on the fifth day of each quarter up to and
including June 5, 2005, the Company shall pay to Holder installments of interest
only (in arrears).
3.2. Principal and Interest Payments. Commencing on September 5,
-------------------------------
2005 and continuing quarterly thereafter until all sums due hereunder or under
the Investment Agreement are repaid in full, Company shall pay to Holder equal
payments of principal and interest in an amount sufficient to fully amortize the
outstanding principal balance by the Maturity Date, as defined below. If not
previously paid in full, the entire unpaid outstanding principal balance under
this Debenture and under the Investment Agreement together with all accrued but
unpaid interest, and all other sums owed hereunder shall be due and payable in
full without further notice or demand on May 31, 2007 (the "Maturity Date").
3.3. Prepayments; Application of Payments.
------------------------------------
(a) The Company may at any time and from time to time prepay
the principal indebtedness evidenced by this Debenture, in whole or in
part, upon at least three Business Days' prior written or telecopy
notice (or telephone notice promptly confirmed by written or telecopy
notice) to the Holder before 11:00 a.m., Washington, D.C. time,
subject to the Company's obligation to pay a prepayment premium of two
percent (2%) of any prepaid principal prior to the first anniversary
of the Closing Date and a prepayment premium of one percent (1%) of
any prepaid principal prior to the second anniversary of the Closing
Date. There shall be no prepayment premium on any prepayment made from
and after the second anniversary of the Closing Date. Any partial
prepayments shall be made in increments of $500,000.
(b) Each payment with respect to this Debenture shall be
applied in the following order of priority: first, to accrued, but
unpaid, interest at the applicable rate; second, to principal (whether
in scheduled installments or accelerated), to the extent such
principal is due and payable; and third, to any scheduled installments
of the outstanding principal balance which are not yet due and
payable, in inverse order of maturity.
-2-
<PAGE>
3.4. Place of Payment. All payments of principal and interest
----------------
hereunder shall be payable to the Holder in lawful money of the United States of
America and in immediately available funds, not later than 12:00 p.m. (noon) on
the date when due, without setoff, defense or counterclaim. Each such payment
shall be made to the Holder at its offices at 1919 Pennsylvania Avenue, N.W.,
Washington, D.C. 20006-3434, Attention: Thomas H. Westbrook. Any payment
coming due on a day which is not a Business Day shall be made on the next
succeeding Business Day, and any such extension of time of payment shall be
included in the computation of interest hereunder.
4. Due on Sale. The entire indebtedness shall become due and payable
-----------
upon the earlier of (i) the Maturity Date, or (ii) the occurrence of a "Transfer
Affecting the Company's Business," as defined in the Investment Agreement.
5. Subordination. The indebtedness represented by this Debenture is
-------------
subordinate to the Senior Debt of the Company in accordance with the terms of
the Subordination Agreement.
6. Assignment. This Debenture and the obligations hereunder may not be
----------
assigned by the Company without the prior written consent of Holder. Holder may
freely assign all or any portion of its right, title and interest in and to the
Debenture.
7. Default and Remedies. The occurrence of an Event of Default under the
--------------------
Investment Agreement shall constitute a default hereunder and during the
continuation thereof shall entitle the Holder to exercise the rights and
remedies specified in the Investment Documents, as well as those available at
law or in equity.
8. Waivers. The Company hereby waives presentment, demand, protest or
-------
further notice of any kind to the extent permitted by applicable law.
9. Controlling Law. This Debenture and all matters related hereto shall
---------------
be governed, construed and interpreted strictly in accordance with the laws of
the State of Maryland, without regard to its principles of conflicts of laws.
10. Purpose of Investment The Company represents and warrants that this
---------------------
Debenture evidences an investment made in the Company made for the purpose of
carrying on a business or commercial enterprise pursuant to Section 12-103(e) of
the Commercial Law Article, Annotated Code of Maryland, as amended.
11. No Usury. This Debenture is subject to the express condition that at
--------
no time shall the Company be obligated or required to pay interest hereunder at
a rate that could subject the Holder to either civil or criminal liability as a
result of being in excess of the maximum rate that the Company is permitted by
law to contract or agree to pay. If, by the terms of this Debenture, the
Company is at any time required or obligated to pay interest at a rate in excess
of such maximum rate, the rate of interest under this Debenture shall be deemed
to be immediately reduced to such maximum rate and interest payable hereunder
shall be computed at such maximum rate and the portion of all prior interest
payments in excess of such maximum rate
-3-
<PAGE>
shall be applied and shall be deemed to have been payments in reduction of the
principal balance of this Debenture.
12. Waiver of Trial by Jury. The Company agrees that any suit, action or
-----------------------
proceeding, whether claim or counterclaim, brought or instituted by the Holder
on or with respect to this Debenture or any event, transaction or occurrence
arising out of or in any way connected with the Investment Agreement or the
dealing of the parties with respect thereto, shall be tried only by a court and
not by a jury. THE COMPANY HEREBY EXPRESSLY WAIVES ANY RIGHT TO A TRIAL BY JURY
IN ANY SUCH SUIT, ACTION OR PROCEEDING. The Company acknowledges and agrees
that the Holder would not extend credit under the Investment Agreement to the
Company and purchase this Debenture if this waiver of jury trial were not part
of the Investment Agreement.
13. Severability. In the event any one or more of the provisions
------------
contained in this Debenture or any other Investment Document shall for any
reason be held to be invalid, illegal or unenforceable in any respect, such
invalidity, illegality or unenforceability shall not affect any other provision
of this Debenture or such other Investment Documents, but this Debenture and
such other Investment Documents shall be construed as if such invalid, illegal
or unenforceable provision had never been contained herein or therein.
-4-
<PAGE>
IN WITNESS WHEREOF, the undersigned has caused this Debenture to be
executed and its seal affixed on the day and year first written above.
WITNESS/ATTEST: COMPANY:
OPINION RESEARCH CORPORATION,
a Delaware corporation
/s/ Douglas L. Cox
- ------------------------------ By: /s/ John F. Short (SEAL)
---------------------------------
Name: John F. Short
Title: President
-5-
<PAGE>
Exhibit 10.8
THIS DEBENTURE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR APPLICABLE SECURITIES LAWS, THIS DEBENTURE MAY NOT BE OFFERED, SOLD,
ASSIGNED, TRANSFERRED, PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED OF IN THE
ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT OF THE DEBENTURE UNDER SUCH ACT
AND UNDER ANY APPLICABLE STATE SECURITIES LAWS, OR UPON SATISFACTION BY THE
ISSUER HEREOF THAT SUCH REGISTRATION IS NOT REQUIRED AS TO SUCH SALE OR OFFER.
THIS INSTRUMENT AND THE RIGHTS AND OBLIGATIONS EVIDENCED HEREBY ARE SUBORDINATE
IN THE MANNER AND TO THE EXTENT SET FORTH IN THAT CERTAIN SUBORDINATION AND
INTERCREDITOR AGREEMENT (THE "SUBORDINATION AGREEMENT") DATED AS OF MAY ____,
1999 AMONG THE HOLDERS OF SUBORDINATED DEBENTURES, OPINION RESEARCH CORPORATION
("COMPANY") AND HELLER FINANCIAL, INC. ("AGENT"), TO THE INDEBTEDNESS (INCLUDING
INTEREST) OWED BY THE COMPANY AND ITS AFFILIATES PURSUANT TO THAT CERTAIN CREDIT
AGREEMENT DATED AS OF MAY ___, 1999 AMONG THE COMPANY, AGENT AND THE LENDERS
FROM TIME TO TIME PARTY THERETO, AS SUCH CREDIT AGREEMENT HAS BEEN AND HEREAFTER
MAY BE AMENDED, SUPPLEMENTED OR OTHERWISE MODIFIED FROM TIME TO TIME; AND EACH
HOLDER OF THIS INSTRUMENT, BY ITS ACCEPTANCE HEREOF, SHALL BE BOUND BY THE
PROVISIONS OF THE SUBORDINATION AGREEMENT.
SUBORDINATED DEBENTURE
$5,500,000.00 May ______, 1999
FOR VALUE RECEIVED, the undersigned, OPINION RESEARCH CORPORATION, a
Delaware corporation (the "Company"), promises to pay to the order of ALLIED
INVESTMENT CORPORATION, a Maryland corporation (the "Holder") the principal sum
of Five Million Five Hundred Thousand and 00/100 Dollars ($5,500,000.00) (the
"Principal Amount"), together with interest thereon as set forth below, at its
offices or such other place as the Holder may designated in writing.
1. Investment Agreement. This Subordinated Debenture (the "Debenture")
--------------------
is subject to the terms of an Investment Agreement between the Company, the
Holder and an affiliate of the Holder, dated of even date herewith (the
"Investment Agreement"), a copy of which may be examined during normal business
hours at the Company's offices. Any capitalized term used herein and not
otherwise defined herein shall have the meaning given to it in the Investment
Agreement.
2. Interest Rate Provisions.
------------------------
2.1. Initial Interest Rates. Except as provided in Section 2.2, from
----------------------
the date hereof and thereafter until repayment of this Debenture in full,
interest shall accrue hereunder at
-1-
<PAGE>
the fixed rate of twelve percent (12%) per annum (the "Interest Rate") and shall
be paid in arrears on a quarterly basis. Interest shall be calculated on the
basis of the actual number of days elapsed over a year of 360 days.
2.2. Default Interest Rate. If the Company shall default in the
---------------------
payment of the principal of or interest on this Debenture or any other amount
due hereunder, by acceleration or otherwise, or under any other Investment
Document to which the Company is a party, the Company shall on demand from time
to time pay interest, to the extent permitted by law, on such defaulted amount
to but excluding the date of actual payment (after as well as before judgment)
at the Interest Rate plus three percent (3%).
3. Payment Provisions.
------------------
3.1. Interest Payments. Commencing on September 5, 1999 and
-----------------
continuing quarterly thereafter on the fifth day of each quarter up to and
including June 5, 2005, the Company shall pay to Holder installments of interest
only (in arrears).
3.2. Principal and Interest Payments. Commencing on September 5,
-------------------------------
2005 and continuing quarterly thereafter until all sums due hereunder or under
the Investment Agreement are repaid in full, Company shall pay to Holder equal
payments of principal and interest in an amount sufficient to fully amortize the
outstanding principal balance by the Maturity Date, as defined below. If not
previously paid in full, the entire unpaid outstanding principal balance under
this Debenture and under the Investment Agreement together with all accrued but
unpaid interest, and all other sums owed hereunder shall be due and payable in
full without further notice or demand on May 31, 2007 (the "Maturity Date").
3.3. Prepayments; Application of Payments.
------------------------------------
(a) The Company may at any time and from time to time prepay
the principal indebtedness evidenced by this Debenture, in whole or in
part, upon at least three Business Days' prior written or telecopy
notice (or telephone notice promptly confirmed by written or telecopy
notice) to the Holder before 11:00 a.m., Washington, D.C. time,
subject to the Company's obligation to pay a prepayment premium of two
percent (2%) of any prepaid principal prior to the first anniversary
of the Closing Date and a prepayment premium of one percent (1%) of
any prepaid principal prior to the second anniversary of the Closing
Date. There shall be no prepayment premium on any prepayment made
from and after the second anniversary of the Closing Date. Any
partial prepayments shall be made in increments of $500,000.
(b) Each payment with respect to this Debenture shall be
applied in the following order of priority: first, to accrued, but
unpaid, interest at the applicable rate; second, to principal (whether
in scheduled installments or accelerated), to the extent such
principal is due and payable; and third, to any scheduled installments
of the outstanding principal balance which are not yet due and
payable, in inverse order of maturity.
-2-
<PAGE>
3.4. Place of Payment. All payments of principal and interest
----------------
hereunder shall be payable to the Holder in lawful money of the United States of
America and in immediately available funds, not later than 12:00 p.m. (noon) on
the date when due, without setoff, defense or counterclaim. Each such payment
shall be made to the Holder at its offices at 1919 Pennsylvania Avenue, N.W.,
Washington, D.C. 20006-3434, Attention: Thomas H. Westbrook. Any payment
coming due on a day which is not a Business Day shall be made on the next
succeeding Business Day, and any such extension of time of payment shall be
included in the computation of interest hereunder.
4. Due on Sale. The entire indebtedness shall become due and payable
-----------
upon the earlier of (i) the Maturity Date, or (ii) the occurrence of a "Transfer
Affecting the Company's Business," as defined in the Investment Agreement.
5. Subordination. The indebtedness represented by this Debenture is
-------------
subordinate to the Senior Debt of the Company in accordance with the terms of
the Subordination Agreement.
6. Assignment. This Debenture and the obligations hereunder may not be
----------
assigned by the Company without the prior written consent of Holder. Holder may
freely assign all or any portion of its right, title and interest in and to the
Debenture.
7. Default and Remedies. The occurrence of an Event of Default under the
--------------------
Investment Agreement shall constitute a default hereunder and during the
continuation thereof shall entitle the Holder to exercise the rights and
remedies specified in the Investment Documents, as well as those available at
law or in equity.
8. Waivers. The Company hereby waives presentment, demand, protest or
-------
further notice of any kind to the extent permitted by applicable law.
9. Controlling Law. This Debenture and all matters related hereto shall
---------------
be governed, construed and interpreted strictly in accordance with the laws of
the State of Maryland, without regard to its principles of conflicts of laws.
10. Purpose of Investment The Company represents and warrants that this
---------------------
Debenture evidences an investment made in the Company made for the purpose of
carrying on a business or commercial enterprise pursuant to Section 12-103(e) of
the Commercial Law Article, Annotated Code of Maryland, as amended.
11. No Usury. This Debenture is subject to the express condition that at
--------
no time shall the Company be obligated or required to pay interest hereunder at
a rate that could subject the Holder to either civil or criminal liability as a
result of being in excess of the maximum rate that the Company is permitted by
law to contract or agree to pay. If, by the terms of this Debenture, the
Company is at any time required or obligated to pay interest at a rate in excess
of such maximum rate, the rate of interest under this Debenture shall be deemed
to be immediately reduced to such maximum rate and interest payable hereunder
shall be computed at such maximum rate and the portion of all prior interest
payments in excess of such maximum rate
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shall be applied and shall be deemed to have been payments in reduction of the
principal balance of this Debenture.
12. Waiver of Trial by Jury. The Company agrees that any suit, action or
-----------------------
proceeding, whether claim or counterclaim, brought or instituted by the Holder
on or with respect to this Debenture or any event, transaction or occurrence
arising out of or in any way connected with the Investment Agreement or the
dealing of the parties with respect thereto, shall be tried only by a court and
not by a jury. THE COMPANY HEREBY EXPRESSLY WAIVES ANY RIGHT TO A TRIAL BY JURY
IN ANY SUCH SUIT, ACTION OR PROCEEDING. The Company acknowledges and agrees
that the Holder would not extend credit under the Investment Agreement to the
Company and purchase this Debenture if this waiver of jury trial were not part
of the Investment Agreement.
13. Severability. In the event any one or more of the provisions
------------
contained in this Debenture or any other Investment Document shall for any
reason be held to be invalid, illegal or unenforceable in any respect, such
invalidity, illegality or unenforceability shall not affect any other provision
of this Debenture or such other Investment Documents, but this Debenture and
such other Investment Documents shall be construed as if such invalid, illegal
or unenforceable provision had never been contained herein or therein.
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IN WITNESS WHEREOF, the undersigned has caused this Debenture to be
executed and its seal affixed on the day and year first written above.
WITNESS/ATTEST: COMPANY:
OPINION RESEARCH CORPORATION,
a Delaware corporation
/s/ Douglas L. Cox
- ----------------------------- By: /s/ John F. Short (SEAL)
-------------------------------
Name: John F. Short
Title: President
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Exhibit 10.9
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT (this "Agreement") is made as of
the day of May, 1999, by and between OPINION RESEARCH CORPORATION, a Delaware
corporation. (the "Company") and ALLIED CAPITAL CORPORATION and ALLIED
INVESTMENT CORPORATION, each a Maryland corporation (collectively, the
"Investor").
RECITALS:
WHEREAS, the Company and the Investor have entered into that certain
Investment Agreement dated as of the date hereof (the "Investment Agreement");
WHEREAS, in order to induce the Investor to enter into the
transactions contemplated thereby, the Company has agreed to provide the
registration rights set forth in this Agreement; and
WHEREAS, unless otherwise provided in this Agreement, capitalized
terms used herein shall have the meanings set forth in Section 9 of this
Agreement or as set forth in the Investment Agreement.
NOW THEREFORE, the parties hereto agree as follows:
1. DEMAND REGISTRATIONS.
1.1. Requests for Registration.
At any time following the fifth anniversary of the date hereof, the
Investor (or its permitted transferees) may request registration under the
Securities Act of all or part of its Registrable Securities (as defined in
Section 9 below) on Form S-1 or any similar long-form registration ("Long-Form
Registrations") or on Form S-2 or S-3 or any similar short-form registration
("Short-Form Registrations") if available. Each request for a Demand
Registration under this Section 1.1 shall specify the approximate number of
Registrable Securities requested to be registered and the anticipated per share
price range for such offering. Within 10 days after receipt of any such request,
the Company shall give written notice of such requested registration to all
other holders of Registrable Securities and shall include in such registration
all Registrable Securities with respect to which the Company has received
written requests for inclusion therein within 15 days after the receipt of the
Company's notice. All registrations requested pursuant to this Section 1.1 are
referred to herein as "Demand Registrations."
1.2. Short-Form Registrations.
As long as the Company is subject to the reporting requirements of
the Securities Exchange Act, the Company will use its best efforts to make
Short-Form Registrations available for the sale of Registrable Securities.
Subject to the limitations set forth in Section 1.4 below,
<PAGE>
the holders of Registrable Securities shall be entitled to request Short-Form
Registrations; provided, that the offering value of the Registrable Securities
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requested to be registered in any Short-Form Registration shall equal at least
$1,000,000.
1.3. Long-Form Registrations.
Subject to the limitations set forth in Section 1.4 below, in the
event the Company is not permitted to use any applicable Short-Form
Registration, the holders of Registrable Securities shall be entitled to request
a Long-Form Registration; provided, that the aggregate offering value of the
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Registrable Securities requested to be registered in any Long-Form Registration
shall equal at least $1,000,000.
1.4. Limit on Number of Registrations.
The holders of Registrable Securities shall be limited to a maximum
number of two (2) Demand Registrations under this Section 1.
1.5. Priority on Demand Registrations.
The Company shall not include in any Demand Registration any
securities which are not Registrable Securities without the prior written
consent of the holders of at least two-thirds of the Registrable Securities
included in such registration. If a Demand Registration is an underwritten
offering and the managing underwriters advise the Company in writing that in
their opinion the number of Registrable Securities and, if permitted hereunder,
other securities requested to be included in such offering exceeds the number of
Registrable Securities and other securities, if any, which can be sold therein
without adversely affecting the marketability of the offering, the Company shall
include in such registration: (i) first, the Registrable Securities requested to
be included which in the opinion of such underwriters can be sold without
adversely affecting the marketability of the offering, pro rata among the
respective holders thereof on the basis of the amount of Registrable Securities
requested to be registered by each such holder; (ii) second, other securities
requested to be included in such registration by the Company; and (iii) third,
other securities requested to be included in such registration by others pro
rata among the holders thereof.
1.6. Restrictions on Demand Registrations.
The Company shall not be obligated to effect any Demand Registration
within six (6) months after the effective date of a previous Demand Registration
or a registration in which the holders of Registrable Securities were given
piggyback rights pursuant to Section 2 below. The Company may postpone for up to
ninety (90) days the filing or the effectiveness of a registration statement for
a Demand Registration if the Company believes that such Demand Registration
would reasonably be expected to have an adverse effect on any proposal or plan
by the Company or any of its subsidiaries to engage in any acquisition of assets
(other than in the ordinary course of business) or any merger, consolidation,
tender offer, securities offering, or similar transaction.
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1.7. Selection of Underwriters.
The Company shall have the right to select the investment banker(s)
and manager(s) to administer the offering, subject to the approval of the
holders of two-thirds of the Registrable Securities included in any Demand
Registration, which approval shall not be unreasonably withheld.
1.8. Other Registration Rights.
The Company shall not grant to any Persons the right to request the
Company to register any equity securities of the Company, or any securities
convertible or exchangeable into or exercisable for such securities, which
rights have priority over, or are inconsistent with, the rights of the holders
of Registrable Securities under this Agreement without the prior written
approval of the holders of at least two-thirds of the Registrable Securities.
2. PIGGYBACK REGISTRATIONS.
2.1. Right to Piggyback.
Whenever the Company proposes to register any of its securities under
the Securities Act (other than pursuant to a Demand Registration) and the
registration form to be used may be used for the registration of Registrable
Securities (a "Piggyback Registration"), the Company shall give prompt written
notice to all holders of Registrable Securities of its intention to effect such
a registration and shall include in such registration all Registrable Securities
with respect to which the Company has received written requests for inclusion
therein within 15 days after the receipt of the Company's notice. Subject to the
provisions of Section 2.2 below, the Company shall also be entitled to include
in such registration any other securities requested to be included in such
registration.
2.2. Priority on Primary Registrations.
If a Piggyback Registration is an underwritten primary registration
on behalf of the Company, and the managing underwriters advise the Company in
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writing that in their opinion the number of securities requested to be included
in such registration exceeds the number which can be sold in such offering
without adversely affecting the marketability of the offering, the Company shall
include in such registration: (i) first, the securities the Company proposes to
sell; (ii) second, the Registrable Securities requested to be included in such
registration, pro rata among the holders of such Registrable Securities on the
basis of the number of shares requested to be registered by each such holder;
and (iii) third, other securities requested to be included in such registration.
2.3. Priority on Secondary Registrations.
If a Piggyback Registration is an underwritten secondary registration
on behalf of holders of the Company's securities, and the managing underwriters
advise the Company in writing that in their opinion the number of securities
requested to be included in such registration exceeds the number which can be
sold in such offering without adversely affecting the marketability of the
offering, the Company shall include in such registration: (i) first, the
Registrable Securities requested to be included in such registration, pro rata
among the holders of such Registrable Securities on the basis of the number of
shares requested to be registered by each such holder; and (ii) second, the
other securities requested to be included in such registration.
3. HOLDBACK AGREEMENTS.
3.1. Holdback by Holders.
Each holder of Registrable Securities agrees, if requested by the
Company and an underwriter of Registrable Securities, not to effect any public
sale or distribution (including sales pursuant to Rule 144) of equity securities
of the Company, or any securities convertible into or exchangeable or
exercisable for such securities, during the seven days prior to and the 180-day
period beginning on the effective date of any underwritten Demand Registration,
any underwritten Piggyback Registration in which Registrable Securities are
included (except as part of such underwritten registration), or any other
registration of the Company in connection with a public offering (except
pursuant to registrations on Form S-8 or any successor form).
3.2. Holdback by Company and Others.
The Company agrees: not to effect any public sale or distribution of
its equity securities, or any securities convertible into or exchangeable or
exercisable for such securities, during the seven days prior to and during the
180-day period beginning on the effective date of any underwritten Demand
Registration or any underwritten Piggyback Registration (except as part of such
underwritten registration or pursuant to registrations on Form S-8 or any
successor form), unless the underwriters managing the registered public offering
otherwise agree.
4. REGISTRATION PROCEDURES.
4.1. Company Obligations.
Whenever the holders of Registrable Securities have requested that
any Registrable Securities be registered pursuant to this Agreement, the Company
shall use its best efforts to effect the registration and the sale of such
Registrable Securities under the Securities Act, and pursuant thereto the
Company shall as expeditiously as possible:
(i) prepare and file with the Securities and Exchange Commission a
registration statement with respect to such Registrable Securities and use its
best efforts to cause such registration statement to become effective (provided
that before filing a registration statement or prospectus or any amendments or
supplements thereto, the Company shall furnish to the counsel selected by the
holders of two-thirds of the Registrable Securities covered by such registration
statement copies of all such documents proposed to be filed);
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(ii) prepare and file with the Securities and Exchange Commission such
amendments and supplements to such registration statement and the prospectus
used in connection therewith as may be necessary to keep such registration
statement effective for a period of not less than ninety days, or such shorter
period during which all Registrable Securities requested to be registered have
been sold, and comply with the provisions of the Securities 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;
(iii) furnish to each seller of Registrable Securities such number of
copies of such registration statement, each amendment and supplement thereto,
the prospectus included in such registration statement (including each
preliminary prospectus), and such other documents as such seller may reasonably
request in order to facilitate the disposition of the Registrable Securities
owned by such seller;
(iv) use its best efforts to register or qualify such Registrable
Securities under such other securities or blue sky laws of such jurisdictions as
the managing underwriter reasonably requests and do any and all other acts and
things which may be reasonably necessary or advisable to enable such seller to
consummate the disposition in such jurisdictions of the Registrable Securities
owned by such seller (provided that the Company shall not be required to (a)
qualify generally to do business in any jurisdiction where it would not
otherwise be required to qualify but for this subsection, (b) subject itself to
taxation in any such jurisdiction or (c) consent to general service of process
in any such jurisdiction);
(v) notify each seller of such Registrable Securities, at any time when
a prospectus relating thereto is required to be delivered under the Securities
Act, of the happening of any event as a result of which the prospectus included
in such registration statement contains an untrue statement of a material fact
or omits any fact necessary to make the statements therein not misleading, and,
at the request of any such seller, the Company shall prepare a supplement or
amendment to such prospectus so that, as thereafter delivered to the purchasers
of such Registrable Securities, such prospectus shall not contain an untrue
statement of a material fact or omit to state any fact necessary to make the
statements therein not misleading;
(vi) cause all such Registrable Securities to be listed on each
securities exchange on which similar securities issued by the Company are then
listed and, if not so listed, to be listed on the NASDAQ national market system;
(vii) provide a transfer agent and registrar for all such Registrable
Securities not later than the effective date of such registration statement;
(viii) enter into such customary agreements (including underwriting
agreements in customary form) and take all such other actions as the holders of
two-thirds of the Registrable Securities being sold or the underwriters, if any,
reasonably request in order to expedite or facilitate the disposition of such
Registrable Securities (including, without limitation, effecting a stock split
or a combination of shares);
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<PAGE>
(ix) make available for inspection by any seller of Registrable
Securities, any underwriter participating in such registration statement, and
any attorney, accountant or other agent retained by any such seller or
underwriter, all financial and other records, pertinent corporate documents and
properties of the Company, and cause the Company's officers, directors,
employees and independent accountants to supply all information reasonably
requested by any such seller, underwriter, attorney, accountant or agent in
connection with such registration statement;
(x) otherwise use its best efforts to comply with all applicable rules
and regulations of the Securities and Exchange Commission;
(xi) permit any holder of Registrable Securities which holder, in its
sole and exclusive judgment, might be deemed to be an underwriter or a
controlling person of the Company, to participate in the preparation of such
registration or comparable statement and to require the insertion therein of
material, furnished to the Company in writing, which in the reasonable judgment
of such holder and its counsel should be included;
(xii) obtain a cold comfort letter from the Company's independent public
accountants in customary form covering such matters of the type customarily
covered by such cold comfort letters addressed to the sellers of Registrable
Securities;
(xiii) in the event of the issuance of any stop order suspending the
effectiveness of a registration statement, or of any order suspending or
preventing the use of any related prospectus or suspending the qualification of
any common stock included in such registration statement for sale in any
jurisdiction, the Company shall use its reasonable best efforts promptly to
obtain the withdrawal of such order; and
(xiv) during the period when the prospectus is required to be delivered
under the Securities Act, promptly file all documents required to be filed with
the Commission pursuant to Sections 13(a), 13(c), 14 or 15(d) of the Securities
Exchange Act.
4.2. Controlling Stockholders' Rights.
If any such registration statement refers to any holder by name or
otherwise as the holder of any securities of the Company and if in its sole and
exclusive judgment, such holder is or might be deemed to be a controlling person
of the Company, such holder shall have the right to require: (i) the insertion
therein of language, in form and substance satisfactory to such holder and
presented to the Company in writing, 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 Company's securities covered thereby and
that such holding does not imply that such holder shall assist in meeting any
future financial requirements of the Company; or (ii) in the event that such
reference to such holder by name or otherwise is not required by the Securities
Act or any similar federal statute then in force, the deletion of the reference
to such holder; provided that with respect to this clause (ii) such holder shall
furnish to the Company an opinion of counsel to such effect, which opinion and
counsel shall be reasonably satisfactory to the Company.
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5. REGISTRATION EXPENSES.
5.1. Company Expenses.
All expenses incident to the Company's performance of the Demand
Registrations (whether Long-Form or Short-Form Registrations) and Piggyback
Registrations to which the Investor is entitled hereunder, shall be borne by the
Company. The foregoing expenses shall include, without limitation, all
registration and filing fees, fees and expenses of compliance with securities or
blue sky laws, printing expenses, messenger and delivery expenses, and fees and
disbursements of counsel for the Company and all independent certified public
accountants, underwriters (excluding discounts and commissions) and other
Persons retained by the Company (all such expenses being herein called
"Registration Expenses"). The Company shall also pay its internal expenses
(including, without limitation, all salaries and expenses of its officers and
employees performing legal or accounting duties), the expense of any annual
audit or quarterly review, the expense of any liability insurance, and the
expenses and fees for listing the securities to be registered on each securities
exchange on which similar securities issued by the Company are then listed or on
the NASDAQ national market system.
5.2. Counsel Fees.
With respect to the Demand Registrations and the Piggyback
Registrations to which the Investor is entitled hereunder, the Company shall
reimburse the holders of Registrable Securities covered by such registration for
the reasonable fees and disbursements of one counsel for, and chosen by, the
holder or holders of Registrable Securities participating in such registration.
Notwithstanding the foregoing, the Company shall not be required to pay for any
Registration Expenses if such registration is subsequently withdrawn at any time
at the request of the holders of two-thirds of the Registrable Securities to be
registered (in which case all participant holders shall bear such expenses on a
pro rata basis).
5.3. Underwriting Discounts and Commissions.
Each holder of Registrable Securities participating in any
registration shall bear its proportionate share (in relation to the number of
shares included in such registered offering as compared to the number of
Registrable Securities of such holder included in such registered offering) of
all underwriting discounts and commissions.
6. INDEMNIFICATION.
6.1. Company Indemnification.
The Company agrees to indemnify, to the extent permitted by law, each
holder of Registrable Securities, its officers and directors and each Person who
controls such holder (within the meaning of the Securities Act or the Securities
Exchange Act) against all losses, claims, damages, liabilities and expenses
caused by (i) any untrue or alleged untrue statement of material fact contained
in any registration statement, prospectus or preliminary prospectus or any
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amendment thereof or supplement thereto or any omission or alleged omission of a
material fact required to be stated therein or necessary to make the statements
therein not misleading, except insofar as the same are caused by or contained in
any information furnished in writing to the Company by such holder expressly for
use therein or by such holder's failure to deliver a copy of the registration
statement or prospectus or any amendments or supplements thereto after the
Company has furnished such holder with a sufficient number of copies of the
same, or (ii) any violation by the Company of the Securities Act, any state
securities or "blue sky" laws or any rule or regulation thereunder in connection
with such registration. In connection with any underwritten offering, the
Company shall indemnify such underwriters, their officers and directors and each
Person who controls such underwriters (within the meaning of the Securities Act)
to the same extent as provided above with respect to the indemnification of the
holders of Registrable Securities.
6.2. Holder Indemnification.
In connection with any registration statement in which a holder of
Registrable Securities is participating, each such holder shall furnish to the
Company in writing such information and affidavits as the Company reasonably
requests for use in connection with any such registration statement or
prospectus and, to the extent permitted by law, shall indemnify the Company, its
directors and officers and each Person who controls the Company (within the
meaning of the Securities Act or the Securities Exchange Act) against any
losses, claims, damages, liabilities and expenses resulting from any untrue or
alleged untrue statement of material fact contained in the registration
statement, prospectus or preliminary prospectus or any amendment thereof or
supplement thereto or any omission or alleged omission of a material fact
required to be stated therein or necessary to make the statements therein not
misleading, but only to the extent that such untrue statement or omission is
contained in any information or affidavit so furnished in writing by such
holder; provided that the obligation to indemnify shall be individual to each
holder and shall be limited to the net amount of proceeds received by such
holder from the sale of Registrable Securities pursuant to such registration
statement.
6.3. Indemnification Procedures.
Any Person entitled to indemnification under this Section 6 shall:
(i) give prompt written notice to the indemnifying party of any claim with
respect to which such Person seeks indemnification, but the failure to do so
shall not relieve the indemnifying party from any liability, except to the
extent it is actually prejudiced by the failure or delay in giving such notice;
and (ii) unless in such indemnified party's reasonable judgment a conflict of
interest between such indemnified and indemnifying parties may exist with
respect to such claim, permit such indemnifying party to assume the defense of
such claim with counsel reasonably satisfactory to the indemnified party. If
such defense is assumed, the indemnifying party shall not be subject to any
liability for any settlement made by the indemnified party without its consent
(but such consent shall not be unreasonably withheld). An indemnifying party who
is not entitled to, or elects not to, assume the defense of a claim shall not be
obligated to pay the fees and expenses of more than one counsel for all parties
indemnified by such indemnifying party with respect to
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such claim, unless in the reasonable judgment of any indemnified party a
conflict of interest may exist between such indemnified party and any other of
such indemnified parties with respect to such claim.
6.4. Survival and Contribution.
The indemnification provided for under this Section 6 shall remain in
full force and effect regardless of any investigation made by or on behalf of
the indemnified party or any officer, director or controlling Person of such
indemnified party and shall survive the transfer of securities. The Company also
agrees to make such provisions, as are reasonably requested by any indemnified
party, for contribution to such party in the event the Company's indemnification
is unavailable for any reason.
7. PARTICIPATION IN UNDERWRITTEN REGISTRATIONS.
No Person may participate in any registration hereunder which is
underwritten unless such Person: (i) agrees to sell such Person's securities on
the basis provided in any underwriting arrangements approved by the Person or
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.
8. RULE 144 COVENANTS.
After the closing of the first sale of securities of the Company pursuant
to a registration statement, the Company agrees to:
(i) make and keep public information available, as those terms are
understood and defined in Rule 144;
(ii) use its best efforts to file with the Securities and Exchange
Commission in a timely manner all reports and other documents required of the
Company to be filed under the Securities Exchange Act (at any time after it has
become subject to such reporting requirements); and
(iii) furnish to any holder of Registrable Securities, upon request: (A)
a written statement by the Company as to its compliance with the reporting
requirements of Rule 144 (at any time after 90 days following the close of the
first sale of securities by the Company pursuant to a registration statement),
and of the Securities Act and the Securities Exchange Act (at any time after it
has become subject to such reporting requirement); (B) a copy of the most recent
annual or quarterly report of the Company; and (C) such other reports and
documents of the Company as such holder may reasonably request to avail itself
of any similar rule or regulation of the Securities and Exchange Commission
allowing it to sell any such securities without registration.
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9. DEFINITIONS.
"Demand Registration" shall have the meaning assigned to it in Section 1.1
hereof.
"Long-Form Registration" has the meaning assigned to it in Section 1.1
hereof.
"Person" means an individual, a partnership, a corporation, an association,
a joint stock company, a trust, a joint venture, a limited liability company, an
unincorporated organization and a governmental entity or any department, agency,
or political subdivision thereof.
"Piggyback Registration" shall have the meaning assigned to it in Section
2.1 hereof.
"Registrable Securities" means: (i) any Warrant Shares issuable or issued
upon the exercise of the Common Stock Purchase Warrant dated as of the date
hereof issued to the Investor, (ii) any Common Stock issued or issuable with
respect to the securities referred to in clause (i) by way of a stock dividend
or stock split or in connection with a combination of shares, recapitalization,
merger, consolidation or other reorganization; and (iii) any of the securities
referred to in clauses (i) and (ii) held by a Person to whom the Investor has
directly transferred at least 25% of such securities. As to any particular
Registrable Securities, such securities shall no longer be Registrable
Securities (a) if further transferred by such transferee, (b) if transferred by
the Investor to a transferee that does not acquire at least 25% of the
securities referred to in clauses (i) and (ii) above, or (c) after they become
freely transferable under Rule 144 of the Securities Act. For purposes of this
Agreement, a Person shall be deemed to be a holder of Registrable Securities
whenever such Person has the right to acquire directly or indirectly such
Registrable Securities (upon conversion or exercise, in connection with a
transfer of securities or otherwise, but disregarding any restrictions or
limitations upon the exercise of such right), whether or not such acquisition
has actually been effected. Notwithstanding the foregoing, prior to
effectiveness of any registration of any Registrable Securities in any
registered offering, the holder thereof, if requested or required by the
managing underwriter, shall exercise all conversion rights or rights under
warrants so that the Registrable Securities included in such offering include
only shares of Common Stock.
"Rule 144" means Rule 144 promulgated by the Securities and Exchange
Commission under the Securities Act as such rule may be amended from time to
time, or any similar rule then in force.
"Securities Act" means the Securities Act of 1933, as amended, or any
similar federal law then in force.
"Securities Exchange Act" means the Securities Exchange Act of 1934, as
amended, or any similar federal law then in force.
"Securities and Exchange Commission" means the United States Securities and
Exchange Commission or any governmental body or agency succeeding to the
functions thereof.
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"Short-Form Registration" shall have the meaning assigned to it in Section
1.1 hereof.
10. MISCELLANEOUS.
10.1. No Inconsistent Agreements.
The Company shall not hereafter enter into any agreement with
respect to its securities which is inconsistent with or violates the rights
granted to the holders of Registrable Securities in this Agreement.
10.2. Adjustments Affecting Registrable Securities.
The Company shall not take any action, or permit any change to
occur, with respect to its securities which would materially and adversely
affect the ability of the holders of Registrable Securities to include such
Registrable Securities in a registration undertaken pursuant to this Agreement
or which would materially and adversely affect the marketability of such
Registrable Securities in any such registration (including, without limitation,
effecting a stock split or a combination of shares).
10.3. Remedies.
Any Person having rights under any provision of this Agreement shall
be entitled to enforce such rights specifically to recover damages caused by
reason of any breach of any provision of this Agreement and to exercise all
other rights granted by law. The parties hereto agree and acknowledge that money
damages may not be an adequate remedy for any breach of the provisions of this
Agreement and that any party may in its sole discretion apply to any court of
law or equity of competent jurisdiction (without posting any bond or other
security) for specific performance and for other injunctive relief in order to
enforce or prevent violation of the provisions of this Agreement.
10.4. Amendments and Waivers.
Except as otherwise provided herein, the provisions of this
Agreement may be amended or waived only upon the prior written consent of the
Company and holders of at least two-thirds of the Registrable Securities.
10.5. Successors and Assigns.
All covenants and agreements in this Agreement by or on behalf of
any of the parties hereto shall bind and inure to the benefit of the respective
successors and assigns of the parties hereto whether so expressed or not. In
addition, whether or not any express assignment has been made, the provisions of
this Agreement which are for the benefit of purchasers or holders of Registrable
Securities are also for the benefit of, and enforceable by, any subsequent
holder of Registrable Securities.
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10.6. Severability.
Whenever possible, each provision of this Agreement shall be
interpreted in such manner as to be effective and valid under applicable law,
but if any provision of this Agreement is held to be prohibited by or invalid
under applicable law, such provision shall be ineffective only to the extent of
such prohibition or invalidity, without invalidating the remainder of this
Agreement.
10.7. Counterparts.
This Agreement may be executed simultaneously in two or more
counterparts, any one of which need not contain the signatures of more than one
party, but all such counterparts taken together shall constitute one and the
same Agreement.
10.8. Descriptive Headings.
The descriptive headings of this Agreement are inserted for
convenience only and do not constitute a part of this Agreement.
10.9. Governing Law.
The corporate law of Delaware shall govern all issues concerning the
relative rights of the Company and its stockholders and all other questions
concerning the construction, validity and interpretation of this Agreement.
10.10 Notices.
All notices, demands or other communications to be given or
delivered under or by reason of the provisions of this Agreement shall be in
writing and shall be deemed to have been given when delivered personally to the
recipient, sent to the recipient by reputable express courier service (charges
prepaid) or mailed to the recipient by certified or registered mail, return
receipt requested and postage prepaid. Such notices, demands and other
communications shall be sent to the parties at the address indicated below:
If to the Company: Opinion Research Corporation. Fax: (908) 281-5105
23 Orchard Road
Skillman, NJ 08542
Attention: Chief Executive Officer
with a copy to: Wolf, Block, Schorr and Solis- Fax: (215) 977-2740
Cohen LLP
1650 Arch Street
Philadelphia, PA 19103
Attention: David Gitlin
-12-
<PAGE>
If to the Investor: Allied Capital Corporation Fax: (202) 659-2053
1919 Pennsylvania Avenue, NW
Washington, DC 20006-3434
Attention: Thomas H. Westbrook
with a copy to: Piper & Marbury L.L.P. Fax: (202) 223-2085
1200 19/th/ Street, NW, 8/th/ Floor
Washington, D.C. 20036
Attention: Anthony H. Rickert
or to such other address or to the attention of such other person as the
recipient party has specified by prior written notice to the sending party.
Signatures on following pages
-13-
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first written above.
ATTEST: COMPANY:
OPINION RESEARCH CORPORATION
By: /s/ Douglas L. Cox By: /s/ John F. Short (SEAL)
------------------------------- ---------------------
Douglas L. Cox, Secretary Name: John F. Short
--------------- -------------------
Title: President
------------------
INVESTOR:
ALLIED CAPITAL CORPORATION
By: /s/ Kristine M. Lansing By: /s/ Thomas H. Westbrook (SEAL)
------------------------------ ---------------------------
Assistant Secretary Name: Thomas H. Westbrook
----------------------
Title: Principal
---------------------
ALLIED INVESTMENT CORPORATION
By: /s/ Kristine M. Lansing By: /s/ Thomas H.Westbrook (SEAL)
------------------------------ ---------------------------
Assistant Secretary Name: Thomas H. Westbrook
----------------------
Title: Principal
---------------------
-14-
<PAGE>
Exhibit 10.10
THIS SECURITY HAS BEEN ACQUIRED IN A TRANSACTION NOT INVOLVING ANY PUBLIC
OFFERING AND HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "ACT"), AND MAY NOT BE OFFERED, SOLD OR TRANSFERRED EXCEPT IN
COMPLIANCE WITH THE ACT.
OPINION RESEARCH CORPORATION
______________________________
COMMON STOCK PURCHASE WARRANT
______________________________
Certificate No. ____
Dated as of May [__], 1999
1. Grant. For consideration of $100 and other value received, OPINION
-----
RESEARCH CORPORATION, a Delaware corporation (the "Corporation"), hereby grants
to ALLIED INVESTMENT CORPORATION or its assigns or transferees (the "Holder"),
at the exercise price set forth in Section 3 below, the right to purchase
207,589 shares (the "Basic Shares") plus, on the terms and conditions set forth
in Section 4(b) hereto, up to an additional 69,196 shares (the "Contingent
Shares," and, together with the Basic Shares, the "Warrant Shares") of Common
Stock (or other security issued in accordance with Section 8). This Warrant is
being issued at Closing under an investment agreement dated as of the date
hereof (the "Investment Agreement") by and among the Corporation and the Holder.
Capitalized terms used herein, but not elsewhere defined herein or in the
Investment Agreement, have the meanings set forth in Schedule 1.
----------
2. Exercise Period. The right to exercise this Warrant, in whole or in
---------------
part, begins on the date hereof. The right to exercise this Warrant expires on
the later of (i) the eighth anniversary of the date hereof, or (ii) on the third
anniversary of the Repayment Date (the "Expiration Date").
3. Exercise Price. The exercise price of this Warrant is $5.422 per
--------------
share, as adjusted from time to time as hereinafter set forth (the "Exercise
Price").
4. Anti-Dilution Adjustment.
------------------------
(a) Dilutive Transactions. If the Corporation enters into a Dilutive
---------------------
Transaction, other than a transaction described in Section 4(b) hereof, the
Exercise Price shall be decreased to the Weighted Average Per Share Value.
<PAGE>
(b) Contingent Shares.
-----------------
(i) If any one of the following three events fails to occur
prior to the second anniversary of the date hereof, then the Holder shall have
the right to purchase 34,598 Contingent Shares (for a total of 242,187 Warrant
Shares purchasable hereunder) upon exercise of this Warrant:
(1) the Repayment Date has occurred;
(2) the Corporation has made to the Holder a Bona Fide
Offer to purchase all of the Warrants or Warrant Shares
at the Market Price (less the Exercise Price if such
Warrant has not been exercised at such time); and
(3) the Market Price at the time the Bona Fide Offer is
made is greater than or equal to the initial Exercise
Price set forth in Section 3 hereof, plus $5 per share.
(ii) If any one of the following three events fails to occur
prior to the third anniversary of the date hereof, then the Holder shall have
the right to purchase 34,598 Contingent Shares (in addition to any Warrant
Shares received pursuant to Section 1 and clause (i) above) upon exercise of
this Warrant;
(1) the Repayment Date has occurred;
(2) the Corporation has made to the Holder a Bona Fide
Offer to purchase all of the Warrants or Warrant Shares
at the Market Price (less the Exercise Price if such
Warrant has not been exercised at such time); and
(3) the Market Price at the time the Bona Fide Offer is
made is greater than or equal to the initial Exercise
Price set forth in Section 3 hereof, plus $8 per share.
(c) Readjustment.
------------
(i) Expiration of Option or Right to Subscribe For or Purchase.
----------------------------------------------------------
If any option or right issued in connection with a Dilutive
Transaction expires without having been exercised prior to
the exercise by Holder of its rights hereunder, the Exercise
Price shall forthwith be readjusted to such greater number
as would have been in effect had the option or right never
been issued.
(ii) Expiration of Right to Convert or Exchange. If any right to
------------------------------------------
convert or exchange any Common Stock Equivalent issued in
connection with a Dilutive Transaction expires without
having been exercised
-2-
<PAGE>
prior to the exercise by Holder of its rights hereunder,
the Exercise Price shall forthwith be readjusted to such
greater number as would have been in effect had the Common
Stock Equivalent never been issued.
5. Other Adjustments.
------------------
(a) Adjustment for Change in Common Stock.
-------------------------------------
(i) If the Corporation (A) pays a dividend or makes a
distribution on its Common Stock in shares of its Common
Stock, (B) subdivides or reclassifies its outstanding
shares of Common Stock into a greater number of shares, or
(C) combines or reclassifies its outstanding shares of
Common Stock into a smaller number of shares (each, an
"Adjustment Event"), the Exercise Price and the number of
Warrant Shares issuable hereunder immediately prior to such
action shall be proportionately adjusted to reflect such
Adjustment Event.
(ii) The adjustment shall become effective immediately after the
record date in the case of a dividend or distribution and
immediately after the effective date in the case of a
subdivision, combination or reclassification.
(iii) The adjustment shall be made successively whenever any
Adjustment Event occurs.
(b) Adjustment for Reorganization. If the Corporation consolidates or
-----------------------------
merges with or into another Person or enters into any other similar transaction,
recapitalization or reorganization (any such action, a "Reorganization"), there
shall thereafter be deliverable, upon exercise of this Warrant (in lieu of the
number of Warrant Shares theretofore deliverable) the number of shares of stock
or other securities or property to which a holder of the number of shares of
Common Stock that would otherwise have been deliverable upon exercise of this
Warrant would have been entitled upon such Reorganization if such Warrant has
been exercised in full immediately prior to such Reorganization.
6. Participation in Repurchases or Redemptions. If the Corporation
-------------------------------------------
repurchases or redeems any of its securities, the Corporation will offer to
include the Holder in such repurchase or redemption, as if the Holder had
exercised this Warrant immediately prior to the event (or any record date with
respect thereto). If the Holder elects to participate in a repurchase or
redemption, this Warrant shall be modified (as of the date of such event) so
that the Holder shall be entitled to receive, upon exercise, the number of
Warrant Shares issuable hereunder less the number of Warrant Shares redeemed or
repurchased.
-3-
<PAGE>
7. Prior Notice as to Certain Events.
---------------------------------
(a) Dividends, Distributions, Subscription Rights. If the Corporation
---------------------------------------------
(i) pays any dividend, or makes any distribution, or repurchases or redeems any
of its securities, or (ii) offers any subscription rights pro rata to the
--- ----
holders of its Common Stock, then at least 15 days prior to the record date for
such action, the Corporation will send written notice (by first class mail,
postage prepaid, addressed to the Holder at its address shown on the books of
the Corporation) of the dates on which (A) the Corporation will close its books
or take a record for such action and (B) the holders of Common Stock of record
will participate in such action.
(b) Reorganizations. If the Corporation (i) enters into any
---------------
Reorganization or reclassification of its capital stock, or (ii) is the subject
of a voluntary or involuntary dissolution, liquidation or winding up of the
Corporation, then at least 15 days prior to such action, the Corporation will
send written notice (by first class mail, postage prepaid, addressed to the
Holder at its address shown on the books of the Corporation) of the dates on
which (A) such action will occur and (B) the holders of Common Stock of record
may exchange their Common Stock for securities or other property deliverable
upon such action.
8. Alternate Class. In the event the Corporation consummates the
---------------
registration of any of its securities other than Common Stock (the "Alternate
Class") in accordance with the Securities Act of 1933, as amended, upon the
request of the Holder:
(a) the Corporation will issue to Holder, upon exercise of this
Warrant, the equivalent number of shares of such Alternate Class, so long as the
holders of the shares of the Alternate Class have all of the sam e rights as the
holders of shares of Common Stock, except for voting rights; and
(b) all references herein to Common Stock shall be deemed to refer to
the Alternate Class.
9. Reservation of Common Stock. The Corporation will reserve and keep
---------------------------
available for issuance and delivery upon the exercise of this Warrant such
number of its authorized but unissued shares of Common Stock or other securities
of the Corporation as will be sufficient to permit the exercise in full of this
Warrant. Upon issuance, each of the Warrant Shares will be validly issued, fully
paid and nonassessable, free and clear of all liens, security interests, charges
and other encumbrances or restrictions on sale and free and clear of all
preemptive rights.
10. No Voting Rights; Limitations of Liability. Prior to exercise, this
------------------------------------------
Warrant will not entitle the Holder to (a) any voting rights, or (b) other
rights as a stockholder of the Corporation not granted herein. No provision of
this Warrant, in the absence of affirmative action by the Holder to exercise
this Warrant, and no enumeration in this Warrant of the rights or privileges of
the Holder, will give rise to any liability of such Holder for the Exercise
Price.
11. Exercise Procedure. To exercise this Warrant, the Holder must deliver
------------------
to the principal office of the Corporation (prior to the Expiration Date) this
Warrant, the subscription
-4-
<PAGE>
substantially in the form of Exhibit A attached hereto, and the Exercise Price
---------
(as adjusted pursuant to the terms hereof). The Holder may deliver the Exercise
Price by any of the following methods, at its option: (i) in legal tender, (ii)
by bank cashier's or certified check, (iii) by wire transfer to an account
designated by the Corporation, or (iv) in accordance with Section 12. Upon
exercise, the Corporation, at its sole expense (including the payment of any
documentary, stamp, issue or transfer taxes), will issue and deliver to Holder,
within 10 days after the date on which the Holder exercises this Warrant,
certificates for the Warrant Shares purchased hereunder. The Warrant Shares
shall be deemed issued, and the Holder deemed the holder of record of such
Warrant Shares, as of the opening of business on the date on which the Holder
exercises this Warrant.
12. Cashless Payment.
----------------
(a) Right to Convert. In lieu of paying the applicable Exercise Price
----------------
by legal tender, check, or wire transfer, the Holder may elect to receive, upon
exercise of this Warrant, that number of Warrant Shares equal to the quotient
obtained by dividing:
[(A-B)(X)] by (A), where:
A = the Conversion Value (as defined Stock on the date of
exercise; below) of a share of Common
B = the Exercise Price for a share of Common Stock;
X = the number of Warrant Shares (equal to Warrant Shares then
issuable is being exercised. or less than the number of
hereunder) as to which this Warrant
(b) Conversion Value. For purposes of this Section 12 only, the
---------------- ----
Conversion Value of a share of Common Stock means:
(i) if the Common Stock is listed on a national securities
exchange or admitted to unlisted trading privileges on such
exchange or listed for trading on the Nasdaq National Market
System maintained by the National Association of Securities
Dealers, Inc., -- the last reported sale price of the Common
Stock on the last trading day prior to the date of exercise
of this Warrant (or the average closing bid and asked prices
for such day if no such sale is made on such day);
(ii) if clause (i) does not apply, and if the prices are reported
by the National Quotation Bureau, Inc., -- the mean of the
last reported bid and asked prices reported on the last
trading day prior to the date of exercise of this Warrant;
and
-5-
<PAGE>
(iii) in all other cases -- the per share value as determined by
the board of directors in good faith.
13. Sale of Warrant or Warrant Shares. Neither this Warrant nor any of the
---------------------------------
Warrant Shares have been registered under the Act or under the securities laws
of any state. Neither this Warrant nor any of the Warrant Shares (when issued)
may be sold, assigned, transferred, pledged or hypothecated or otherwise
disposed of except as permitted: (i) by any shareholders agreement then in
effect, (ii) by any effective registration statement under the Act and by the
securities laws of any state in question, or (iii) by an opinion of counsel
reasonably satisfactory to the Corporation stating that such registration under
the Act and registration or qualification under the securities laws of any state
is not required. Until the Warrant Shares have been registered under the Act and
registered and qualified under the securities laws of any state in question, the
Corporation shall cause each certificate evidencing any Warrant Shares to bear
the following legends:
THE SHARES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR UNDER
THE SECURITIES LAWS OF ANY STATE. THE SHARES MAY NOT BE OFFERED,
SOLD, ASSIGNED, TRANSFERRED, PLEDGED OR HYPOTHECATED OR OTHERWISE
DISPOSED OF IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND SUCH
REGISTRATION OR QUALIFICATION AS MAY BE NECESSARY UNDER THE
SECURITIES LAWS OF ANY STATE, OR AN OPINION OF COUNSEL
SATISFACTORY TO THE CORPORATION THAT SUCH REGISTRATION OR
QUALIFICATION IS NOT REQUIRED.
THE SHARES EVIDENCED BY THIS CERTIFICATE ARE SUBJECT TO THE
TERMS OF INVESTMENT AGREEMENT BETWEEN THE HOLDER AND THE
CORPORATION DATED AS OF MAY [___], 1999.
14. Transfer. The Corporation will register this Warrant on its books and
--------
keep such books at its offices. To effect a transfer permitted by Section 13
hereof, the Holder must present (either in person, or by duly authorized
attorney) written notice substantially in the form of Exhibit B attached hereto.
---------
To prevent a transfer in violation of Section 13, the Corporation may issue
appropriate stop orders to its transfer agent.
15. Replacement of Warrant. If the Holder provides evidence that this
----------------------
Warrant or any certificate or certificates representing the Warrant Shares have
been lost, stolen, destroyed or mutilated, the Corporation (at the request and
expense of the Holder) will issue a replacement warrant upon reasonably
satisfactory indemnification by the Holder (if required by the Corporation).
-6-
<PAGE>
16. "Put" Rights.
-----------
(a) Commencing on the fifth anniversary of the date hereof, in the event
that the Corporation no longer has any of its securities registered under the
Securities Exchange Act of 1934, the Holder may sell the Warrant or the Warrant
Shares to the Company (and the Company is obligated to purchase such shares) for
a price in cash that is equal to the Fair Market Value (less the Exercise Price
if such Warrant has not been exercised at such time). For the purposes of this
Section 16, Fair Market Value shall have the meaning set forth in clause (iv) of
the definition of "Fair Market Value" on Schedule 1.
(b) To exercise its rights hereunder, the Holder shall give the Company at
least 60 days' prior written notice of its desire to sell the Warrant or the
Warrant Shares. Any sale pursuant to this Section 16 shall be consummated as
soon as practical after the delivery of the notice of such election by the
Holder, but in any event, within 60 days after the delivery of such notice.
17. Governing Law. The laws of the State of Delaware (other than its
-------------
conflict of law rules) govern this Warrant.
* * * *
Signatures on following page.
-7-
<PAGE>
IN WITNESS WHEREOF, the Corporation has caused this Warrant to be signed on
its behalf, in its corporate name, by its President, and its corporate seal to
be hereunto affixed and the said seal to be attested by its Secretary, as of the
[___] day of May, 1999.
OPINION RESEARCH CORPORATION
a Delaware corporation
Attest: /s/ Douglas L. Cox By: /s/ John F. Short [Seal]
------------------ ------------------
Douglas L. Cox, John F. Short,
------------------- ------------------
Secretary President
-8-
<PAGE>
EXHIBIT A
---------
IRREVOCABLE SUBSCRIPTION
------------------------
To: Opinion Research Corporation
The undersigned hereby elects to exercise its right under the attached
Warrant by purchasing ____ shares of the Common Stock, and hereby irrevocably
subscribes to such issue. The certificates for such shares shall be issued in
the name of:
______________________________
(Name)
______________________________
(Address)
______________________________
(Taxpayer Number)
and delivered to:
______________________________
(Name)
______________________________
(Address)
The Exercise Price of $_______ is enclosed.
or
--
In lieu of payment of the Exercise Price, the undersigned hereby invokes
the provisions of Section 12 of the Warrant.
Date:_______________
Signed: ________________________________________
(Name of Holder, Please Print)
________________________________________
(Address)
________________________________________
(Signature)
-9-
<PAGE>
Exhibit B
---------
ASSIGNMENT
----------
For value received, the undersigned hereby sells, assigns and transfers
unto:
_______________________________
(Name)
_______________________________
(Address)
the attached Warrant, together with all right, title and interest therein
to purchase [__] shares of the Common Stock, and does hereby irrevocably appoint
_______________________ as attorney-in-fact to transfer said Warrant on the
books of Opinion Research Corporation with full power of substitution in the
premises.
Done this ______ day of ____________ 19____.
______________________________
(Signature)
______________________________
(Name and title)
______________________________
______________________________
(Address)
-10-
<PAGE>
SCHEDULE 1
----------
"Bona Fide Offer" means a bona fide written offer coupled with evidence
reasonably satisfactory to the Holder that the Corporation has the present
financial ability to pay the purchase price of the Warrant or Warrant
Shares (as the case may be) in full in cash at a closing to occur no more
than 30 days from the date such bona fide written offer was delivered to
the Holder.
"Common Stock Equivalent" means any equity interest of the Corporation that is
convertible or exchangeable into Common Stock at any time.
"Common Stock Deemed Outstanding" means, at any given time, the sum of:
(i) the number of shares of Common Stock and Common Stock
Equivalents (excluding the Contingent Shares) outstanding at such time,
plus
----
(ii) the number of shares of Common Stock and Common Stock
Equivalents subject to any options, warrants, convertible securities or
other commitments outstanding at such time.
"Consideration" means:
(i) if the Corporation issues Common Stock, -- the gross proceeds
received by the Corporation;
(ii) if the Corporation issues Common Stock Equivalents, -- the gross
proceeds received by the Corporation, plus the minimum aggregate amount of
gross proceeds, if any, payable to the Corporation upon exchange or
conversion;
(iii) if the Corporation issues options or rights to subscribe for or
to purchase Common Stock or any Common Stock Equivalents, -- the gross
proceeds, if any, received by the Corporation, plus the minimum aggregate
amount of gross proceeds, if any, payable to the Corporation upon exercise;
(iv) if the Corporation issues a combination of securities consisting
of Common Stock or Common Stock Equivalents and other securities of the
Corporation, and if the amount of gross proceeds allocable to the Common
Stock or Common Stock Equivalents is not determinable on its face at the
time of such issuance, -- the portion of gross proceeds received by the
Corporation, as determined in good faith by the Corporation's Board of
Directors; and
(v) if the Corporation receives any non-cash consideration, -- the
fair value of the non-cash consideration, as determined in good faith by
the Corporation's Board of Directors.
-11-
<PAGE>
"Dilutive Transaction" means any transaction (other than Exempt Transactions)
where the Corporation does any of the following, based on a Per Share Price
which is less than the Non-Dilutive Price:
(i) issues or sells any Common Stock or any Common Stock
Equivalents;
(ii) issues or sells any options, warrants or other rights to
purchase or otherwise acquire any Common Stock or any Common Stock
Equivalent; or
(iii) decreases the subscription, exercise, conversion or exchange
price of the securities described in (i) or (ii).
"Employee Options" means options to purchase shares of Common Stock issued by
the Board of Directors of the Corporation pursuant to a stock option plan
approved by the shareholders of the Corporation to employees of,
consultants to, contractors with, or members of the Board of Directors of
the Corporation, in connection with or as compensation for the performance
of services to the Corporation.
"Employee Option Shares" means shares of Common Stock into which Employee
Options are exercisable.
"Exempt Transaction" means any transaction where the Corporation:
(i) issues any Common Stock upon conversion or exercise of
securities outstanding or issued as of the date hereof,
(ii) issues Employee Options to acquire Employee Option Shares;
provided, however, that the exercise price for such Employee Options shall
-------- -------
be no less than the Fair Market Value of the shares of Common Stock at the
time of the issuance of such options, or
(iii) issues any Common Stock upon exercise of this Warrant.
"Fair Market Value" of a share of Common Stock means:
(i) if the Common Stock is listed on a national securities exchange
or admitted to unlisted trading privileges on such exchange or listed for
trading on the Nasdaq National Market System maintained by the National
Association of Securities Dealers, Inc., -- the last reported sale price of
the Common Stock on the last trading day prior to the Dilutive Transaction
(or the average closing bid and asked prices for such day if no such sale
is made on such day);
(ii) if clause (i) does not apply, and if the prices are reported by
the National Quotation Bureau, Inc., -- the mean of the last reported bid
and asked prices reported on the last trading day prior to the Dilutive
Transaction;
(iii) if clauses (i) and (ii) do not apply, and if the transaction
involves the sale by the Corporation of securities to unaffiliated third
parties (utilizing the services of an investment banker acceptable to
Holder), -- the Per Share Price; and-
-12-
<PAGE>
(iv) in all other cases -- as determined based on earnings and book
value and other appropriate items in accordance with the following
procedures:
(A) the Holder will recommend three qualified, independent
appraisers to the Corporation;
(B) the Corporation will select and compensate one of the three
appraisers to determine a value;
(C) if either the Holder or the Corporation is dissatisfied with
the value determined by the first appraiser, that Person may designate
and compensate an appraiser of its choice to determine a second value;
(D) if the second value is within 10% of the first value or if
the Holder and the Corporation agree, the average of the two values
will be the "Fair Market Value";
(E) if the second value is not within 10% of the first value,
and if either the Holder or the Corporation is dissatisfied with the
second value, that Person may designate and compensate an appraiser of
its choice to determine a third value;
(F) the average of the two values that are nearest will be the
"Fair Market Value"; and
(G) In determining Fair Market Value, the Holder and the
Corporation agree that the independent appraiser shall be instructed,
among other things: (i) to consider recent relevant transactions
involving similar companies that provide services similar to those
provided by the Corporation, (ii) to consider the current market for
publicly traded companies that provide services similar to those
provided by the Corporation, (iii) to utilize all appropriate
valuation models and techniques employing a wide range of assumptions,
(iv) to consider the value of any options to acquire any interest in
any company, business or asset (whether by acquisition of stock,
assets or otherwise) to the extent the value of such interest exceeds
the exercise price (in cash, securities, other assets, assumption of
liabilities or otherwise) of such option, and further (v) that the
Fair Market Value of the Common Stock shall be determined on the basis
of the following assumptions: (a) without any reduction in value for
lack of control or the inherent lack of liquidity of non-public
minority interests, (b) giving full effect to the earnings history and
prospects of the Corporation, (c) that there were liquid public
markets for such securities capable of absorbing a sale of all such
securities with no discount from otherwise prevailing market prices or
for illiquidity, (d) the proceeds that would be realized would be
those realized upon the sale of all of the Corporation's assets,
without reduction for any taxes or transaction expenses that might
occur as a result of the sale or any refinancing, (e) that there is a
willing buyer with adequate recourse debt financing and a seller with
no compulsion to
-13-
<PAGE>
sell, (f) that all shares of the Common Stock have the same voting
rights (notwithstanding that there may be outstanding more than one
class or series of Common Stock with different voting rights), and (g)
otherwise on a basis which values all of the same class or having the
same terms at the same per share price.
"Market Price" means the average price of the Common Stock as listed on the
American Stock Exchange over the immediately preceding 20-day period.
"Non-Dilutive Price" means the initial Exercise Price set forth in Section 3
hereof as of the date hereof, adjusted (i) for stock splits, combinations,
similar events and (ii) to the Weighted Per Share Value each time the
Corporation enters into a Dilutive Transaction.
"Per Share Price" means the total Consideration for each share of Common Stock
or Common Stock Equivalent issued or issuable by the Corporation in
connection with a Dilutive Transaction.
"Repayment Date" means the date on which the Corporation has indefeasibly
repaid in full in cash all amounts owed under the Debenture issued by the
Corporation to the Holder on the date hereof.
"Weighted Average Per Share Value" means the amount determined by performing the
following calculation and rounding the resulting number to the nearest
whole cent: Divide:
(i) the sum of:
(a) the Non-Dilutive Price of a Warrant Share multiplied by the
number of shares of Common Stock Deemed Outstanding
immediately prior to the Dilutive Transaction, plus
----
(b) the aggregate Consideration, if any, received or to be
received by the Corporation in connection with the
Dilutive Transaction, by
--
(ii) the number of shares of Common Stock Deemed Outstanding
immediately after the Dilutive Transaction.
-14-
<PAGE>
Exhibit 10.11
THIS SECURITY HAS BEEN ACQUIRED IN A TRANSACTION NOT INVOLVING ANY PUBLIC
OFFERING AND HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "ACT"), AND MAY NOT BE OFFERED, SOLD OR TRANSFERRED EXCEPT IN
COMPLIANCE WITH THE ACT.
OPINION RESEARCH CORPORATION
______________________________
COMMON STOCK PURCHASE WARRANT
______________________________
Certificate No. ____
Dated as of May [__], 1999
1. Grant. For consideration of $100 and other value received, OPINION
-----
RESEARCH CORPORATION, a Delaware corporation (the "Corporation"), hereby grants
to ALLIED INVESTMENT CORPORATION or its assigns or transferees (the "Holder"),
at the exercise price set forth in Section 3 below, the right to purchase
120,183 shares (the "Basic Shares") plus, on the terms and conditions set forth
in Section 4(b) hereto, up to an additional 40,061 shares (the "Contingent
Shares," and, together with the Basic Shares, the "Warrant Shares") of Common
Stock (or other security issued in accordance with Section 8). This Warrant is
being issued at Closing under an investment agreement dated as of the date
hereof (the "Investment Agreement") by and among the Corporation and the Holder.
Capitalized terms used herein, but not elsewhere defined herein or in the
Investment Agreement, have the meanings set forth in Schedule 1.
----------
2. Exercise Period. The right to exercise this Warrant, in whole or in
---------------
part, begins on the date hereof. The right to exercise this Warrant expires on
the later of (i) the eighth anniversary of the date hereof, or (ii) on the third
anniversary of the Repayment Date (the "Expiration Date").
3. Exercise Price. The exercise price of this Warrant is $5.422 per
--------------
share, as adjusted from time to time as hereinafter set forth (the "Exercise
Price").
4. Anti-Dilution Adjustment.
------------------------
(a) Dilutive Transactions. If the Corporation enters into a Dilutive
---------------------
Transaction, other than a transaction described in Section 4(b) hereof, the
Exercise Price shall be decreased to the Weighted Average Per Share Value.
<PAGE>
(b) Contingent Shares.
-----------------
(i) If any one of the following three events fails to occur prior to
the second anniversary of the date hereof, then the Holder shall have the right
to purchase 20,031 Contingent Shares (for a total of 140,213 Warrant Shares
purchasable hereunder) upon exercise of this Warrant:
(1) the Repayment Date has occurred;
(2) the Corporation has made to the Holder a Bona Fide
Offer to purchase all of the Warrants or Warrant Shares
at the Market Price (less the Exercise Price if such
Warrant has not been exercised at such time); and
(3) the Market Price at the time the Bona Fide Offer is
made is greater than or equal to the initial Exercise
Price set forth in Section 3 hereof, plus $5 per share.
(ii) If any one of the following three events fails to occur prior to
the third anniversary of the date hereof, then the Holder shall have the right
to purchase 20,030 Contingent Shares (in addition to any Warrant Shares received
pursuant to Section 1 and clause (i) above) upon exercise of this Warrant;
(1) the Repayment Date has occurred;
(2) the Corporation has made to the Holder a Bona Fide
Offer to purchase all of the Warrants or Warrant Shares
at the Market Price (less the Exercise Price if such
Warrant has not been exercised at such time); and
(3) the Market Price at the time the Bona Fide Offer is
made is greater than or equal to the initial Exercise
Price set forth in Section 3 hereof, plus $8 per share.
(c) Readjustment.
------------
(i) Expiration of Option or Right to Subscribe For or Purchase.
----------------------------------------------------------
If any option or right issued in connection with a Dilutive
Transaction expires without having been exercised
-2-
<PAGE>
prior to the exercise by Holder of its rights hereunder, the
Exercise Price shall forthwith be readjusted to such greater
number as would have been in effect had the option or right
never been issued.
(ii) Expiration of Right to Convert or Exchange. If any right to
------------------------------------------
convert or exchange any Common Stock Equivalent issued in
connection with a Dilutive Transaction expires without
having been exercised prior to the exercise by Holder of its
rights hereunder, the Exercise Price shall forthwith be
readjusted to such greater number as would have been in
effect had the Common Stock Equivalent never been issued.
5. Other Adjustments.
------------------
(a) Adjustment for Change in Common Stock.
-------------------------------------
(i) If the Corporation (A) pays a dividend or makes a
distribution on its Common Stock in shares of its Common
Stock, (B) subdivides or reclassifies its outstanding
shares of Common Stock into a greater number of shares, or
(C) combines or reclassifies its outstanding shares of
Common Stock into a smaller number of shares (each, an
"Adjustment Event"), the Exercise Price and the number of
Warrant Shares issuable hereunder immediately prior to
such action shall be proportionately adjusted to reflect
such Adjustment Event.
(ii) The adjustment shall become effective immediately after
the record date in the case of a dividend or distribution
and immediately after the effective date in the case of a
subdivision, combination or reclassification.
(iii) The adjustment shall be made successively whenever any
Adjustment Event occurs.
(b) Adjustment for Reorganization. If the Corporation consolidates or
-----------------------------
merges with or into another Person or enters into any other similar transaction,
recapitalization or reorganization (any such action, a "Reorganization"), there
shall thereafter be deliverable, upon exercise of this Warrant (in lieu of the
number of Warrant Shares theretofore deliverable) the number of shares of stock
or other securities or property to which a holder of the number of shares of
Common Stock that would otherwise have been deliverable upon exercise of this
Warrant would have been entitled upon such Reorganization if such Warrant has
been exercised in full immediately prior to such Reorganization.
6. Participation in Repurchases or Redemptions. If the Corporation
-------------------------------------------
repurchases or redeems any of its securities, the Corporation will offer to
include the Holder in such repurchase or redemption, as if the Holder had
exercised this Warrant immediately prior to the event (or any record date with
respect thereto). If the Holder elects to participate in a repurchase or
redemption, this Warrant shall be modified (as of the date of such event) so
that the Holder shall be entitled to receive, upon exercise, the number of
Warrant Shares issuable hereunder less the number of Warrant Shares redeemed or
repurchased.
7. Prior Notice as to Certain Events.
---------------------------------
-3-
<PAGE>
(a) Dividends, Distributions, Subscription Rights. If the Corporation
---------------------------------------------
(i) pays any dividend, or makes any distribution, or repurchases or redeems any
of its securities, or (ii) offers any subscription rights pro rata to the
--- ----
holders of its Common Stock, then at least 15 days prior to the record date for
such action, the Corporation will send written notice (by first class mail,
postage prepaid, addressed to the Holder at its address shown on the books of
the Corporation) of the dates on which (A) the Corporation will close its books
or take a record for such action and (B) the holders of Common Stock of record
will participate in such action.
(b) Reorganizations. If the Corporation (i) enters into any
---------------
Reorganization or reclassification of its capital stock, or (ii) is the subject
of a voluntary or involuntary dissolution, liquidation or winding up of the
Corporation, then at least 15 days prior to such action, the Corporation will
send written notice (by first class mail, postage prepaid, addressed to the
Holder at its address shown on the books of the Corporation) of the dates on
which (A) such action will occur and (B) the holders of Common Stock of record
may exchange their Common Stock for securities or other property deliverable
upon such action.
8. Alternate Class. In the event the Corporation consummates the
---------------
registration of any of its securities other than Common Stock (the "Alternate
Class") in accordance with the Securities Act of 1933, as amended, upon the
request of the Holder:
(a) the Corporation will issue to Holder, upon exercise of this
Warrant, the equivalent number of shares of such Alternate Class, so long as the
holders of the shares of the Alternate Class have all of the same rights as the
holders of shares of Common Stock, except for voting rights; and
(b) all references herein to Common Stock shall be deemed to refer to
the Alternate Class.
9. Reservation of Common Stock. The Corporation will reserve and keep
---------------------------
available for issuance and delivery upon the exercise of this Warrant such
number of its authorized but unissued shares of Common Stock or other securities
of the Corporation as will be sufficient to permit the exercise in full of this
Warrant. Upon issuance, each of the Warrant Shares will be validly issued,
fully paid and nonassessable, free and clear of all liens, security interests,
charges and other encumbrances or restrictions on sale and free and clear of all
preemptive rights.
10. No Voting Rights; Limitations of Liability. Prior to exercise, this
------------------------------------------
Warrant will not entitle the Holder to (a) any voting rights, or (b) other
rights as a stockholder of the Corporation not granted herein. No provision of
this Warrant, in the absence of affirmative action by the Holder to exercise
this Warrant, and no enumeration in this Warrant of the rights or privileges of
the Holder, will give rise to any liability of such Holder for the Exercise
Price.
11. Exercise Procedure. To exercise this Warrant, the Holder must deliver
------------------
to the principal office of the Corporation (prior to the Expiration Date) this
Warrant, the subscription substantially in the form of Exhibit A attached
---------
hereto, and the Exercise Price (as adjusted pursuant to the terms hereof). The
Holder may deliver the Exercise Price by any of the following
-4-
<PAGE>
methods, at its option: (i) in legal tender, (ii) by bank cashier's or certified
check, (iii) by wire transfer to an account designated by the Corporation, or
(iv) in accordance with Section 12. Upon exercise, the Corporation, at its sole
expense (including the payment of any documentary, stamp, issue or transfer
taxes), will issue and deliver to Holder, within 10 days after the date on which
the Holder exercises this Warrant, certificates for the Warrant Shares purchased
hereunder. The Warrant Shares shall be deemed issued, and the Holder deemed the
holder of record of such Warrant Shares, as of the opening of business on the
date on which the Holder exercises this Warrant.
12. Cashless Payment.
-----------------
(a) Right to Convert. In lieu of paying the applicable Exercise Price
----------------
by legal tender, check, or wire transfer, the Holder may elect to receive, upon
exercise of this Warrant, that number of Warrant Shares equal to the quotient
obtained by dividing:
[(A-B)(X)] by (A), where:
A = the Conversion Value (as defined Stock on the date of
exercise; below) of a share of Common
B = the Exercise Price for a share of Common Stock;
X = the number of Warrant Shares (equal to Warrant Shares then
issuable is being exercised. or less than the number of
hereunder) as to which this Warrant
(b) Conversion Value. For purposes of this Section 12 only, the
---------------- ----
Conversion Value of a share of Common Stock means:
(i) if the Common Stock is listed on a national securities
exchange or admitted to unlisted trading privileges on such
exchange or listed for trading on the Nasdaq National
Market System maintained by the National Association of
Securities Dealers, Inc., -- the last reported sale price
of the Common Stock on the last trading day prior to the
date of exercise of this Warrant (or the average closing
bid and asked prices for such day if no such sale is made
on such day);
(ii) if clause (i) does not apply, and if the prices are
reported by the National Quotation Bureau, Inc., -- the
mean of the last reported bid and asked prices reported on
the last trading day prior to the date of exercise of this
Warrant; and
(iii) in all other cases -- the per share value as determined by
the board of directors in good faith.
-5-
<PAGE>
13. Sale of Warrant or Warrant Shares. Neither this Warrant nor any of the
---------------------------------
Warrant Shares have been registered under the Act or under the securities laws
of any state. Neither this Warrant nor any of the Warrant Shares (when issued)
may be sold, assigned, transferred, pledged or hypothecated or otherwise
disposed of except as permitted: (i) by any shareholders agreement then in
effect, (ii) by any effective registration statement under the Act and by the
securities laws of any state in question, or (iii) by an opinion of counsel
reasonably satisfactory to the Corporation stating that such registration under
the Act and registration or qualification under the securities laws of any state
is not required. Until the Warrant Shares have been registered under the Act and
registered and qualified under the securities laws of any state in question, the
Corporation shall cause each certificate evidencing any Warrant Shares to bear
the following legends:
THE SHARES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR UNDER THE SECURITIES LAWS
OF ANY STATE. THE SHARES MAY NOT BE OFFERED, SOLD, ASSIGNED, TRANSFERRED,
PLEDGED OR HYPOTHECATED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, AND SUCH REGISTRATION OR QUALIFICATION AS MAY BE NECESSARY UNDER
THE SECURITIES LAWS OF ANY STATE, OR AN OPINION OF COUNSEL SATISFACTORY TO
THE CORPORATION THAT SUCH REGISTRATION OR QUALIFICATION IS NOT REQUIRED.
THE SHARES EVIDENCED BY THIS CERTIFICATE ARE SUBJECT TO THE TERMS OF
INVESTMENT AGREEMENT BETWEEN THE HOLDER AND THE CORPORATION DATED AS OF MAY
[___], 1999.
14. Transfer. The Corporation will register this Warrant on its books and
--------
keep such books at its offices. To effect a transfer permitted by Section 13
hereof, the Holder must present (either in person, or by duly authorized
attorney) written notice substantially in the form of Exhibit B attached hereto.
---------
To prevent a transfer in violation of Section 13, the Corporation may issue
appropriate stop orders to its transfer agent.
15. Replacement of Warrant. If the Holder provides evidence that this
----------------------
Warrant or any certificate or certificates representing the Warrant Shares have
been lost, stolen, destroyed or mutilated, the Corporation (at the request and
expense of the Holder) will issue a replacement warrant upon reasonably
satisfactory indemnification by the Holder (if required by the Corporation).
16. "Put" Rights.
------------
(a) Commencing on the fifth anniversary of the date hereof, in the event
that the Corporation no longer has any of its securities registered under the
Securities Exchange Act of 1934, the Holder may sell the Warrant or the Warrant
Shares to the Company (and the Company
-6-
<PAGE>
is obligated to purchase such shares) for a price in cash that is equal to the
Fair Market Value (less the Exercise Price if such Warrant has not been
exercised at such time). For the purposes of this Section 16, Fair Market Value
shall have the meaning set forth in clause (iv) of the definition of "Fair
Market Value" on Schedule 1.
(b) To exercise its rights hereunder, the Holder shall give the Company at
least 60 days' prior written notice of its desire to sell the Warrant or the
Warrant Shares. Any sale pursuant to this Section 16 shall be consummated as
soon as practical after the delivery of the notice of such election by the
Holder, but in any event, within 60 days after the delivery of such notice.
17. Governing Law. The laws of the State of Delaware (other than its
-------------
conflict of law rules) govern this Warrant.
* * * *
{Signatures on following page.}
-7-
<PAGE>
IN WITNESS WHEREOF, the Corporation has caused this Warrant to be signed on
its behalf, in its corporate name, by its President, and its corporate seal to
be hereunto affixed and the said seal to be attested by its Secretary, as of the
[___] day of May, 1999.
OPINION RESEARCH CORPORATION
a Delaware corporation
Attest: /s/ Douglas L. Cox By: /s/ John F. Short [Seal]
-------------------------- ----------------------
Douglas L. Cox, John F. Short,
-------------------------- ----------------------
Secretary President
-8-
<PAGE>
EXHIBIT A
---------
IRREVOCABLE SUBSCRIPTION
------------------------
To: Opinion Research Corporation
The undersigned hereby elects to exercise its right under the attached
Warrant by purchasing ____ shares of the Common Stock, and hereby irrevocably
subscribes to such issue. The certificates for such shares shall be issued in
the name of:
______________________________
(Name)
______________________________
(Address)
______________________________
(Taxpayer Number)
and delivered to:
______________________________
(Name)
______________________________
(Address)
The Exercise Price of $_______ is enclosed.
or
--
In lieu of payment of the Exercise Price, the undersigned hereby invokes
the provisions of Section 12 of the Warrant.
Date:_______________
Signed: ________________________________________
(Name of Holder, Please Print)
________________________________________
(Address)
________________________________________
(Signature)
-9-
<PAGE>
Exhibit B
---------
ASSIGNMENT
----------
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers
unto:
_______________________________
(Name)
_______________________________
(Address)
the attached Warrant, together with all right, title and interest therein
to purchase [__] shares of the Common Stock, and does hereby irrevocably appoint
_______________________ as attorney-in-fact to transfer said Warrant on the
books of Opinion Research Corporation with full power of substitution in the
premises.
Done this ______ day of ____________ 19____.
______________________________
(Signature)
______________________________
(Name and title)
______________________________
______________________________
(Address)
-10-
<PAGE>
SCHEDULE 1
----------
"Bona Fide Offer" means a bona fide written offer coupled with evidence
reasonably satisfactory to the Holder that the Corporation has the present
financial ability to pay the purchase price of the Warrant or Warrant
Shares (as the case may be) in full in cash at a closing to occur no more
than 30 days from the date such bona fide written offer was delivered to
the Holder.
"Common Stock Equivalent" means any equity interest of the Corporation that is
convertible or exchangeable into Common Stock at any time.
"Common Stock Deemed Outstanding" means, at any given time, the sum of:
(i) the number of shares of Common Stock and Common Stock Equivalents
(excluding the Contingent Shares) outstanding at such time, plus
----
(ii) the number of shares of Common Stock and Common Stock Equivalents
subject to any options, warrants, convertible securities or other
commitments outstanding at such time.
"Consideration" means:
(i) if the Corporation issues Common Stock, -- the gross proceeds
received by the Corporation;
(ii) if the Corporation issues Common Stock Equivalents, -- the gross
proceeds received by the Corporation, plus the minimum aggregate amount of
gross proceeds, if any, payable to the Corporation upon exchange or
conversion;
(iii) if the Corporation issues options or rights to subscribe for or
to purchase Common Stock or any Common Stock Equivalents, -- the gross
proceeds, if any, received by the Corporation, plus the minimum aggregate
amount of gross proceeds, if any, payable to the Corporation upon exercise;
(iv) if the Corporation issues a combination of securities consisting
of Common Stock or Common Stock Equivalents and other securities of the
Corporation, and if the amount of gross proceeds allocable to the Common
Stock or Common Stock Equivalents is not determinable on its face at the
time of such issuance, -- the portion of gross proceeds received by the
Corporation, as determined in good faith by the Corporation's Board of
Directors; and
(v) if the Corporation receives any non-cash consideration, -- the
fair value of the non-cash consideration, as determined in good faith by
the Corporation's Board of Directors.
-11-
<PAGE>
"Dilutive Transaction" means any transaction (other than Exempt Transactions)
where the Corporation does any of the following, based on a Per Share Price
which is less than the Non-Dilutive Price:
(i) issues or sells any Common Stock or any Common Stock
Equivalents;
(ii) issues or sells any options, warrants or other rights to
purchase or otherwise acquire any Common Stock or any Common Stock
Equivalent; or
(iii) decreases the subscription, exercise, conversion or exchange
price of the securities described in (i) or (ii).
"Employee Options" means options to purchase shares of Common Stock issued by
the Board of Directors of the Corporation pursuant to a stock option plan
approved by the shareholders of the Corporation to employees of,
consultants to, contractors with, or members of the Board of Directors of
the Corporation, in connection with or as compensation for the performance
of services to the Corporation.
"Employee Option Shares" means shares of Common Stock into which Employee
Options are exercisable.
"Exempt Transaction" means any transaction where the Corporation:
(i) issues any Common Stock upon conversion or exercise of securities
outstanding or issued as of the date hereof,
(ii) issues Employee Options to acquire Employee Option Shares;
provided, however, that the exercise price for such Employee Options shall
-------- -------
be no less than the Fair Market Value of the shares of Common Stock at the
time of the issuance of such options, or
(iii) issues any Common Stock upon exercise of this Warrant.
"Fair Market Value" of a share of Common Stock means:
(i) if the Common Stock is listed on a national securities exchange
or admitted to unlisted trading privileges on such exchange or listed for
trading on the Nasdaq National Market System maintained by the National
Association of Securities Dealers, Inc., -- the last reported sale price of
the Common Stock on the last trading day prior to the Dilutive Transaction
(or the average closing bid and asked prices for such day if no such sale
is made on such day);
(ii) if clause (i) does not apply, and if the prices are reported by
the National Quotation Bureau, Inc., -- the mean of the last reported bid
and asked prices reported on the last trading day prior to the Dilutive
Transaction;
(iii) if clauses (i) and (ii) do not apply, and if the transaction
involves the sale by the Corporation of securities to unaffiliated third
parties (utilizing the services of an investment banker acceptable to
Holder), -- the Per Share Price; and
-12-
<PAGE>
(iv) in all other cases -- as determined based on earnings and book
value and other appropriate items in accordance with the following
procedures:
(A) the Holder will recommend three qualified, independent
appraisers to the Corporation;
(B) the Corporation will select and compensate one of the three
appraisers to determine a value;
(C) if either the Holder or the Corporation is dissatisfied with
the value determined by the first appraiser, that Person may designate
and compensate an appraiser of its choice to determine a second value;
(D) if the second value is within 10% of the first value or if
the Holder and the Corporation agree, the average of the two values
will be the "Fair Market Value";
(E) if the second value is not within 10% of the first value,
and if either the Holder or the Corporation is dissatisfied with the
second value, that Person may designate and compensate an appraiser of
its choice to determine a third value;
(F) the average of the two values that are nearest will be the
"Fair Market Value"; and
(G) In determining Fair Market Value, the Holder and the
Corporation agree that the independent appraiser shall be instructed,
among other things: (i) to consider recent relevant transactions
involving similar companies that provide services similar to those
provided by the Corporation, (ii) to consider the current market for
publicly traded companies that provide services similar to those
provided by the Corporation, (iii) to utilize all appropriate
valuation models and techniques employing a wide range of assumptions,
(iv) to consider the value of any options to acquire any interest in
any company, business or asset (whether by acquisition of stock,
assets or otherwise) to the extent the value of such interest exceeds
the exercise price (in cash, securities, other assets, assumption of
liabilities or otherwise) of such option, and further (v) that the
Fair Market Value of the Common Stock shall be determined on the basis
of the following assumptions: (a) without any reduction in value for
lack of control or the inherent lack of liquidity of non-public
minority interests, (b) giving full effect to the earnings history and
prospects of the Corporation, (c) that there were liquid public
markets for such securities capable of absorbing a sale of all such
securities with no discount from otherwise prevailing market prices or
for illiquidity, (d) the proceeds that would be realized would be
those realized upon the sale of all of the Corporation's assets,
without reduction for any taxes or transaction expenses that might
occur as a result of the sale or any refinancing, (e) that there is a
willing buyer with adequate recourse debt financing and a seller with
no compulsion to
-13-
<PAGE>
sell, (f) that all shares of the Common Stock have the same voting
rights (notwithstanding that there may be outstanding more than one
class or series of Common Stock with different voting rights), and (g)
otherwise on a basis which values all of the same class or having the
same terms at the same per share price.
"Market Price" means the average price of the Common Stock as listed on the
American Stock Exchange over the immediately preceding 20-day period.
"Non-Dilutive Price" means the initial Exercise Price set forth in Section 3
hereof as of the date hereof, adjusted (i) for stock splits, combinations,
similar events and (ii) to the Weighted Per Share Value each time the
Corporation enters into a Dilutive Transaction.
"Per Share Price" means the total Consideration for each share of Common Stock
or Common Stock Equivalent issued or issuable by the Corporation in
connection with a Dilutive Transaction.
"Repayment Date" means the date on which the Corporation has indefeasibly
repaid in full in cash all amounts owed under the Debenture issued by the
Corporation to the Holder on the date hereof.
"Weighted Average Per Share Value" means the amount determined by performing the
following calculation and rounding the resulting number to the nearest
whole cent: Divide:
(i) the sum of:
(a) the Non-Dilutive Price of a Warrant Share multiplied by the
number of shares of Common Stock Deemed Outstanding
immediately prior to the Dilutive Transaction, plus
----
(b) the aggregate Consideration, if any, received or to be
received by the Corporation in connection with the Dilutive
Transaction, by
--
(ii) the number of shares of Common Stock Deemed Outstanding
immediately after the Dilutive Transaction.
-14-
<PAGE>
EMPLOYMENT AGREEMENT
--------------------
THIS EMPLOYMENT AGREEMENT (the "Agreement") is made as of this 1st day
of January, 1999, by and between OPINION RESEARCH CORPORATION, a Delaware
Corporation (the "Company"), and JOHN F. SHORT (the "Executive").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, the Company believes that it would benefit from the
application of the Executive's particular and unique skill, experience and
background to the management and operation of the Company, and wishes to employ
the Executive as Chief Executive Officer of the Company ("CEO"); and
WHEREAS, the parties desire by this Agreement to set forth the terms
and conditions of the employment relationship between the Company and the
Executive.
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants in this Agreement, the Company and the Executive agree as follows:
1. Employment and Duties. The Company hereby employs the
---------------------
Executive as CEO on the terms and conditions provided in this Agreement and
Executive agrees to accept such employment subject to the terms and conditions
of this Agreement. The Executive shall perform the duties and responsibilities
as are customary for the officer of a corporation in such position, and shall
perform such other duties and responsibilities as are reasonably determined from
time to time by the Board of Directors of the Company (the "Board"). The
Executive agrees to devote his best efforts and substantially all of his time,
attention, energy, and skill to performing the duties of CEO. Provided that such
activities shall not violate any provision of
-1-
<PAGE>
this Agreement or materially interfere with his performance of his duties
hereunder, nothing herein shall prohibit the Executive (a) from participating in
any other business activities approved in advance by the non-management members
of Board in accordance with any terms and conditions of such approval, such
approval not to be unreasonably withheld or delayed, (b) from engaging in
charitable, civic, fraternal, or trade group activities, or (c) from investing
his assets in other entities or business ventures.
2. Term. The term of this Agreement shall be for two years (the
----
"Initial Term"), commencing on the date hereof (the "Effective Date"), and
expiring on the day preceding the second anniversary of the Effective Date (the
"Termination Date"), unless extended by mutual agreement of the parties or
earlier terminated in accordance with the terms of this Agreement. This
Agreement shall continue in full force and effect for additional terms of 12
months each after the expiration of the Initial Term (each, an "Extended Term"),
unless either party shall give the other party before the commencement of any
Extended Term at least six months prior written notice of such party's intention
to terminate this Agreement.
3. Compensation. As compensation for performing the services required
------------
by this Agreement, and during the term of this Agreement, the Executive shall be
compensated as follows:
(a) Base Compensation. The Company shall pay to the Executive an
-----------------
annual salary ("Base Compensation") of $350,000, payable in equal installments
pursuant to the Company's customary payroll procedures in effect for its
executive personnel at the time of payment, but in no event less frequently than
monthly, subject to withholding for applicable
-2-
<PAGE>
federal, state, and local taxes. The Executive shall be entitled to increases in
Base Compensation and bonuses with respect to each fiscal year during the term
of this Agreement, to be determined by the Compensation Committee of the Board
based on periodic reviews of the Executive's performance conducted on at least
an annual basis. Such Base Compensation as increased from time to time by the
Compensation Committee of the Board shall be deemed to be the Executive's Base
Compensation for purposes of this Agreement. The Executive's Base Compensation
shall not be reduced during the Initial Term of this Agreement.
(b) Incentive Compensation. In addition to Base Compensation, the
----------------------
Executive shall receive additional compensation ("Incentive Compensation). The
Incentive Compensation shall be pursuant to short-term and/or long-term
incentive compensation programs which shall be established by the Compensation
Committee of the Board. The annual Incentive Compensation opportunity pursuant
to such programs shall not be less than $200,000. For purposes of this
Agreement, the Executive's "Pro Rata Share" of Incentive Compensation for any
fiscal year of the Company shall be a fraction whose numerator shall be equal to
the number of months (or parts of months) during which the Executive was
actually employed by the Company during any such fiscal year and whose
denominator shall be the total number of months in such fiscal year.
4. Employee Benefits. During the term of this Agreement and subject to
-----------------
the limitations set forth in this Section 4, the Executive and his eligible
dependents shall have the right to participate in any retirement plans
(qualified and non-qualified), pension, insurance, health, disability or other
benefit plan or program that has been or is hereafter adopted by the
-3-
<PAGE>
Company (or in which the Company participates), according to the terms of such
plan or program.
5. Vacation and Leaves of Absence. The Executive shall be entitled to
------------------------------
the normal and customary amount of paid vacation provided to senior executive
officers of the Company, but in no event less than 20 days during each 12 month
period, beginning on the Effective Date of this Agreement. Any vacation days
that are not taken in a given 12 month period shall not accrue or carry over
from year to year. Upon any termination of this Agreement for any reason
whatsoever, accrued and unused vacation for the year in which this Agreement
terminates will be paid to the Executive within 10 days of such termination
based on his annual rate of Base Compensation in effect on the date of such
termination. In addition, the Executive may be granted leaves of absence with or
without pay for such valid and legitimate reasons as the Board in its sole and
absolute discretion may determine, and is entitled to the same sick leave and
holidays provided to other senior executive officers of the Company.
6. Expenses.
--------
(a) Business Expenses. The Executive shall be promptly reimbursed
-----------------
against presentation of vouchers or receipts for all reasonable and necessary
expenses incurred by him in connection with the performance of business-related
duties as well as membership fees in a country club of his choice.
(b) Automobile Expense. During the term of this Agreement, in order
------------------
to facilitate the performance of the Executive's duties hereunder, and otherwise
for the convenience of the Company, the Company shall provide the Executive with
an automobile
-4-
<PAGE>
allowance of $1,000 per month.
7. Indemnification. The Company shall (and is hereby obligated to)
---------------
indemnify (including advance payment of expenses) the Executive in each and
every situation where the Company is obligated to make such indemnification
pursuant to applicable law and the relevant portions of the Company's
Certificate of Incorporation and By-Laws. The Company shall indemnify the
Executive, including payment of attorneys' fees and expenses, in each and every
situation where, under applicable law, the Company is not obligated, but is
nevertheless permitted or empowered, to make such indemnification.
8. Termination and Termination Benefits.
------------------------------------
(a) Termination by the Company.
--------------------------
(i) With Cause. The Company may terminate this Agreement
prior to its expiration date only with "cause". In such event, the Executive
shall be paid his Base Compensation, and the benefits pursuant to Section 4
hereof, up to the effective date of such termination. For purposes of this
Section 8(a), "cause" shall mean (A) an act of dishonesty by Executive
constituting a felony and resulting or intended to result in gain to or personal
enrichment of Executive at Company's expense, (B) the willful engaging by
Executive in misconduct which is injurious to the Company, and (C) the
deliberate and intentional refusal of Executive substantially to perform his
duties hereunder.
(ii) Disability. If due to illness, physical or mental
----------
disability, or other incapacity, the Executive shall fail, for a total of any
four consecutive months ("Disability"), to perform the principal duties required
by this Agreement, the Company may
-5-
<PAGE>
terminate this Agreement upon 30 days' written notice to the Executive. In such
event, the Executive shall be (A) paid his Base Compensation until the
expiration of this Agreement and his Pro Rata Share of any Incentive
Compensation payable to him for the year in which the termination occurs, and
(B) provided with employee benefits pursuant to Section 4, to the extent
available, until the expiration of this Agreement. For purposes of this
subsection, "expiration of this Agreement" shall mean the later of (A) the
Termination Date or (B) the last day of any Extended Term in effect on the date
the Executive becomes disabled; provided, that any such Extended Term shall
terminate on the day preceding the anniversary of the Effective Date which
coincides with or follows the Executive's Disability.
(b) Termination by the Executive. The Executive may terminate this
----------------------------
Agreement for "cause" upon 30 days' written notice to the Company (during which
period the Executive shall, if requested in writing by the Company, continue to
perform his duties as specified under this Agreement). For purposes of this
Agreement, if the Executive's employment is terminated by the Company without
cause (as defined in Section 8(a)(i) above) or the Company shall fail to renew
the term of this Agreement after the Initial Term or any Extended Term, it shall
be deemed as though the Executive terminated this Agreement for cause under this
Section 8(b). In such event, the Executive shall be paid his Base Compensation
up to the effective date of such termination and his full share of any Incentive
Compensation payable to him for the year in which the termination occurs as well
as the additional termination compensation set forth in Section 8(c) below. For
purposes of the Executive's termination of this Agreement for cause under this
Section 8(b), "cause" includes (W) the Company's failure to
-6-
<PAGE>
make any of the payments or provide any of the benefits to the Executive under
this Agreement, (X) a material alteration in the scope of the Executive's
responsibilities and duties as CEO of the Company, (Y) the Company's
determination to relocate the Executive's primary workplace beyond a 100 mile
radius of Skillman, New Jersey, or (Z) the Company's material breach of any
provision of this Agreement or violation of any applicable criminal law not due
to the Executive's gross negligence or willful fault.
(c) Additional Termination Compensation. In the event of a
-----------------------------------
termination of this Agreement pursuant to Section 8(b), the Company, in addition
to paying the Executive his Base Compensation and Incentive Compensation as
hereinabove provided, shall pay to the Executive a lump sum payment (hereinafter
"Termination Compensation") equal to (i) two times the Executive's Base
Compensation if such termination does not occur within 24 months after a Change
in Control (as hereinafter defined); or (ii) two and one-half (2.5) times the
Executive's Base Compensation if such termination occurs within 24 months after
a Change in Control. Payment of Termination Compensation shall be paid no later
than 14 days following the effective date of the Executive's termination. For
purposes of this Agreement, a "Change of Control" shall be deemed to have
occurred upon the earliest to occur of the following events: (i) the date the
stockholders of the Company (or the Board of Directors, if stockholder action is
not required) approve a plan or other arrangement pursuant to which the Company
will be dissolved or liquidated, or (ii) the date the stockholders of the
Company (or the Board of Directors, if stockholder action is not required)
approve a definitive agreement to sell or otherwise dispose of substantially all
of the assets of the Company, or (iii) the date the stockholders of the Company
-7-
<PAGE>
(or the Board of Directors, if stockholder action is not required) and the
stockholders of the other constituent corporation (or its board of directors if
stockholder action is not required) have approved a definitive agreement to
merge or consolidate the Company with or into such other corporation, other
than, in either case, a merger or consolidation of the Company in which holders
of shares of the Company's Common Stock immediately prior to the merger or
consolidation will have at least a majority of the ownership of common stock of
the surviving corporation (and, if one class of common stock is not the only
class of voting securities entitled to vote on the election of directors of the
surviving corporation, a majority of the voting power of the surviving
corporation's voting securities) immediately after the merger or consolidation,
which common stock (and, if applicable, voting securities) is to be held in the
same proportion as such holders' ownership of Common Stock of the Company
immediately before the merger or consolidation, or (iv) the date any entity,
person or group, within the meaning of Section 13(d)(3) or Section 14(d)(2) of
the Securities Exchange Act of 1934, as amended, other than the Company or any
of its subsidiaries or any employee benefit plan (or related trust) sponsored or
maintained by the Company or any of its subsidiaries or John F. Short shall have
become the beneficial owner of, or shall have obtained voting control over, more
than forty percent (40%) of the outstanding Shares of the Company's Common
Stock, or (v) the first day after the date hereof when directors are elected
such that a majority of the Board of Directors shall have been members of the
Board of Directors for less than two years, unless the nomination for election
of each new director who was not a director at the beginning of such two year
period was approved
-8-
<PAGE>
by a vote of at least two-thirds of the directors then still in office who were
directors at the beginning of such period.
(d) Death Benefit. Notwithstanding any other provision of this
-------------
Agreement, this Agreement shall terminate on the date of the Executive's death.
In such event the Executive's estate shall be paid his Base Compensation for the
remainder of the month in which such termination occurs and his Pro Rata Share
of any Incentive Compensation payable to him for the year in which such
termination occurs.
(e) No Mitigation. The Executive shall not be required to mitigate
-------------
the amount of any payments provided for by this Agreement by seeking employment
or otherwise, nor shall the amount of any payment or benefit provided in this
Agreement be reduced by any compensation or benefit earned by the Executive
after termination of his employment.
9. Miscellaneous.
-------------
(a) Integration; Amendment. This Agreement (including the
----------------------
definitions contained in the Registration Statement) constitutes the entire
agreement between the parties hereto with respect to the matters set forth
herein and supersedes and renders of no force and effect all prior
understandings and agreements between the parties with respect to the matters
set forth herein, except that nothing contained in this Agreement shall affect
that certain Non-Competition Agreement entered into by the Executive on November
26, 1991. No amendments or additions to this Agreement shall be binding unless
in writing and signed by both parties.
(b) Severability. If any part of this Agreement is contrary to,
------------
prohibited by, or deemed invalid under applicable law or regulations, such
provision shall be
-9-
<PAGE>
inapplicable and deemed omitted to the extent so contrary, prohibited, or
invalid, but the remainder of this Agreement shall not be invalid and shall be
given full force and effect so far as possible.
(c) Waivers. The failure or delay of any party at any time to
-------
require performance by the other party of any provision of this Agreement, even
if known, shall not affect the right of such party to require performance of
that provision or to exercise any right, power, or remedy hereunder, and any
waiver by any party of any breach of any provision of this Agreement shall not
be construed as a waiver of any continuing or succeeding breach of such
provision, a waiver of the provision itself, or a waiver of any right, power, or
remedy under this Agreement. No notice to or demand on any party in any case
shall, of itself, entitle such party to the other or further notice or demand in
similar or other circumstances.
(d) Power and Authority. The Company represents and warrants to the
-------------------
Executive that it has the requisite corporate power, to enter into this
Agreement and perform the terms hereof; and that the execution, delivery and
performance of this Agreement by it has been duly authorized by all appropriate
corporate action; and this Agreement represents the valid and legally binding
obligation of the Company and is enforceable against it in accordance with its
terms.
(e) Burden and Benefit; Survival. This Agreement shall be binding
----------------------------
upon and inure to the benefit of the parties hereto and their respective heirs,
executors, personal and legal representatives, successors and, assigns. In
addition to, and not in limitation of anything contained in this Agreement, it
is expressly understood and agreed that the Company's
-10-
<PAGE>
obligation to pay termination compensation set forth herein shall survive any
termination of this Agreement.
(f) Governing Law; Headings. Except as set forth in Section 6, this
-----------------------
Agreement and its construction, performance, and enforceability shall be
governed by, and construed in accordance with, the laws of the State of New
Jersey. Headings and titles herein are included solely for convenience and
shall not affect, or be used in connection with, the interpretation of this
Agreement.
(g) Notices. All notices called for under this Agreement shall be
-------
in writing and shall be deemed given upon receipt if delivered personally or by
facsimile transmission and followed promptly by mail, or mailed by registered or
certified mail (return receipt requested), postage prepaid, to the parties at
the following addresses (or at such other address for a party as shall be
specified by like notice; provided that notices of a change of address shall be
effective only upon receipt thereof):
If to the Executive:
John F. Short
10 Governors Lane
Princeton, NJ 08540
If to the Company:
Opinion Research Corporation
23 Orchard Road
Skillman, New Jersey 08558
Attention: Board of Directors
-11-
<PAGE>
or to any other address or addressee as any party entitled to receive notice
under this Agreement shall designate, from time to time, to others in the manner
provided in this Section 9(g) for the service of Notices.
Any notice delivered to the party hereto to whom it is addressed shall
be deemed to have been given and received on the day it was received; provided,
--------
however, that if such day is not a business day then the notice shall be deemed
- -------
to have been given and received on the business day next following such day.
Any notice sent by facsimile transmission shall be deemed to have been given and
received on the business day next following the day of transmission.
IN WITNESS WHEREOF, the parties have duly executed this Agreement as
of the date first above written.
OPINION RESEARCH CORPORATION
By: /s/ Steven A. Greyser
--------------------------------------------
Stephen A. Greyser
Chairman, Compensation Committee
By: /s/ Derek B. Smith
--------------------------------------------
Derek B. Smith
Member, Compensation Committee
/s/ John F. Short
--------------------------------------------
John F. Short
-12-
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED BALANCE SHEET AS OF JUNE 30, 1999 AND THE RELATED CONSOLIDATED
STATEMENTS OF INCOME AND CASH FLOWS FOR THE SIX MONTHS ENDED JUNE 30, 1999 AND
IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> JUN-30-1999
<CASH> 3,075
<SECURITIES> 0
<RECEIVABLES> 31,709
<ALLOWANCES> 249
<INVENTORY> 0
<CURRENT-ASSETS> 38,472
<PP&E> 8,367
<DEPRECIATION> 0
<TOTAL-ASSETS> 91,563
<CURRENT-LIABILITIES> 17,096
<BONDS> 50,703
0
0
<COMMON> 42
<OTHER-SE> 18,608
<TOTAL-LIABILITY-AND-EQUITY> 91,563
<SALES> 0
<TOTAL-REVENUES> 46,208
<CGS> 0
<TOTAL-COSTS> 28,693
<OTHER-EXPENSES> 14,010
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,302
<INCOME-PRETAX> 2,203
<INCOME-TAX> 1,056
<INCOME-CONTINUING> 1,147
<DISCONTINUED> 0
<EXTRAORDINARY> (90)
<CHANGES> 0
<NET-INCOME> 1,057
<EPS-BASIC> 0.27
<EPS-DILUTED> 0.27
</TABLE>
