|
|
|
|
Legal Resources
Business Contracts
MCLE Courses
Projects
Friends
|
Sample Business ContractsHome: Sample Business Contracts:
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
-2-
<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;
-3-
<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)
-4-
<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
-5-
<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
-6-
<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.
-----------
-7-
<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
-8-
<PAGE>
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.
-----------
"Multiemployer Plan" means a multiemployer plan as defined in Section
4001(a)(3) of ERISA.
"New Lending Office" See Section 2.11.
------------
"Non-U.S. Lender" See Section 2.11.
------------
"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.
------------
"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;
-9-
<PAGE>
(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.
-10-
<PAGE>
"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
-11-
<PAGE>
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.
------------
"Transaction" See Section 4.2.
-----------
"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
-12-
<PAGE>
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,
-13-
<PAGE>
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
-----------
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.
-14-
<PAGE>
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
-------
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
------------
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,
-15-
<PAGE>
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-
---------------
U.S. Lender shall be required to deliver any form pursuant to this Section
-------
2.10(e) that such Non-U.S. Lender is not legally able to deliver.
-------
(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,
-16-
<PAGE>
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
------------
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.
------------
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
----------
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
-17-
<PAGE>
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;
------- ---
(vii) the employment contracts, as described in Section 4.24;
------------
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.
------------
(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.
-18-
<PAGE>
(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.
-19-
<PAGE>
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
------------
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
-----------
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.
-20-
<PAGE>
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
------------
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
------------
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.
-21-
<PAGE>
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.
-----------
(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
-------------
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
-22-
<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
-------------
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.
------------
-23-
<PAGE>
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
-------------
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.
-24-
<PAGE>
SECTION 4.22 Environmental Matters. To the Company's knowledge, except as
set forth in Schedule 4.22:
-------------
(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.
-25-
<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
--------
4.30. The Company conducts its business and affairs without infringement of or
----
interference with any Intellectual Property of any other Person.
-26-
<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.
-27-
<PAGE>
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;
-28-
<PAGE>
(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.
-29-
<PAGE>
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
-30-
<PAGE>
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>
-31-
<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.
-32-
<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.
-33-
<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
-34-
<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
-35-
<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.
-36-
<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 th |
